Arizona Land and Farm News


Lots are Becoming Hot Property

A recent article in Realtor.Mag said that vacant lots are looking better and better as investments.  The price of a finished, ready-to-build lot can cost a developer about 25% of the finished home price.  With the lure of Tucson as a retirement place(read more on the Buyer page), and the amenities of Arizona, these lots - in abundance now with the recession - will be snapped up before long.

"The country needs 1.2 million new units for the next 10 years just because of population growth," says Scott Clark, president of American Development Partners, which has bought thousands of vacant lots all over the West. "[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant."

National Assn of Realtors sees a strengthening demand for land throughout the US in the coming years.  

Higher levels of equity in most land deals, combined with the growing demand for food and recreational space as the U.S. population grows, will help ensure long-term stability and a strong future demand for land.  More than half of all farmland owners are over 65 and will be considering sales.  In addition, retiring Boomers will fuel demand for more recreational ranch and timberland.

 “How the United States uses and preserves land is very important today and will be even more so in the future,” states real estate consultant and Boston College MBA Professor Frank J. Parker, CRE. “Development pressures will rise in the future decades due to a strong increase in the nation’s birth rate and in immigrants with permanent residency. Land usage demand will elevate accordingly.”   

A Growing Trend:  Buying Land for Recreational Value

Recent statistics show that the #2 reason for land investment now is recreation.  This is different from holding for appreciation - it means using the land for birdwatching, hiking, exercising your horses, fishing, and other hobbies.  One of the reasons land values are rising is the ability to use it "as is." 

Many buyers are holding land for future building, to retire or for 2nd homes.  Mobile communication has made telecommuting and home businesses available almost anywhere in the country.  Green technology is available to help control building costs - solar, for instance, in our part of the US is a very real benefit to lower energy costs. 

Some owners are taking advantage of the Conservation Reserve Program, using their land for recreation and growing plants that protect the environment.  So look at a parcel of land for sale as an investment with many uses and one that will provide you many opportunities in the future.

Farmland Soaring in Value

According to Realtor Magazine, farmland is hot property even now, with the rest of the economic news so grim.  The interest reflects rising profits from agriculture.  The magazine reported, "The U.S. Department of Agriculture estimates that farmers will earn a record $95.7 billion this year, 10.3 percent more than last year and 57 percent more than the 10- year average of $61.1 billion."

Politicians talked about the demographic shift during the recent election, but farming is seeing its own.  A lot of young people now want to farm - not just to stay on the farm where they were raised, but to move from crowded cities and the suburbs.

In some locations, the price of farm land is prohibitive, but Arizona - being out of the corn belt - has some great buys right now.  Look at the listings below and let me know if you see one that interests you.  It's a great time to consider farming and ranching!

When Phoenix and Tucson Merge

The Arizona Republic,  Catherine ReagorApr. 9, 2006

Phoenix and Tucson are heading for a collision.

Arizona's two largest metropolitan areas are on course to meet and merge within a decade, engulfing several small towns along the way.

The downtowns of the two major cities are separated by 120 miles. But their suburbs reach much farther along Interstate 10. Planned developments stretch 60 miles south of metropolitan Phoenix, deep into Pinal County. In Tucson, new projects are heading 40 miles north into Pinal, the only county that separates the two regions. That leaves only a 20-mile gap between the two cities' growth.

Urban researchers are calling the corridor a megapolitan, or "super-sized" metropolitan area, and see it spanning from Prescott in the north all the way south to Sierra Vista and the Mexico border. The Phoenix-Tucson stretch is the epicenter.

Dubbed the Arizona Sun Corridor by researchers, the megapolitan area is one of 10 expected to be the center of most of the nation's growth during the next 35 years. The combined population of metropolitan Phoenix and Tucson today is about 5 million. Forecasts call for the swath's population to top 10 million by 2040.

"Megapolitans are the future of the country's growth," said Marshall Vest, an economist and director with the Economic and Business Research Center at the University of Arizona's Eller College of Management in Tucson. "Phoenix and Tucson are already merging into one, but the growth is much more than just a corridor of land filling in."

