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Old 02-15-2009, 09:52 AM
 
Location: Tempe
1,832 posts, read 5,739,871 times
Reputation: 1738

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I know everyone loves the live on the other edges of town just know hat you are getting into

Housing pattern crippled Phoenix

Quote:
Outskirts suffer from failed blueprint of development

Phoenix grew into the nation's fifth-largest city through a reliable pattern: Build affordable homes on the metro area's edges, welcome waves of new buyers, and then roads, schools and retail centers follow.

Home buyers relied on that pattern. Buy an affordable home on the edge, watch it quickly appreciate, then sell at a good profit and move again to a bigger home in an established area.

Builders and all the other businesses of the real-estate industry relied on that pattern. Develop open land just beyond established neighborhoods, offer affordable houses, and watch the area grow into the Valleys' newest suburb.

Everybody seemed to benefit as metropolitan Phoenix swelled from 1 million people in 1955 to 6.5 million today.

One reason the current housing collapse has been so brutal in Phoenix is how suddenly that pattern broke down. In only a couple of years, the breakdown trapped people in unfinished communities much like a fast-moving landslide buries people in their tracks.

Digging into the rubble of Phoenix's latest real-estate collapse, the damage is clearest in the edge developments, areas where home values have fallen the most and foreclosures are highest. Homeowners on half-empty blocks feel stranded and frustrated. Down unfinished roads, empty corners, vacant strip malls and stalled school projects suggest the ghost of a community buyers counted on.

“We have too many empty and foreclosed homes in our neighborhood and not enough stores and jobs. I have to do a lot of my shopping online,” said Jennifer Barber, who lives in Goodyear's Estrella Mountain Ranch. “The way we are growing is not working. We aren't getting many of the basic things we were promised.”

On the same streets where stranded homeowners watch home values plummet, builders can't sell the vacant homes next door. Businesses that did move in are struggling. Others have decided not to come. Cities and towns that counted on tax revenue from new residents and business have seen their budget plans fall apart.

“We can't keep doing this,” said Shannon Scutari, Arizona's policy adviser for growth and infrastructure. “Our method for growing is broke, and there's no quick fix. We must have sustainable growth and solid ways of tracking and supporting it.”

In a state economy so heavily dependent on the real-estate industry, the rapid breakdown of that reliable pattern helped push Arizona into a recession.

Metro Phoenix home building has slowed to a crawl. Last year, 13,000 new home permits were issued, down 60 percent from 2007. Valley foreclosures hit a record 40,000 last year and continue to climb this year. Home prices are down 40 percent from 2006's peak because half of all homes selling now are foreclosures that lenders are reselling at bargain prices.

The damage can be seen in empty retail centers, in stalled or partly filled schools, and along narrow roads clogged with traffic because there is no money to widen them.

Retailers balk

Retail follows rooftops. Phoenix's familiar adage reflected the reliable growth pattern. Part of the breakdown in that pattern now is the reluctance or inability of stores to open in new neighborhoods. There may be many rooftops in an area, but that doesn't mean those homes are full. Builders still can't sell many of the houses they built in the Valley's fringes communities. Those empty houses and foreclosure homes dot every block.


Q&A: Four leaders in the Arizona real estate industry assess today's crash:
• Drew Brown
• Ioanna Morfessis
• Francis Najafi
• Margie O'Campo de Castillo

In Goodyear, for instance, the opening of the Estrella Falls mall was postponed last week for a second time. Shopping center developer Westcor now plans to open it in late 2011.

Another Goodyear shopping center, on Estrella Parkway, has only one tenant, a pizza parlor that opened last year. The shopping center sits near hundreds of new homes. The next closest place for people to shop and eat is a few miles away along Interstate 10.

Karen Madison lives in the neighborhood. She shares a car with her husband, who works during the day. “I feel stranded most days because there's nothing close enough for me to walk to,” said Madison, who sometimes walks a few miles, pushing her daughter in a stroller, to fill prescriptions. “We were so excited when we saw the shopping center go up just a few blocks away. But there's nothing there.” She shares a car with her husband, who works during the day. “I feel stranded most days because there's nothing close enough for me to walk to,” said Madison, who sometimes walks a few miles, pushing her daughter in a stroller, to fill prescriptions. “We were so excited when we saw the shopping center go up just a few blocks away. But there's nothing there.”

