Q2 2015 Tucson Land Update

Land Update

08 Jul Q2 2015 Tucson Land Update


Top: Boulder Pass – Miramonte / Above: Golden Barrel – Mattamy

Gradual Growth

Permits are down, but sales, starts and land transactions are up

In the first half of 2015 more than 1,077 residential permits have been pulled in the Tucson area. This is down from the 1,135 and 1,209 permits pulled in the first half of 2014 and 2013 respectively (The 2015 number does not include permits pulled in Oro Valley in June as they have not yet been reported). Although the permit numbers year to date are still behind the first half numbers for 2013 and 2014, we have been experiencing an upward trend in permits over the past few months as both May and June had over 200 permits each.

Permits are not the entire story. Typically sales precede permits and the sales numbers reported to SAHBA by ten participating builders showed net sales of 473 for the quarter, just two less than Q1 and more than any quarter in 2013 or 2014. The 948 sales for the first half of the year is 109 more (13%) than the first half of 2014 and 72 more than the first half of 2013. Historically the second half of the year has fewer sales, but we should still expect higher sales in 2015 than last year. This in turn should equate to additional permits.

In regards to single family housing starts, Q2 had 461 homes started. This was the largest amount of home starts in a quarter since Q1 in 2010 when 573 homes were started. Q2 in 2014 was just one fewer at 460 starts. The first half of 2015 has started 17 more homes than were started in the first half of 2014 (778 vs. 761). While not a huge increase year over year, this is still a positive trend showing single family homes are maintaining positive momentum. We hope the higher sales numbers result in increased permits and increased number of homes being built.

With that said, several communities have experienced incredible sales and subsequent housing starts over the past few months, more than making up for slow or nonexistent sales in other communities.

As highlighted in our last quarterly update, there were seven communities that averaged greater than 3 starts per month in Q1. These top seven communities had 122 of the 317 SFR home starts in Q1 (38.5%). In Q2 there were nine communities that averaged greater than 3 starts per month. These communities contributed 205 of the 461 home starts (44.5%). All of the prior communities remained in the group with two new additions. All but three are in the Northwest submarket:

Q2 vs. Q1

Saguaro Bloom (DR Horton) – 3 product lines: 43 / 19

Sierra Morado (Pulte) – 2 product lines: 37 / 14

Star Valley (Lennar) – 3 product lines: 24 / 17

The Pines (DR Horton) – 1 product line: 23 / 24

San Lucas (LGI Homes) – 1 product line: 21 / 18

La Cima Esplendora (KB Home) – 1 product line: 16 / 11

San Lucas (Richmond) – 1 product line: 14 / 15

Red Rock (Pulte) – 2 product lines: 14 / 15

San Lucas (DR Horton) – 1 product line: 13 / –

With the increased sales and housing starts, finished lot inventories are at an all-time low. Builders and investors recognize the shortage and are purchasing land. This year started off with only seven residential land transactions valued at $10.1 million, four of which were ongoing option deals, two were investor purchases and only one platted lot purchase by a builder. In Q2 there were 14 transactions valued at $26.7 million. There were another four option deals, but four builder purchased platted lot transactions and the first finished lot deals of the year – one by a builder and one by an investor.

The Finished Lot Inventory Trends chart below highlights the current position of the market. It has been a gradual decline over the past few years and new lots coming online have softened the decline. At current absorption rates and development rates it appears that there are several years of inventory before we run out of finished lots. The problem is that the communities selling well now will be gone soon and the remaining inventories will be in less desirable communities or will not be economically feasible to build houses on.

The current “hot” communities are all selling homes starting in the mid to high $100s. Many of the new communities currently in development or that have been recently purchased, particularly those in the Tangerine Corridor, will have to start selling homes in the mid to high $200,000s or higher. With these price points the velocity will be no where near the current top selling communities. However the higher margins on these homes help offset the slower sales rates. Within the next year or two there will be at least four new communities in the corridor with several others under contract.

Of the land purchases that have closed thus far in 2015 only the Richmond purchase of 37 finished lots in Los Arroyos (Sahuarita) and DR Horton’s option purchases in Mission Antigua, Sunset Pointe and Eagle Point Estates will be able to offer homes in the sub-$200 price point. This might lead to challenges in the next few years for homebuyers looking for entry level or 1st move-up homes. Most likely the resale market will be the primary source for them.

Overall the market is stable and is showing gradual growth. We expect our typical seasonal challenges causing some slowing toward the end of the year, but they will bounce back next spring. There are still many opportunities out there for builders and developers alike and there is a need for more lots in the market.

Please contact us for additional insight and information.

trend chart


Starts and Closings are only SFR houses and do not include active adult, custom or multi-family homes

Toll Brothers

Los Saguaros – Toll Brothers


2015 Residential Land Transactions

land transactions

Market Overview

Lot Supply

The finished lot supply was reduced by 225 lots in Q2 with a total finished lot count of 3,420. There were 236 new finished lots in three communities added to the market in Q2: 172 lots in Golden Barrel at Dove Mountain (Mattamy); 49 lots in Desert Willow (Pulte); and 15 lots in Bear Canyon Overlook (AF Sterling). During Q2 there was a total reduction of 461 finished lots, 144 more than in Q1 and the largest quarterly total reduction in finished lots (lots builders started homes on removing them from the finished lot inventory) since Q1 2010 when 573 homes were started (Q2 2014 had just one less at 460 new home starts)

There are currently 7 communities (704 SFR lots) under construction throughout Tucson. Of these up to 173 lots could be completed in Q3 2015 and would be added to existing communities.

