Metro Phoenix growing at its fringes again with new homes

• Earlier this week, a group paid $35 million for almost 1,100 acres in Peoria's Lake Pleasant Heights development
• Last fall, a California investor paid $80 million for more than 10,000 acres in the Tartesso development, west of the White Tank Mountains
• More than 18,000 new houses went up in the Valley during 2016, the most in nearly a decade

Metro Phoenix’s edges are getting stretched with new-home developments again.

It’s been awhile since we have grown out with big communities instead of in with smaller infill sites.

But recent deals for big swaths of land are spreading the Valley farther north toward Lake Pleasant, past the White Tank Mountains in the west and farther south towards Tucson.

Last week, a group paid $35 million for almost 1,100 acres in the planned Lake Pleasant Heights property in Peoria. Plans call for 2,800 houses in the development, said broker Mike Schwab of Land Advisors Organization.

• Last fall, a California investor paid $80 million for more than 10,000 acres in the Tartesso development, west of the White Tank Mountains. The Buckeye community could sprout nearly 40,000 new homes, according to brokerage Nathan & Associates.
• In September, one of Arizona’s biggest landowners, El Dorado Holdings bought 1,100 acres in the Bella Vista Farms development near Florence for $38.4 million.

Several small deals for land farther out have also closed, and some bigger ones are in the works as builders run out of home lots closer in.

Communities getting reboot

These far-flung Valley communities, where investors and developers are now spending big dollars to buy, aren’t new.

They are developments that stalled with Phoenix’s growth and housing market during the crash. Most have sat nearly empty since 2006.

But buyer demand for new homes in metro Phoenix is finally recovering. More than 18,000 new houses went up in the Valley during 2016, the most in nearly a decade.

The number of new houses expected to go up in the Phoenix area this year is expected to top last year’s pace by a few thousand and then keep climbing in 2018 and on.

To keep up with demand, investors and builders are buying these big tracts of land farther out.

“Infill is a great trend for Phoenix, but much of the Valley’s future growth will happen outside of the freeway ring,” growth expert Greg Vogel and CEO of Land Advisors, told me.

He said last year, only 10 percent of new-home permits in metro Phoenix were for infill developments.

Finding bargains farther out

The multimillion-dollar question for investors and builders buying land on the Valley’s edges is whether homebuyers will make the trek.

Recent land buyers are betting they will because half the area’s existing new subdivisions will be out of land and houses for sale by the end of the year.

Also, if it’s about finding the biggest home for their buck, buyers will need to go farther out. New-home prices in neighborhoods closer in across Chandler, Mesa, Gilbert, Peoria and Surprise as well as north and south Phoenix have climbed during the past few years.

Prices are expected to keep rising with demand this year.

But whether new-home prices climb next year and beyond will depend on how far out many buyers are willing to go.

Lake Pleasant Heights, where developers invested $35 million last week, is right next to Vistancia, which ranks No. 15 nationally for the most new- home sales.

Arizona housing analyst Jim Belfiore told me builder D.R. Horton has already sold more than 40 homes in Tartesso, the development west of the White Tanks that recently sold.

Prices for new houses in Tartesso start at $150,000, less than half the typical price of a new Valley home.

So dozens of new homebuyers have already decided they will flock to the fringes of the Valley to find a bargain.