The Arizona Republic

Nov. 13, 2005 12:00 AM

Pinal County is in the midst of a land rush.

Developers are paying record prices for large parcels on the southern fringes of metropolitan Phoenix in anticipation of more home buyers heading that way to find the biggest house for their buck.

More than 600 big land deals worth at least $1 billion have closed in Pinal during the past year. New residential developments are forming a horseshoe-shaped new southeast Valley, spanning from the city of Maricopa down Interstate 10 to Eloy and northeast to Coolidge and Florence.

These small, sleepy towns, bypassed by new freeways and growth decades ago, are now poised to become fast-growing Phoenix suburbs.

Driving developers are forecasts for the Valley's population to almost double by 2030 and projections for at least 50,000 new homes each year until then. As East Valley cities such as Chandler and Gilbert run out of land, Pinal could capture a bigger share of the home-building market.

In a few years, 40 percent of all new Valley homes could go up in Pinal, said Phoenix Housing Market Letter Publisher RL Brown, who just upped his forecast for home building in the emerging suburb. Now, the West Valley dominates new-home building, with half of all houses going up there.

If Pinal were to capture a 40 percent stake in home building in the Valley, that could mean about 20,000 new houses a year in the county. Last year, 17 percent of all new Valley homes, about 10,000, went up in Pinal.

"Pinal is where the land is," Brown said. "And so far home prices have been reasonable enough to draw the buyers."

Affordable homes

New homes selling for almost half of what one would cost in Chandler or Mesa is what launched Pinal's housing market. In the late 1990s, land prices jumped in the East Valley, so home builders made the leap to Casa Grande. New subdivisions with houses starting at $75,000 sold out quickly. Most buyers were from the Valley and were willing to trade a longer drive on Interstate 10 for a bigger house and smaller mortgage.

Northern Pinal County has long been considered a possible suburb for the Valley. In the early 1980s, planners envisioned a community of 200,000 people, called Stanmar, on 45,000 acres that had been bought by Phoenix investors, including former Circle K Chairman Karl Eller. That deal collapsed with the real estate market in the early 1990s, but housing-market watchers didn't forget about Pinal.

About the time builders started putting up homes in Casa Grande, which is about 50 miles south of downtown Phoenix, investors started buying up fields of cotton, melons and alfalfa farther out in Pinal County.

In 2000, Johnson Ranch opened up along the Hunt Highway on the way to Florence. Homes in the golf course community started at $75,000. The typical new home in the Valley was selling for twice that much. Almost 1,000 new homes sold in the then far-flung development during its first couple of years, making it one of the top-selling developments in the country.

It was a shock for Pinal government. Home-building permits were still counted by hand in the county known for its farms and prisons.

In 2001, Rancho El Dorado opened on the other side of Pinal's horseshoe in the city of Maricopa. Houses were going for $90,000, and 100 were selling each week for the first few months.

Pinal's housing market has grown as home building has climbed in the Valley.

About 36,000 new homes went up in metro Phoenix in both 2001 and 2002. Last year, the Valley led the nation for new home building with almost 61,000, and the market is on track to at least meet that record this year.

Big developments

Pinal's position as one of the Valley's next epicenters of growth was cemented in the summer of 2004.

Pulte Homes' Del Webb division bought land farther along the Hunt Highway, where it's building one of its amenity-rich Anthem developments.

Del Webb has been a pioneer in extending the Valley's boundaries with its developments and enticing buyers to line up or even camp out to buy one of its homes.

Besides its Sun City projects in the northwest Valley, Del Webb's Terravita project was one of the first big gated communities in north Scottsdale when it opened in the early 1990s.

Then, in the late 1990s, it took the Valley north to almost New River with its first Arizona Anthem development.

"When Del Webb bought its land near Florence last year, the value of Pinal County land doubled," said Nate Nathan of Scottsdale-based land brokerage Nathan & Associates. His firm has brokered many of the big sales in Pinal.

Del Webb paid $87 million for its 3,200-acre Merrill Ranch project near Florence, where it's planning 9,000 homes. The site cost about $27,000 an acre. If Del Webb could find a site that large in Gilbert, the land would cost at least triple that amount.

No home price figures are available for the development yet, but the average house in Johnson Ranch is now selling for $185,000. The overall median price of a Valley home is about $260,000.

Already, 5,000 people have signed up for the chance to buy a home next year in Del Webb's Pinal project.

In June, another Valley housing pioneer staked a claim in Pinal. The Pivotal Group, known for its upscale housing like the Esplanade Place condominium tower in Phoenix's posh Camelback Corridor area, is developing a 3,200-acre project in the small city of Coolidge. It's the city's first master-planned development.

Nathan said land prices in Pinal are now triple what they were a few years ago, but developers continue to buy.

In the past few months, Engle Homes bought the 4,000-acre Red River project south of Rancho El Dorado. Johnson Ranch developer Sunbelt Holdings recently went deeper into Pinal to buy 4,500 acres in Eloy.

Veteran Valley builder Garth Wieger is extending the horseshoe to the west. His group bought 1,000 acres in the tiny town of Mobile.

"Developing homes in Pinal is a value play," said John Graham, president of Sunbelt. "To get people to drive, you have to give them more house for their money."

Rising land prices means higher home prices, and Graham said that makes transportation and jobs big issues for Pinal.

Ready for growth?

Developers and city officials alike are concerned that Pinal isn't ready for all the new developments.

A recent study by economist and real estate investor Elliott Pollack called into question the typical methods for transportation planning in central Arizona. It said population projections dictating freeway construction are lagging Pinal's actual growth.

He said Pinal needs the same sort of extensive freeway planning that Maricopa County undertook to put together its system.

Besides roads and freeways, Jim Thompson, Casa Grande's city manager, said Pinal municipalities face big challenges in planning water, sewer and other basic systems needed for new developments.

New home-building permits in Pinal have already shot up 100 percent in the past year.

But there were delays in processing that translate to longer construction times for builders.

Pinal leaders, city officials and developers have formed a new group, the Pinal Partnership, to help the county's rural areas prepare for growth.

The population of Pinal County, which has about 250,000 residents, is expected to grow to about 1 million in 20 years.

But housing analysts say that for Pinal to continue to grow and entice people to make the commute, home prices in the area must stay lower than much of the rest of the Valley.