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Arizona municipalities trying not to slow down homebuilders amid surge

(Photo by Justin Sullivan/Getty Images)

This story is part of KTAR News’ “Arizona’s Rising Real Estate” weeklong special series on 92.3 FM, online and our app.

PHOENIX — At a time when the housing market in the Valley is desperate for more inventory, homebuilders are trying to keep up. However, they must get plans and permits approved first before they can have shovels hitting the ground.

That’s where attorneys like Jordan Rose come in.

The founder and president of Rose Law Group helps homebuilders process applications for things like zoning and land use in cities across Arizona.

“I would say that 95% of them at this point in time are welcoming the growth and removing red tape,” Rose told KTAR News 92.3 FM about municipalities. “Elected officials are filtering that message down to their staff and their management and saying, ‘Let’s figure out how to say yes, not no, and work on that with the developer as a partner.’”

She believes that’s due, in part, to municipalities wanting to make up for the economic slowdown they experienced during the COVID-19 pandemic.

Still, regulations remain that could make the homebuilding process difficult and costly for homebuyers.

A new study by the National Association of Home Builders shows regulations imposed by government at all levels account for $93,870 – or about 23.8% – of the average sale price of a new single-family home.

That’s up from $84,671 in 2016 and $65,224 in 2011.

Rose said in Arizona, homebuilders face regulations for things like roadways built prior to construction of model homes, the height of a roof on a home and the distance a garage can be from the front property line.

“There’s all sorts of issues that are problematic for developers, so it’s certainly no walk in the park,” Rose said. “But the attitude is ‘let’s figure out how to get to yes generally right now.”

Another challenge for homebuilders is a shrinking supply of land that’s available for development.

The Arizona State Land Department is helping out by opening more state land for development. It recently released 2,783 acres of state land in the far southeast Valley, which has seen tremendous growth over the past few years.

D.R. Horton Inc. and Brookfield Residential Properties Inc. submitted the highest bids in an auction for state land that sits in Apache Junction. The pair of homebuilders paid $245.5 million for it – more than three times the appraised value of $68 million – and plan to build a master-planned community there called Superstition Vistas.

The bid also came with another 5,500 acres of adjacent land that the homebuilders agreed to entitle and provide the infrastructure for future development.

“Construction will probably start right around the end of the year,” John Bradley, Arizona division president of Brookfield Residential, said. “It’ll take us probably another year to be prepared to sell to builders. D.R. Horton will probably be building homes middle of next year.”

Bradley said they got the land in November, and so far “we have not had any what we would call red tape challenges.”

“We have plenty of things that we need to work on with the city,” he added. “But we have been doing that very, very constructively.”

When it’s complete, Superstition Vistas will have about 10,000 homes with nearly 30,000 residents.

Anticipated amenities include paths, trails, parks that define a specific neighborhood, a community pool, and a community farm. There will also likely be a regional park with a lake, ball fields, playgrounds and a dog park.

Bradley said he believes there’s high demand for master-planned communities like this.

“The market has taken off,” he said. “This is a post-pandemic scenario that I’m not sure too many people saw coming. But it has been very, very strong and it seems to be continuing. I’m not sure that the end is in sight.”

Realtor.com recently ranked Phoenix third in the nation for building the most homes for buyers. The city recorded more than 8,600 building permits for new homes as of March.

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