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Prairie-Home Contagion is Good News for Arizona Too

By November 17, 2020November 14th, 2022No Comments

By Ashley Gurbal Kritzer & Angela Gonzales | Phoenix Business Journal

America’s heartland is positioned for a post-pandemic housing boom if current trends continue.

And in Tucson and Lake Havasu City, approvals to build single-family homes were up 29% through September — even higher than metro Phoenix where approvals were up 21%, according to a Business Journals analysis of 354 markets across the country.

While homebuilders in metro Phoenix know how hot the market is in the region as they constantly fight against undersupply, there are some areas of the country where building permits are even higher.

In greater Kansas City, approvals to build single-family homes were up 26% year to date through September. So, too, were the Rust Belt cities of Columbus, Ohio, and Fort Wayne, Indiana. Near Fort Collins, Colorado, they rose 47%, and the rural area around Clarksville, Tennessee — just north of Nashville and south of the Kentucky border — reported a 63% increase, tops in the country among major metros The Business Journals analyzed.

Robert Dietz, chief economist for the National Association of Home Builders in Washington, D.C., said it’s no surprise the country’s biggest homebuyers are thundering into more rural, less populous, areas of the country. He said the coronavirus and its effects on remote-work policies have turbocharged buyer demand for bigger homes and a flight from congested urban areas, a trend that’s already triggered a surge in building activity in places long dismissed as too far-flung from hot job markets and top-ranked research clusters.

Meanwhile, the reverse is playing out for many of the priciest and traditionally most sought after housing markets.

Building up in sought-after locales
Among the 354 metropolitan areas The Business Journals analyzed, 236 reported year-to-date increases in single-family building permits through September, with areas in the Midwest and South recording the largest increases. Conversely, pricier and more congested metros — most notably California’s Bay Area as well as Denver and New York City — saw the largest one-year declines.

“Columbus and Indianapolis — those kinds of cities are going to emerge as winners over the next few years,” Dietz said.

Some rural areas of Arizona also are doing well, including the Sierra Vista and Douglas area of the southern part of the state, where permits are up 27% year to date, along with Flagstaff, up 13%

Other parts of Arizona are showing declines in growth, such as the Prescott Valley and Prescott area, down 2% in year-to-date permits, and Yuma, down 3%, according to The Business Journals analysis.

Mandalay Homes and Mosaic are two Phoenix-based homebuilders that are doing what they can to reverse that trend in the Prescott/Prescott Valley area. They have embarked on a $100 million agreement to build 400 homes in that area.

Bigger homes
Indeed, COVID-19 has relegated people to their homes for activities once reserved for commercial real estate. Home schooling, home workouts, home offices — all are driving buyers toward larger residences. And because they’re spending less time commuting, those same buyers are proving increasingly willing to move farther from city centers to larger spaces at affordable prices.

Many of these larger homes in the metro Phoenix area are in the southeast Valley, including Queen Creek, San Tan Valley and Gilbert areas.

For example, Scottsdale-based Maracay plans to build 1,400 homes at its Waterston community in Gilbert, along with the nearby city of Maricopa, which also is seeing the construction of larger homes priced under $300,000.

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