Being part of a megapolitan designates an area as a growth magnet. Government is starting to look at the areas as places for better planning. That, along with projections for growth, can mean more federal money for projects such as freeways.

The megapolitan concept is more than just two cities' suburbs spilling across each other's borders. It's a combination of land-use, commerce and transportation planning that looks at vast areas as single entities.

"Phoenix and Tucson need to forget competing with each other and start working on economic development together to compete with other megapolitans," Vest said.

But not everyone sees the move toward megapolitan as a good one. Some like living and working in rural Arizona and don't want to become part of a booming urban center that could gobble up the identity of their small towns. If that happens, residents from some of those areas are likely to leave.

The notion of Phoenix and Tucson merging isn't new, but it is happening faster than most expected. Metropolitan Phoenix's record-breaking growth streak during the past five years is leading the charge for the cities to connect, but Tucson is also now growing rapidly.

"It used to be once you passed Chandler Boulevard on I-10 in the Valley, there wasn't much development until you passed Prince Road near Tucson," said Dale Baich, an assistant federal public defender who has been driving from Phoenix to Tucson every other week since the mid-1990s. "You had to plan ahead if you wanted to stop for gas or getting something to eat."

About four years ago, he started noticing more development around Casa Grande and in north Marana. Now, he makes the drive looking at new growth as far south as Eloy. As he dodges the many construction trucks heading farther out, he is watching for where Phoenix and Tucson will meet.

Megapolitans explained

Burb, edge city, outtown, node, hub and even metropolis, the precursor to megapolitan, have been used to define the country's growth from large cities out to fast-growing small towns and rural areas.

But megapolitan isn't just the latest catchword for new fringe growth. Statistics show that these areas are where growth will continue for decades. The U.S. Census has started using the term as a way to better track growth than the standard metropolitan statistical area. Megapolitans track an area based on future growth; an MSA relies more on core population.

More than 200 million people, two-thirds of the U.S. population, live in the 10 megapolitan regions. The combined areas are projected to add 85 million people, 64 million jobs and $33 trillion in construction spending by 2040, said Robert Lang, director of Virginia Tech's Metropolitan Institute and co-author of "Land Lines," a July report on megapolitans for the Lincoln Institute of Land Policy.

Lang, who is on sabbatical to teach a graduate class on megapolitans at Arizona State University, updated the concept of megalopolis to encompass these "networks of multimetropolitan areas." 

"The stakes are high in Phoenix because of the scale of growth projected for the area," he said. "If Ohio doesn't plan for the megapolitan it is part of, oh well, because it isn't expected to grow much."

Metropolitan Phoenix is already an area built on growth. Home building is its top industry, unlike any other megapolitan. Three have economies dominated by technology-based industries.

And Arizona has more undeveloped land than the others.

"It's a glass half full, half empty scenario for Arizona," said ASU Professor John Long, who is teaching the class with Lang. "Arizona is the smallest megapolitan and has the greatest potential for growth, but the state doesn't have the greatest track record for planning for growth."

As executive director of the Greater Phoenix Economic Council, Barry Broome is charged with fostering development in the Valley. He's not impressed by the notion of a megapolitan region.

"I am a big believer that bigger isn't better," he said. "I don't think going from 5.5. million to 16.5 million people is in the best interests of metro Phoenix."

He said Tucson could be an asset to the local economy, particularly in terms of recruiting international businesses. His concern with has more to do with the strain growth would put on the state's resources.

"When we talk about becoming a mega-metropolis with Phoenix and Tucson connecting, I am mindful of the physical pressure on Arizona's terrain, water and the environment," Broome said.

Arizona's growth corridor runs through five counties: Yavapai, Maricopa, Pinal, Pima and Cochise. Unlike most megapolitans, it is in one state.

  • In the northwest, Portland, Ore., and Seattle are expected to jump over state lines to merge by 2030.
  • The Southland region runs from San Diego to Los Angeles and into Las Vegas.
  • In the south, Atlanta and Raleigh, N.C., sit 400 miles apart along Interstate 85 and bookend the Piedmont region.
  • Interstate 35 slices through its eponymous region, the I-35 Corridor, which starts in Kansas City, Mo., runs through Oklahoma and into Texas.

