They’re willing to pay more but want better value

Glen Creno and Catherine Reagor Burrough
The Arizona Republic
Jan. 18, 2005 12:00 AM

ORLANDO – Buyers are more willing to stretch their budgets to purchase a home, and they are demanding homes tailored to their needs.

Builders are under increasing pressure to identify and serve an increasingly fractured marketplace of buyers, according to new research.

The new spending clout is being wielded by minorities, one-person households, baby boomers and women, who frequently have the final say over how and when families make big purchases.

“Consumers are willing to go for a smaller lot, but they want a lot more of everything else,” said Gopal Ahluwalia, vice president of the research economics group at the National Association of Home Builders, the trade group that put on the annual convention where the market research was unveiled.

Consumer experts and economic researchers at the International Builders’ Show in Orlando last week identified these powerful forces changing the way homes are designed and built:

• One fourth of all home buyers last year were minorities, and that figure is expected to increase.

• More one-person households purchased homes than ever before.

• Most buyers say they would purchase an existing home before a new standardized tract home.

• Minority buyers are twice as likely as a White home buyer to buy a downtown home.

• More ethnic buyers are asking for specific amenities in homes such as feng shui designs and two master suites.

• Female buyers want time-saving and efficient designs and amenities, such as foyers with “drop zones” where they can leave keys, plug in a cellphone and hang a purse.

• Buyers are willing to trade longer commutes to find a house they can afford with all the amenities they want.

Since 2000, the median size of a new U.S. home has hovered around 2,325 square feet, but the median price of a new home has climbed almost 28 percent.

The typical new U.S. home sold for about $214,000 at the end of 2004.

In metropolitan Phoenix, the median price of a new home has increased almost 40 percent during the past five years to reach almost $190,000.

Recently, Phoenix surpassed Atlanta to become the nation’s biggest home-building market.

Numbers for single-family home permits in the Valley are expected to top 60,000 for 2004, according to R.L. Brown, publisher of the Phoenix Housing Market Letter.

The magazine Better Homes and Gardens released the results of a housing survey it did last year that found the top issue with home buyers is affordability.

Karol Dewulf Nickell, editor of the magazine, said buyers aren’t necessarily looking for low-cost housing.

She said they are looking for all the amenities and space they can get for the lowest price.

Subdivision’s houses to be all concrete

Luci Scott
Arizona Business Gazette
Jan. 6, 2005 12:00 AM

Dave Keller is building a rare subdivision of concrete homes.

The concrete increases energy efficiency and makes the homes quieter and resistant to termites, mold and fire.

The subdivision, Sunset Trails IV at 40th Avenue and Lone Cactus Drive in northwest Phoenix, will contain 34 homes of 3,000 to 4,000 square feet, including full finished basements and inside and outside concrete walls, selling for $115 to $120 a square foot.

“That’s comparable with 2-by-6 (wood frame) construction prices,” Keller said. ”

Houses in some neighborhoods have been built of concrete blocks, and some newer custom homes have been built with concrete walls.

Concrete homes are more common in California, Ohio, Indiana and New England.

Given that concrete homes cut utility bills and have other advantages, why haven’t more been built in Phoenix?

“The builders here are set in their ways,” said the project’s engineer, Mike Spurling of Gilbert.

“I’ve been here since ’97, and from what I’ve seen, they’re not progressive at all. Most of them I’ve talked to have the attitude of if it’s new, it’s not any good and they don’t want to do it.”

The subdivision’s building material is not even new, he said. The walls are being built with insulated concrete forms, made of concrete and foam.

“ICFs have been out for years,” Spurling said.

ICFs are becoming more popular across the nation, the National Association of Home Builders reports.

Keller’s homes will be territorial Southwest with a smooth stucco finish, flat roofs, parapets and wood veneer garage doors. Work on the first homes is expected to begin this month.

Keller said the walls will have an insulation rating of R-50, compared with wood frame houses, whose walls are traditionally R-19.