Arrested development

Stalled growth has impacted residents beyond just what stores are nearby. Schools, a cornerstone of a community, have been affected, as well.

Parents moved into new homes expecting the new schools that districts planned. Districts planned schools expecting growth to continue.

The downturn has pulled the rug out from those plans. Districts hire demographers to project K-12 student growth. Based on those projections, districts work years out to buy land and raise money for new schools.

When the real-estate market was booming, aggressive population projections led to aggressive school-expansion plans. Districts fast-tracked school construction to get ready for new students expected in the thousands of new homes.

When the growth pattern broke down, some districts canceled plans and put new schools on hold. In others, new schools may not have enough students to fill the buildings for many years.

There are few Arizona schools under construction now. The Senate approved a one-year moratorium on school building last June because of the state's big budget shortfall.

In Surprise, the Dysart District has a large new high school almost completed near Loop 303 and Peoria Avenue, - right across the street from a gated community of new homes and near several more planned housing developments. Many of the new houses are empty.

Construction on more homes in the area has been delayed for years. Maria Castenza is concerned that Dysart's Mountain View Elementary in her neighborhood will close because she sees fewer students on the playground and hears enrollment is dropping as more people move away or lose their homes. Her daughter is supposed to start kindergarten there in the fall.

In 2000, Dysart had 5,000 students. Today, it has 24,000. Dysart recently redid its demographic studies.

“We experienced hyper growth for a number of years,” said Jim Dean, a spokesman for Dysart School District. “Our growth has slowed down, but we are opening the new high school on schedule and don't have plans to close any schools.”

Another issue for Dysart's new high school is that the approach is still only a dirt road. The school district has approached the city of Surprise and offered to pay for paving the road.

Inadequate roads

A truism in the Phoenix real-estate industry has long been “buyers drive until they qualify,” meaning people drive farther out until lower prices allow them to qualify for a loan.

But road construction hasn't kept up with the Valley's growth. Real-estate agents don't take prospective buyers to communities along Pinal County's Hunt Highway early in the morning or after 4 p.m. in the afternoon. The bumper-to-bumper traffic is a fast deterrent for many buyers despite the very affordable homes in the far southeast Valley area.

Thousands of homes have gone up along the Hunt Highway since 2000, but the road is still mostly two lanes.

Mara Olivias works at the Burger King on Hunt Highway and lives a few blocks away in one of the area's new developments. Her husband drives more than an hour each way to his job in Scottsdale. She said once when there was a wreck on Hunt Highway it took him four hours to get home.

Hunt Highway has been widened to four spacious lanes in front of the Anthem Merrill Ranch community, but that stretch is more than 20 miles away from the Valley's big freeways and the highway's most congested intersections.

Last month, Pinal County shelved plans to widen one of the most congested stretches from two to five lanes. The problem is a lack of money. Stalled home building means a drop in fees charged to builders. Fewer fees mean less money to widen roads.

Annette Oberlander moved to a new home in Pinal County from Gilbert last year. She and her husband are retired, so traffic is manageable. But she won't go to the grocery store after 3 p.m. because it takes her a half an hour to drive 2 miles.

In the West Valley, traffic congestion on Interstate- 10 has become a problem for a number of edge developments.

DMB President Drew Brown, whose company is building Verrado in Buckeye, has said I-10 would have to be widened to 20 lanes each way to handle traffic from all the developments planned on the west side.

Residents of the Anthem community north of Phoenix know well how long it takes freeways to be widened. Anthem opened in 1999, and the widening of Interstate- 17 leading into and out of Phoenix is just being completed now.

Stalled growth could give municipalities time to catch up.

The economic stimulus money expected from Washington could fund some much-needed freeway expansions.

