January 29, 2015
In 2014, Tucson’s housing market remained flat reporting only 2,200 new building permits, roughly the same as year before. Home sales could never gain traction throughout the year and new construction closings decreased slightly by 4 percent from the previous year. Tucson experienced job losses in both construction and manufacturing employment, but reported gains in service sector jobs. Adding 4,200 jobs over last 12 months is positive, but a 1.2 percent growth rate is nearly half the national average.
In 2014, land deals were few, but highlighted by two national homebuilders Toll Brothers and Mattamy Homes entering our market. Mattamy Homes, a Canadian homebuilder, purchased over $22 million in residential land and is seeking to do more. LGI Homes, a regional homebuilder, also purchased property last year to begin start-up operations.
Land Sales for multi-family construction continues its quest. HSL Properties purchased 12 acres planning 300 units next to the Pines Golf Course and a 386-unit property next to Tucson National Omni Spa at Shannon Road. The average sale price is $10,000-$12,000 per unit. Operators of La Posada in Green Valley have purchased approximately 80 acres of vacant land in Oro Valley for an assisted-living community. This will be a fantastic addition to this community.
In summary, 2014 single-family residential permits were relatively unchanged from the previous year. Marana, Sahuarita and Oro Valley all reported double-digit declines. Pima County reported a 7 percent gain powered by the Vail region, but the City of Tucson posted a remarkable 100 percent gain over last year. This might suggest a large portion of permits were pulled in advance of the December 22 deadline to avoid future impact fee assessments, a considerable savings at $8,000 per lot.
The median sale price – a measure that lessens the skewing effect of very high and very low sale prices – was $165,000, 4.5 percent higher than in December 2013. The 2014 increase came after the median price rose 7 percent in 2013 and 23 percent in 2012. Builders are finding success in the move-up market which yields better margins.
In Pima County, the resale market is roughly 13,000+ sales per year, but fell 5.4 percent from the year before…although the dollar volume of sales was essentially flat for the year at $2.68 billion. Average sales price is $205,000, up 1.3 percent from last year. In a slow market recovery, new construction battles the resale market daily, but especially under $200,000. Rising construction costs have squeezed the homebuilder in its efforts to compete with the foreclosure and resale market. This trend continues through 2015 without job gains for both construction and manufacturing, though it is interesting to note that home sales were up 17 percent in December from November and 3.7 percent from December of last year.