Current Weather
The Spy FM

In Phoenix, ‘Zombie’ Subdivisions Rise From The Dead

Filed by KOSU News in Business.
June 28, 2013

Developers in Phoenix are scrambling to keep up with another frenzied demand for housing. During the Great Recession, homebuilders in the suburbs abandoned neighborhoods that were only half-built. These so-called zombie subdivisions left a ring of unfinished construction around the city.

But now, the zombies are waking up.

When the housing party ended five years ago, Phoenix was left to clean up the mess. Since 2009, the city has received $116 million in federal stimulus money, teamed up with builders and gotten to work on reviving housing developments like Gordon Estates in South Phoenix.

In Gordon Estates, work crews are putting the final touches on 14 new homes that are just about move-in ready. Chris Hallett, who runs the Phoenix’s Neighborhood Services Department, says he’s running out of foreclosed properties to resurrect.

“The inventory out there is slowing,” Hallett says. “That’s a sign of a good economy, and that’s a sign that our work here is just about done.”

The housing recovery in Phoenix is in full swing and the supply of existing homes can’t keep up with buyer demand. In response, builders began snatching up empty lots late last year. The easiest targets were the zombies already equipped with sewers and streetlights.

“The opportunity to acquire distressed lots or failed communities is long gone,” says Dave Everson, president of Mandalay Homes. “They’re now in the hands of people that are either building them or are in the process of getting started to build them.”

Everson’s company helped finish Gordon Estates, and Everson himself has bought a half-dozen distressed subdivisions. And he has reason to be optimistic about their future: The number of new-home sales in April was up 27 percent compared with the year before.

During the recession, builders recalibrated: They drew smaller floor plans, cut back on fancy amenities and designed denser neighborhoods.

“As an industry we tooled up for that,” Everson says. “But what we are finding is, as the market’s healing, we probably underestimate consumers’ desire for a little bit larger home.”

On average, new homes sold were about 30 percent larger than existing homes that were, says Mike Orr, a housing researcher at Arizona State University. Parents need bigger houses to accommodate their unemployed adult children, he says. But more likely, it’s just industry picking up where it left off.

“I think the city planners would like to have much denser city centers with tall buildings,” Orr says. “But the builders know how to make money doing it the old way, going out on the outer fringes.”

Around Phoenix, about 350 subdivisions are actively selling new homes. In a normal market, that number is more than 600. But it takes time to recover, Realtor Greg Swann says.

“This year is definitely better than two years ago,” he says, “but there are limits to the enthusiasm that you can express for this.”

Two years ago, in a zombie neighborhood in West Phoenix, the only things you would see were fire hydrants emerging from the desert floor and sidewalks leading to nowhere. But today, you will find crews working on about a dozen big homes.

And when construction is really moving in Phoenix, Swann says you’ll know it.

“If there’s a truss on a truck in front of you every day when you’re driving on the freeway,” Swann says, “if you’re trying to angle around that truss because you can’t see, then they’re building houses.” [Copyright 2013 KJZZ-FM]

Leave a Reply

9AM to 10AM The Takeaway

The Takeaway

A fresh alternative in morning news, "The Takeaway" provides a breadth and depth of world, national and regional news coverage that is unprecedented in public media.

Listen Live Now!

10AM to 11PM On Point

On Point

On Point unites distinct and provocative voices with passionate discussion as it confronts the stories that are at the center of what is important in the world today. Leaving no perspective unchallenged, On Point digs past the surface and into the core of a subject, exposing each of its real world implications.

View the program guide!

11AM to 12PM The Story

The Story

The Story with Dick Gordon brings the news home through first-person accounts. The live weekday program is passionate, personal, immediate and relevant to listeners, focusing on the news where it changes our lives, causes us to stop and rethink, inspires us.

View the program guide!

Upcoming Events in your area (Submit your event today!)

Streaming audio and podcasts

Stream KOSU on your smartphone

Phone Streaming

SmartPhone listening options on this page are intended for many iPhones, Blackberries, etc. with low-cost software applications available to listen to our full-time web streams, both News on KOSU-1 and Classical on KOSU-2.

Learn more about our complete range of streaming services

We're perfecting the patient experience - Stillwater Medical Center