There are approximately 79 active SFR communities in the Tucson Metro area. Five communities were built out during the quarter, but still selling the remaining specs: 3 in the NW 1 in the NE and 1 in the SE submarket. As many as eight more communities could build out in Q3 2015 based on recent building trends.

Lot Supply Statistics

Q2 ’15 vs. Q2 ’14 vs. Q2 ’13

Finished Lots: 3,420 / 3,811 / 3,734
New Lots Added: 236 / 365 / 183
Total New Lots Added – prior 12 mo: 1,007 / 1,510 / 384
Total Quarter Permits 607 / 617 / 565

* Oro Valley did not report permits for the month of June ’15
(Permit data from Bright Future Real Estate Research, LLC)

SFR Community Statistics as of June 30, 2015:

79 active traditional SFR communities
5 communities were built-out or closed in Q2 (most still selling specs)
5 new communities were finished or opened in Q2
5 communities under construction (526 lots / up to 129 could be finished in Q3)
up to 2 new communities could be added in Q3
14 residential land transactions in Q2 2015 totaling over $26.75 million
5 raw land or platted lot transactions
4 rolling options in 4 communities
4 investor land transactions
1 finished lot transactions in Q2

Lot Ownership

During Q2 2015 investor inventory was reduced by 37 lots. This reduction was from the Richmond purchase of the remaining finished lots in Los Arroyos from Kaufman Capital.

Builder controlled lots: 2,582 (75.5%)
Investor controlled lots: 839 (24.5%)

Investor Ownership Q2 2015:

43.1% Far South submarket (255 lots)
25.9% Northwest submarket (367 lots)
21.5% Southeast submarket (177 lots)
6.8% Southwest submarket ( 40 lots)

Saguaro Bloom

Saguaro Bloom – DR Horton

Sierra Morado

Sierra Morado – Pulte



There were 607 permits pulled in Q2 2015, not including Oro Valley permits which still have not been released, but have averaged between 7 and 17 per month in 2015. Once the OV permits are recorded, Q2 should have had more permits pulled than any quarter in 2014 (Q2 ‘14 had 617 permits) and all but Q1 of 2013 (644 permits). After starting out the year with permits under 200 each month, May and June were each over 200. We are trending positively but are still around 60 permits behind the first half of 2014 and 130 behind the first half of 2013.

Northwest communities of San Lucas, The Pines and Red Rock again had strong housing starts averaging over 4 starts per month per builder. DR Horton’s Saguaro Bloom community had a breakout quarter with 43 starts between the 3 communities. In the Southeast Pulte had 37 starts in Sierra Morado and KB had 16 in La Cima Esplendora. We anticipate these strong housing start numbers to continue into Q3 following the higher permit numbers of Q2.

Based on current building trends, as many as 8 communities could build out in Q3. All of the lots currently in development that should be completed during Q3 are additional phases to existing communities. We anticipate the overall number of communities will continue to drop in 2015. We still anticipate there to be a modest increase in permits in 2015.


Deset Willow

Desert Willow – Pulte


Miramonte at Glenn

Our lot supply numbers represent only traditional SFR lots. We do not track multi-family, active-adult, or custom lots. Our definition of a ‘finished’ lot is one that is fully improved and a building permit can be pulled. Lots are no longer considered available once trenching has been initiated. Sales do not affect our counts – only starts. Builder lots include all lots under their control, including options.

We currently do not include platted lots in our inventory or ownership counts. However, there is an increasing amount of activity from both builders and investors in acquiring raw and entitled land in the Tucson area. We do track them and will include them in our counts as they are developed.

Investor lots include investors, developers and other non-builders.

* Permit data from Bright Future Real Estate Research, LLC


About Our Company

CHAPMAN LINDSEY Commercial Real Estate Services, L.L.C. was formed in 1991 by successful real estate professionals who wanted to better serve their clients. As a full service commercial real estate company, CHAPMAN LINDSEY offers brokerage and leasing services with an emphasis in vacant land sales. CHAPMAN LINDSEY’s three partners combine over 76 years of commercial real estate experience to provide a focus of expertise in the areas of land, investment properties, property
leasing, acquisition and deposition services, and tenant representation.

The company is an active member of the Southern Arizona CCIM (Certified Commercial Investment Member) Chapter and the Tucson Association of Realtors.

Dan Feig and Aaron Mendenhall specialize in the sale of land and developed lots to investors, developers and home builders in Pima County.


CHAPMAN LINDSEY has closed over $600 million in transactions.
CHAPMAN LINDSEY has also closed over $125 million in land alone in the past 6 years.
CHAPMAN LINDSEY has exclusively represented the following home builders with the purchase or sale of their own land/excess inventory;

Cornerstone Homes, DR Horton Homes, Ducati Homes, KB Home, Lennar Homes, LGI Homes, Maracay Homes, Meritage Homes, Milestone Homes, Miramonte Homes, Pepper-Viner Homes, Richmond American Homes, Standard Pacific Homes and TJ Bednar Homes

If you are looking to buy or sell land, please contact us to discuss how we can put our expertise to work for you.

Daniel Feig / 520-747-4000 x103


Aaron Mendenhall / 520-747-4000 x102