Q3 2016 Tucson Land Update

TLU Header Q3 16

01 Oct Q3 2016 Tucson Land Update


Top: Blue Agave – Mattamy / Above: Fianchetto Farms – DR Horton

Builder Positioning in Tucson

Lot inventories, or the lack thereof, could shake up sales leaders

The Tucson housing market continued its upward momentum through the 3rd Quarter. While permits and house starts were below the stellar 2nd quarter numbers, they were still higher than any other quarter since the downturn. We are on pace to see 2,600 permits in 2016 and 1,800 single family house starts. It is good to see the sustained growth in the Tucson market and an improved outlook for the future.

As has been discussed in prior quarters, the single family finished lot supply is low. Over the past several years the builders and developers have taken notice and have been purchasing primarily raw and platted land around Tucson. These investments are paying off as new lots and subdivisions have been completed and introduced into the market at rates about the same as they are being built. Finished lot inventory bottomed out at 3,015 lots at the end of 2015 and has been holding steady around 3,140 throughout 2016.

Nearly 500 lots have been introduced in each quarter this year which has kept pace with the increased permits and house starts from the builders so far. It is interesting to compare the volume of new home sales to lot inventory levels and to lot development. Some builders have been more aggressive than others and are positioning themselves for future success as lot inventories throughout Tucson continue to tighten. Several builders who have enjoyed strong home sales are finding themselves in need of future lots to maintain their market positions. Comparing the top five builders in these different areas sheds some light on how builder ranking and positioning may change in the next few years.

When looking at new home closings over the 12 months ending September 30, DR Horton is the clear leader with 403 closings. Richmond was a distant 2nd with 261 closings with Pulte right behind at 221. Lennar was 4th with 172 closings and Meritage 5th with 149. KB Home and LGI Homes were the only other builders with more than 100 closings with 134 and 104 respectively.

The existing finished lot inventories of builders is much tighter.. Meritage currently controls the most finished lots at 321 with Maracay right behind at 316. DR Horton’s fast sales pace has depleted their lot inventory down to 294. KB Home comes in 4th with 265 lots and Lennar in 5th at 243 finished lots.

Pulte is currently has the most lots under construction with 310. Mattamy is right behind them at them at 308 lots. KB Home is developing 227 lots and DR Horton has 209. Meritage comes in 5th with 61 SFR lots currently under development. These numbers are what is currently being developed. Many builders have other lots currently going through the entitlement process that should start development within the next year or two depending on entitlement challenges, but it will most likely be at least two years prior to being ready to start constructing homes.

When combining existing lots and lots under development we see positioning that should be representative of builder success for the next year or two. This gives an idea of the lots that each builder will have to build on in the near future and highlights which builders need replacement lots the most. (see chart for details)

The top 5 builders with the most combined lots in Tucson are as follows: DR Horton – 503; KB Home – 492; Pulte – 441; Mattamy – 420; Meritage – 382. Please note that these numbers can change quickly as development of platted inventories begins.

Builders have spent over $26 million so far this year on platted or raw land with over 1,200 future lots. Last year they spent over $73 million for approximately 2,800 future lots. The timing of entitlements, approvals and development will determine their release to the market. These lots are coming but more will be needed as the housing market continues to strengthen in Tucson.

Please contact us for additional insight and information.

Builder chart - Inventory   Closings
Lot chart Q3 16
New Lot chart Q3 16
Starts chart Q3 16

2016 Residential Land Transactions

Comps Q3 16

Sales data from Real Estate Daily News / RED Comps

Casa Seton

Casa Seton – Miramonte


Market Overview

Lot Supply

Once again the finished lot supply barely changed in Q3, increasing by 9 lots with a total finished lot count of 3,149. There were 484 new finished lots added to the market in Q3: 89 lots in Compass Pointe at Gladden Farms (Meritage); 85 lots in Sonoran Ranch (KB Home); 72 lots in Oakmore Reserve (KB Home); 69 lots in Willow Vista (Richmond); 57 lots in Mountain Vail Estates (Lennar); 53 lots in Robb Hill (Lennar); 38 lots in Santa Rita Ranch (KB Home); and 21 lots in Red Colt Ranch (AF Sterling). Year to date, 1,575 new lots have been added to the market and 1,444 new homes have been started. During Q3 builders began construction on 475 new single family homes, 71 less than in Q2 but still more starts than any other quarter since Q1 2010.

There are currently 14 communities (1,100 SFR lots) under construction throughout Tucson. Of these up to 520 lots could be completed in Q4 2016. Five new communities could be added next quarter and additional lots will be added to existing communities.

There are approximately 78 active SFR communities in the Tucson Metro area. Four communities were built out during the quarter, but still selling the remaining specs: 1 in the NW, 1 Infill/Central, 1 in the SW and 1 in the Far South submarket. As many as 7 more communities could build out in Q3 2016 based on recent building trends.

*Communities not yet open for sales

Lot Supply Statistics

Q3 ’16 vs. Q3 ’15 vs. Q3 ’14

Finished Lots: 3,149 / 3,227 / 3,697
New Lots Added: 484 / 210 / 263
Total New Lots Added – prior 12 mo: 1,737 / 954 / 1,377
Total Quarter Permits * 662 / 544 / 538

(Permit data from Bright Future Real Estate Research, LLC)

SFR Community Statistics as of September 30, 2016:

78 active traditional SFR communities
4 communities were built-out or closed in Q3 (most still selling specs)
9 new communities were finished or opened in Q3
14 communities under construction (1,100 lots / up to 471 could be finished in Q4)
up to 6 new communities could be added in Q4
other future lots will be additions to existing communities
11 residential land transactions in Q3 2016 totaling over $10.8 million
4 finished lot transactions
3 rolling options in 3 communities
1 investor land transactions – raw land for future development
3 platted lot transactions to builders – 2 in NW and 1 infill

Lot Ownership

During Q3 2016 investor inventory decreased by 89 lots.

Builder controlled lots: 2,328 73.9%
Investor controlled lots: 821 26.1%

Investor Ownership Q3 2016:

57.8% Far South submarket (255 lots)
24.5% Northwest submarket (350 lots)
20.9% Southeast submarket (177 lots)
9.0% Southwest submarket ( 39 lots)

Linda Vista

Linda Vista Heights – Richmond

Santa Rita KB

Santa Rita Ranch – KB Home



Permits remained strong through Q3 with 662 permits pulled in the quarter. While 88 fewer permits were pulled in Q3 vs Q2, each month was over 200 permits. The 2,032 permits pulled in the first three quarters of the year is nearly 400 permits ahead of the 1,636 in the same period of 2015. Should the trend of 200+ permits per month continue, we should easily pass 2,600 permits this year.

New home starts in Q3 totaled 475 but were down 71 starts from the stellar Q2 starts. However, this was the still the 2nd highest number of starts in a quarter since the downturn. Tucson is on pace to start more than 1,800 new SFR homes in 2016. (remember this number will vary from residential permits due to multi-family, active adult and custom starts we do not track)

We anticipate Q4 to be similar to, if not slightly stronger than Q3 in permits and starts as many new communities open for sales. We anticipate 2016 finishing strong and the upward trend to continue into 2017.

Gladden KB

Gladden Farms – KB Home

Robb Hill

Robb Hill – Lennar

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

Sales comp data from Real Estate Daily News Comps (realestatedaily-news.com)


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



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