By Angela Gonzales | Phoenix Business Journal
Homebuilders are busy buying lots and building model homes across metro Phoenix in a sign of increasing optimism in the residential real estate sector.
R.L. Brown Housing Reports tracked 1,053 land transactions with 30,617 acres and 14,194 lots purchased in 2023 in Maricopa and Pinal counties. That’s down from 1,442 land transactions over 47,359 acres in 2022 — though the amount of lots purchased was actually up 8.5% from the13,088 lots that were purchased in 2022, according to R.L. Brown Housing Reports.
“I expect land to continue this pace in 2024 to keep new home product permitting in the 22,000 range and new home closings at 23,000, as we forecasted in December,” said Jim Daniel, president of R.L. Brown Housing Reports.
Meanwhile, Michael Ingram, founder of Scottsdale-based El Dorado Holdings Inc., expects to see at least a 10% to 15% increase in new home sales and homebuilding permits in 2024 over 2023.
Faith in Phoenix’s residential real estate market is evident in the flurry of recent lot acquisitions by homebuilders, who are scooping up land throughout the Valley with dreams of building up communities to serve huge employers such as Taiwan Semiconductor Manufacturing Co.
Houston-based CastleRock Communities, for instance, just dropped $34 million in cash for 230 acres at the Northpointe at Vistancia master-planned community in Peoria, according to Tempe-based real estate database Vizzda LLC. The land transaction represents 479 lots, said CastleRock CEO Lance Wright.
Plans call for developing three product lines ranging between 1,500 and 3,500 square feet, with estimated prices between $500,000 and $800,000.
“We’ll bring all-new product; we haven’t started drawing the product,” he said. “We will create it new just for Vistancia.”
The Vistancia purchase is part of a wider Phoenix push for the Texas homebuilder.
CastleRock also recently bought 149 lots from Pulte Homes in the city of Maricopa, while securing two other communities in Prescott Valley. The company has plans to continue buying land in the Valley, Wright said.
“Phoenix is a big market,” he said. “As we were growing, it was always one of our primary targets. We love the jobs environment. Vistancia was a great opportunity for us to plant a flag. It is a nice deal with long-term opportunities.”
CastleRock anticipates at least a three-year runway for Vistancia, where the company will “most likely sell some lots to a second builder,” Wright said. With nearly 3,500 acres, Northpointe is the northernmost portion of the 7,100-acre Vistancia master-planned community and will include up to 3,200 residential dwelling units. Vistancia will also feature a 370-acre commercial mixed-use development with up to 1,900 medium- to high-density residential dwelling units.
In 2021, Newport Beach, California-based IHP Capital Partners teamed up with Minneapolis-based Varde Partners to acquire Northpointe. For the most part, the lower portion of Vistancia is sold out, said Chris Bley, co-president and chief investment officer at IHP Capital Partners. After selling to CastleRock, another 1,000 lots remain to be sold at Northpointe, he said.
The master-planned community is a few miles from Taiwan Semiconductor Manufacturing Co.’s $40 billion plant being built in north Phoenix.
“I think there will be a huge symbiotic relationship, not just for the employees at TSMC but tangible jobs that come along with it,” Bley said. “That’s one of the reasons we really want to create a truly well-rounded master plan.”
Mark Hammons, principal of Land Resources, the development management team for the IHP/Varde venture, said he’s optimistic 2024 will be a very good year.
“The sales pace is better than we originally had thought,” Hammons said. “I believe that builders are doing a great job in working through some interest rate buy-downs and incentives to really attract the buyers on the sidelines right now. We have already received a lot of interest from our homebuilder partners.”
For instance, Shea Homes purchased 125 lots for its age-restricted Ridgecrest at Northpointe community, said Hammons, who noted that Shea is planning four phases with 414 total home sites.
Ridgecrest is among the first of several Trilogy Boutique Communities around the country that Shea Homes’ Active Lifestyle Communities division is building for homebuyers over 55 years of age. Prices will start in the high $400,000s.
“They make their residents feel very special; they have a strong following across the country,” Hammons said. “We’re very happy to have them in our community. They do an outstanding job.”
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