R-value ratings measure the ability to resist heat flow, and the higher the R value, the more effective the building material.

Phoenix architect Jonathan Peiffer, who is accredited by the U.S. Green Building Council and versed in environmentally friendly design, said there is no scientific evidence to prove whether an R-50 rating can be achieved.

“But whether they reach R-50 is not the point,” said Peiffer, who is not working on this subdivision. “The issue is does it perform much better than wood frame, and this is definitely an improvement over traditional construction by a long shot.”

Keller said his roofs will rank at R-48; they will be made of structurally insulated panels containing 12 inches of polystyrene. Interior drywall will be attached to recycled plastic that is part of the forms.

The walls of concrete also will make the homes quieter, Keller said.

“Houses typically built aren’t soundproof,” Keller said. “You close the door to this house, it’s like closing the door on a Cadillac.”

Keller said he is building and selling the homes at comparable costs to stick-built homes.

Keller’s company is 4 Investors, named for the four principals: Keller and his wife, Marsha, and their partners, Bob and Glenda Salars.

Taryn Holowka, spokeswoman for the U.S. Green Building Council, said the fact that Keller is not killing trees to build his homes is not automatically an environmentally friendly thing because some wood comes from well-managed forests.

“But it sounds like (Keller’s homes) would be energy efficient,” she said.

All of the lots in the subdivision are reserved, but Keller is taking backup offers. He said he has another project of concrete homes on the drawing board at Interstate 10 and Val Vista Road; it will have 61 larger homes on lots of 1 or 1 1/4 acre.

Mike Padgett
The Business Journal

Orpheum Lofts is the first historic office building in downtown Phoenix to undergo conversion into residences — and its first resident is Diane List of Michigan.

List arrived in Phoenix just in time to spend Christmas Eve in her new 1,000-square-foot loft, and she’s been sitting on the floor with her laptop cruising the Internet for furniture. List’s arrival in her loft makes her downtown Phoenix’s newest resident.

She and her late husband, Don, about two years ago decided to buy one of the lofts as an investment. But since his death early this year, List decided use her new loft as a part-time residence. She has family in the Valley.

“We looked around the Phoenix area, and we became intrigued with the lofts starting to go up in downtown Phoenix,” List said. “When we saw Orpheum Lofts, we decided that was the future of Phoenix.”

List is a psychologist, like her late husband. She owns several mental health clinics in central Michigan. Before her husband died in January, he urged her to keep the property.

“One of the last things he said was, ‘You keep that place in Phoenix. You’ll like that. That’ll be a good place for you,’” List said.

One of List’s first stops when she arrived in the Valley was IKEA in Tempe, where she bought a mattress. But before she starts her furniture buying, she wants to live in the loft a few days “to get a feel for the space.”

“I was going to move some mid-century modern furniture from Michigan, but I want to make sure that it feels right,” she said.

The former office building at 114 W. Adams St., known in its first life as Phoenix Title & Trust Building, was built in 1931. It has been undergoing renovation by TASB LLC, a Denver-based developer, and The Weitz Co. in Phoenix. Norman Sheldon, one of TASB’s principals, said other residents at Orpheum Lofts are expected soon. He said only two of the building’s 90 units remain unsold.

While List was on her way to the airport Dec. 23 in Michigan, with her ticket to Phoenix in hand, she was driving through freezing weather. Meanwhile, Sheldon was in the Orpheum Lofts building, supervising the renovation, and anticipating List’s arrival. He checked out the building’s exercise equipment and the basement lap pool, fitted with equipment so residents can swim against the current. The pool is 12 feet wide by 25 feet long.

List closed on her loft during the Thanksgiving holiday while she was in Phoenix. She visited her family in the Valley, but she stayed downtown at the Wyndham Phoenix Hotel. She walked to local restaurants and attended a Phoenix Suns game at America West Arena.

“I’ve seen a change downtown since we put our deposit down two years ago,” she said. “The more people get interested in the area, the better it gets for all of us.”