"Freeways are the paths of growth in many areas," said Greg Vogel, principal of Arizona Land Advisors. "Arizona is playing catch-up on roadways in many areas of the state where growth is headed."

Some in the path of Phoenix and Tucson's growth aren't ready for it or don't want it.

Tucson, landlocked by many parcels owned by the Arizona State Land Department, is growing toward Sierra Vista. A couple of huge developments, including a Del Webb Anthem community, are planned between Tucson and Sierra Vista.

"Uncontrolled growth will destroy a community's lifestyle and quality of life," said Valerie McCaffrey, manager of the Sierra Vista Farmers Market and part of a group of farmers protesting rapid development. "Look at Prescott. When you turn a small town into a medium-sized town, the traffic can be horrendous."

She said Sierra Vista's agriculture industry already is being squeezed by development, so she's weighing a move.

The original megapolitan scenario predicted the growth corridor would span from the northern tip of Phoenix, near Black Canyon City, to Nogales. But the reach was expanded when research done in the ASU class showed that Prescott had people commuting to Phoenix and Tucson had people commuting from Sierra Vista.

The full results of the ASU class will be part of a report, expected this summer, by ASU's Morrison Institute for Public Policy.

The once-sleepy town of Eloy is in the path of the merger and already is sprouting subdivisions.

Roman Ramirez has rented a house in the longtime farming community for the past decade. The truck driver wants to be near a large urban area but not in the middle of one.

Plus, he said growth has driven up housing costs, and his family can't afford a new house in his hometown.

"If I wanted to live in a big city like Mesa or Tucson, I would have moved to one," he said.

Lang said being a part of a megapolitan doesn't mean a small city would be overtaken by a larger city. "All the cities in a megapolitan have their own identity," Lang said. "The megapolitan distinction is an overlay backed by statistics used to plan for things like transportation, airports, economic development."

He said Phoenix and Tucson already are likely one big metropolitan area by government standards.

Almost half the residents in Pinal now commute to Maricopa County for work, according to the U.S. Census. If at least 15 percent of the residents from Pinal commute to Pima, then the three counties would be considered one MSA.

In 2000, about 10 percent of Pinal residents commuted to Pima. That was before Tucson began expanding into Pinal.

Arizona's big cities merge

Metropolitan Phoenix is expanding much more rapidly into Pinal than Tucson is. So the spot where the two combine is likely to be closer to Tucson.

More than 600 land deals worth at least $1 billion closed on the fringes of metropolitan Phoenix in Pinal in the past year. Soon, 40 percent of all new Valley homes could be in Pinal, said Phoenix Housing Market Letter Publisher RL Brown. That's up from an early-2005 projection of 30 percent.

John Strobeck, a Tucson housing analyst, estimates that half of all new homes built for people working in that city could be outside Pima County.

State-owned land, including the 275-square-mile Superstition Vistas parcel about 30 miles east of Phoenix, is key to the Phoenix-Tucson corridor developing as a healthy megapolitan, developers say.

So far development has jumped over the many state land parcels. Large Native American reservations like the Gila River and Tohono O'Odham communities also are situated along the Phoenix-Tucson corridor, potentially breaking up flow of development.

"We used to think the Indian reservations would be a wall between Phoenix and Tucson. That is clearly wrong," said Grady Gammage, a real estate attorney and growth analyst. South of the Tohono O'Odham reservation is Red Rock Village, which, at 40 miles away, is the farthest north Tucson has pushed. The project will have almost 4,000 homes and is 80 miles from Phoenix.

The project is about 15 miles from Picacho Peak, which is where economist Vest thinks Phoenix and Tucson will meet.

Land broker Nate Nathan of Nathan & Associates puts the connection point at Eloy.

"The homes are going up," he said. "People are going to move in. Some will work in Eloy. Some will work in Casa Grande. Some will work in Phoenix, and some will work in Tucson."