Federal money from last year's housing bailout bill is expected to reach Arizona this month to help neighborhoods hardest hit by foreclosures.
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Old 02-15-2009, 10:30 AM
 
2,942 posts, read 1,624,171 times
Reputation: 1726
People went out to the far reaches of the valley like Queen Creek to buy a house, because they were cheaper and they could qualify for the loan. They were just happy to be able to own a house. They were not worried about the long drive to work untill gas went up, and it became expensive to commute being that far out. Then their homes became unatractive to buyers and they lost the most value.
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Old 02-15-2009, 10:43 AM
 
Location: Slaughter Creek, Travis County
1,194 posts, read 3,960,929 times
Reputation: 977
Part of the problem was the artificially low interest rates and individuals not understanding ARMs. Plus, when a community's economic engine is based on construction, sooner or later an adjustment will occur. The metro Phoenix area needs to diversify its economy for it to have any sustainable, linear growth. The logarithmic growth experienced in the past 10-15 years was not healthy and probably is no longer possible.
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Old 02-15-2009, 10:43 AM
 
Location: Casa Grande, AZ (May 08)
1,707 posts, read 4,318,719 times
Reputation: 1448
This is one of the main reasons that when I decided to buy last year (May 08), I paid just slightly more to live in Casa Grande. I had already decided I wanted (and could only afford) to live on the outskirts. I was only looking at new builds.

I looked at QC (Johnson Ranch mostly), Anthem Merrill, Maricopa, and parts of Coolidge and Florence. All had prices about 10% less expensive that in Casa Grande, and commute is not an issue for me since I work from home. BUT, even with the slow down/stoppage of building in CG, at least CG already HAD many of the conveniences that make life liveable including the mall, hospital, big box stores, fitness centers etc.

Plus the access to both I 10 and I 8 was appealing just in case, as the article suggests has happened, road improvements were delayed.

Yes, even my development is only half built. I live in one of the model homes and got it just as they pulled out so got a very nice place at a really nice price. For now Im enjoying having no nabors on three sides of me, but realize someday they will build again. There are some shopping centers mostly empty, but there are many more well established ones, with lots of options.

The hopefully good news out here is that I am actually seeing SOME of those shops start to fill up recently, and for whatever reason there are actually a couple of builders throwing up models again in a couple places. Im not fully convinced it is quite the time for MORE homes yet, but then Im not in the business.

Also, our city govt seemed to do a pretty reasonable job of managing finances so even with the downturn and ton of foreclosures, the budget is still relatively intact and there are still capital projects in the works.

Anyway, what Im saying is I am really glad I didnt try to save that extra 10% last year. I am very happy with my decision so far. I had to live SOMEWHERE and I like the intangible benefits of home ownership vs. renting.
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Old 02-15-2009, 12:49 PM
 
Location: Sonoran Desert
38,957 posts, read 50,883,019 times
Reputation: 28135
That article is total fluff. You could have read the same drivel in each of the recessions of the last 40 years. When the current recession ends, as it will, the outskirts will once again blossom with new homes, shopping, schools and new residents. People want to live here and they want to live where they can have two car garage, a backyard, and a pool. That means growing out. It is not some developer plot - it is the free market.
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Old 02-15-2009, 04:20 PM
 
10,719 posts, read 20,213,565 times
Reputation: 10019
The problem wasn't so much that people couldn't afford to live in the central part of the valley but they wanted to buy luxury homes that were expensive yet cost half as much in the outskirts. To me, it's just part of the "living beyond your means" type of mentality. People couldn't just be content with an older home that was less than 1800 sq feet in the central part of the valley. They wanted a new home with all the bells and whistles even if it meant living in Queen Creek or near Maricopa.
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Old 02-16-2009, 01:49 PM
 
