For the first time in a long time, a new master-planned community is opening in Phoenix. Even more unusual, unlike most new developments that are catering to starter-home buyers, this one caters to the move-up market.
Lennar is opening a sales center and three model homes at Estates of Lone Mountain in Phoenix's high-end northeast area this weekend on the eve of Super Bowl Sunday. Pulte, Lennar's partner in the 600-acre development, is planning to start sales in April.
Lennar Arizona division president Alan Jones said the homes, to be priced from the mid-$400s to the low $500s, will be entry level for the Northeast Phoenix market, which borders well-to-do Scottsdale. Most of the homes in the area are custom homes in the $900,000 range, he said.
Most lots in the area are an acre or larger, but since all the Lone Mountain lots back up to washes with no homes behind them and the density at 800 homes on 600 acres is low, buyers will get the feel of a large lot home without having the land to take care of, said Jones.
Lennar's houses will also be generously sized from 2,878 square feet up to 3,811 square feet, and they'll be decked out with granite countertops, pavers, three garage bays, and other higher-end details that buyers of custom homes consider standard.
Jones said being able to provide that much house in a gated community surrounded by much higher-priced houses should make the community a winner. However, he's not expecting high sales. "At this point, if we can do a couple a month, we are happy," he said.
It helps that Lennar and Pulte bought the land from the Arizona State Land Department in 2000 before the price run-up, so its cost basis is lower than land bought at the peak.
"That's why we've gone ahead with it," Jones said. "We are going to be conservative, and we are going to do it very slowly, and we are not going to go out and develop 100 home sites at a time, just 48.
Pulte, which plans to open its portion of the community in April with homes priced from the low $300s, also is offering a high degree of customization to appeal to buyers who might normally want a custom home, said Graham Epperson, vice president of sales for Pulte Phoenix East.
Buyers will be able to change room configurations, extending laundry rooms or garages, for instance. And they'll be allowed to choose different trim packages inside. "Things that you haven't really seen in production building for quite some time," said Epperson.
Both Epperson and Jones said they see positive signs that the market has begun to turn around and are in the expansion mode to be ready for it.
Jones said Lennar bought three new communities in Phoenix last year and has a fourth in escrow. Most were finished lots that were bought for less than it would cost to develop them.
"We feel good about things," said Jones. "We see signs of the market picking up. We have a ways to go, and it's still going to be a battle. But we are being conservative about it, and we are not going out and trying to build four or five homes in a community in a month."
Still, the company has been raising prices in some of its Phoenix communities.
"We were building 2,400 homes, and now we are at 400. But we're right-sized for it," he said.
Pulte, too, is growing in Phoenix.
"We have purchased numerous properties throughout the valley for future development," said Epperson. "We are looking at finished lot opportunities, but we are also looking at positions that might require some development on our part."
"Phoenix is a great market that still has good in-migration, and when the environment turns, we feel like we have a great opportunity to capture additional market share," he added. "We are seeing some very positive indicators out there. We've seen traffic as of late starting to increase. We are seeing folks turn away from the short-sale and foreclosure market and once more looking more seriously at creating the home they want to live in."
Lennar isn't the only builder opening up new product in Phoenix over the next few weekends to kick off the spring selling season, said Michelle Mace-Basha of M3B Inc., a sales and marketing company in the area.
DMB's Verrado opened a new community within an existing master plan in the West Valley last weekend, and Joseph Carl Homes is opening a master plan within a master plan called Canta Mia in the South Valley.
"There is this trifecta of openings in the valley by developers of sign means and builders of stability," said Mace-Basha. "I view the three of these pieces as signs that builders are showing a commitment to the valley."
"There is some optimism surrounding the valley, [but] I would say its cautious optimism," she added.
Learn more about markets featured in this article: Phoenix, AZ.