Since moving to the Tucson Foothills in 2000 I've watched the Foothills morph into an area of more and more expensive homes.
As in many cities, high rates of home appreciation have contributed to this, but also, in the Foothills virtually all the new construction in the past seven + years has been at the upper-end of the market - big expensive homes. No one is building $400,000 homes in the Foothills. By mid 2003, when the country and the stock market began to recover from the effects of 9/11, luxury home building in the Foothills really started to take off.
And while a big chunk of that luxury home building took place in Pima Canyon and a few other luxury subdivisions in the Foothills, soon every nook and cranny of the Foothills was fair game.
Large multi-acre estates from the 40's and 50's were being split into 1 acre lots to make room for new luxury homes. And older homes on lots scattered throughout the Foothills were razed, and in their place $1,000,000+ McMansions were built. And more recently, builders started putting up big expensive spec homes on less desirable lots. Lots that are next to roads, or homes squeezed onto small hillside lots, where the house overwhelms the setting.
Because of this rush of luxury development I started wondering how that has effected the rates of appreciation in both luxury and more moderately priced communities in the Tucson Foothills.
Overall, single family homes in the Tucson Foothills have appreciated +82% between 2000 and 2007 - based on average sale price-$371,937 in 2000 - $677,050 in 2007 = +82%.
(and that's down 3.7% from 2006)
Looking at the average sale price and % of appreciation in five upscale communities and five mid-priced communities, here's what I found.
Average Sale Price by Subdivision 2000 to 2007
2000 2007 %
- Pima Canyon $717,375 $1,629,536 +127%
- Ventana Canyon Est $869,500 $1,232,500 + 42%
- Skyline CC Est $692,324 $1,118,586 + 61%
- La Paloma Est $941,428 $1,600,000 +70%
- Catalina Foothills 10 $637,750 $1,398,100 + 119%
- Fairfield Sunrise $290,147 $595,115 +105%
- Shadow Hills $332,124 $618,068 + 86%
- Villages of Ventana $247,285 $503,320 +103%
- Cimarron Fthls Est $353,140 $635,681 + 80%
- Catalina Fthls 7 $352,162 $758,333 +115%
In the luxury communities listed above, the cumulative appreciation has been 419%, or an average of 84%. While in the mid-priced communities it's been a whopping 489%, or an average of 97% during the same period.
between the lines,
And there's a key difference at play when comparing the two types of communities that the numbers alone don't explain.
In these mid-priced communities, there have been very few, almost none, new homes built in the last seven years, so the appreciation that we're seeing, is just that, appreciation on existing homes.
So maybe the stable inventory, and the rising tide of higher priced luxury homes in the Tucson Foothills has benefited the mid-priced market.
While in the luxury communities, and in Pima Canyon in particular, there's been lots of new construction, and increasingly that new construction is for ever larger, more exotic, and more expensive homes. So while the figures are accurate, they reflect more than just appreciation on existing homes. They also reflect the higher cost of more exotic homes being added to the mix.
Pima Canyon opened in 2000, and added 290 luxury homesites to the Foothills in one swoop.
But this goldrush mentality to build more and bigger luxury homes, and to do it anywhere and everywhere you can, has gotten way ahead of the market.
At $1.5 to $2.0mil, there is now 51 months of inventory.
At $2.0mil and up, there is 63 months of inventory, in the Foothills.
While up to about $700,000 there is just 8 to 9 months of inventory.
And despite the increasing popularity of the Foothills as a destination for luxury home buyers, it is difficult to imagine that the luxury market is not going to suffer reduced appreciation, for at least the next year or two, as a result of rampant building.