9,091 posts, read 19,137,552 times
Reputation: 6967
pretty sensational article

fails to mention all the new power centers that have opened within the past year that are closer to the hundreds of homes in goodyear then the one way down by the MC-85 which has a pizza place & an automotive place (meant to serve those who live down in that area, estrella etc)

also fails to mention that the widening of I-10 in the west valley is on schedule and was actually pushed forward due to some hard work by the cities - will be 5 lanes in each direction - in rush hour you won't hit a bottleneck until 83rd ave once it's done

i'd also like to see the exact quoted from the DMB president - 20 lanes sounds a bit like hyperbole to me

the growth pattern is fine and does work - the key element will be creating more jobs in the outlaying areas, then the communities are pretty much self sufficient

if you don't have that then you need a strong centralized jobs center with integrated public transit (including rail) to move people in

what hurt phoenix, vegas and other places was more speculative building as opposed to growth patterns
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Old 02-16-2009, 02:04 PM
 
Location: Sonoran Desert
38,957 posts, read 50,883,019 times
Reputation: 28135
Quote:
Originally Posted by Finger Laker View Post
pretty sensational article

fails to mention all the new power centers that have opened within the past year that are closer to the hundreds of homes in goodyear then the one way down by the MC-85 which has a pizza place & an automotive place (meant to serve those who live down in that area, estrella etc)

also fails to mention that the widening of I-10 in the west valley is on schedule and was actually pushed forward due to some hard work by the cities - will be 5 lanes in each direction - in rush hour you won't hit a bottleneck until 83rd ave once it's done

i'd also like to see the exact quoted from the DMB president - 20 lanes sounds a bit like hyperbole to me

the growth pattern is fine and does work - the key element will be creating more jobs in the outlaying areas, then the communities are pretty much self sufficient

if you don't have that then you need a strong centralized jobs center with integrated public transit (including rail) to move people in

what hurt phoenix, vegas and other places was more speculative building as opposed to growth patterns
The pizza place they mention does a booming business every day of the week. It's the only pizza anywhere near us (Estrella). People are backed up paying for takeout. There is a lot of demand for services from development around that area and from Estrella. I suspect the businesses that are slated to open in Estrella in September will do even better. New home sales in Estrella were UP 28% from 2007 to 2008. What housing slump? No, seriously, I understand things are bad. But the empty shopping is temporary and I, for one, am grateful for it. We drove up Estrella today and they are putting lights at several intersections near the new ballparks. Our quality of life is going the way of Ahwatukee. I fled there in the face of the onslaught of development following the early 90s downturn. Tartesso here we come.
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Old 02-16-2009, 03:33 PM
 
Location: Louisville, KY
1,590 posts, read 4,602,555 times
Reputation: 1380
the article is certainly reporting the truth!

when i first moved here i couldn't believe what people were paying for a home on a postage stamp, and the loans they were taking to be in them. Luckily i was able to sit back and wait. Too many times coworkers told me i had to get in before the price got too high. my response was always "i'll go back to Pennsylvania and live on 100 acres for that much". One co-worker was bragging about his home earning "about a hunny" in equity. I asked why not sell and rent for a little while and he told me that was insanity, the prices are just going to keep going up like they did in California.

Maricopa is full of people who moved here thinking it was the next scottsdale, and that their $250,000 home would double in value short term. They all believed every word that the sellers spewed about upcoming theaters, bowling alleys, restaurants, shopping centers, population growth and so on. The ones still remaining are complaining about the train noise and stock yards. As if these weren't there when they bought.

When i first got into a rental in Maricopa many people were complaining that the walmart considering a store in maricopa would decimate the town. Then the wave of foreclosures hit and many of those with their pseudo affluence got booted out of their oversized over priced homes. It is very odd to hear anyone speak out against the walmart now that it is on the verge of opening its doors. I like to think this opportunity allowed cities like Maricopa to fill up with more level headed people than those that used to occupy the city.

Maricopa is lucky enough to still have small amounts of commercial growth interest. There was a stall for a little while, but the local news site has had many stories of stalled developments getting ready to break ground as of late. Good news for the city, but i hope it doesn't turn this city full of shops with the owner is behind the counter into just another beige, faceless, corporate, cold suburb like the rest of them.
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Old 02-16-2009, 04:39 PM
 
Location: Arizona
824 posts, read 2,327,229 times
Reputation: 605
Quote:
"One co-worker was bragging about his home earning "about a hunny" in equity."
That sounds like someone in dire need of being worked over. I guess that he probably was, spreadsheet-wise.
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