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Housing market slump slams local economy
Thelma Grimes/San Pedro Valley News-Sun
In 2004, Benson city officials talked of "explosive" growth coming this way, corporate centers preparing for construction, housing developments set to bring hundreds to thousands of new homes to the area and dreams of how much all this growth would bring in added revenues to city coffers.
But reality set in along with a recession that has sent many housing developments into bankruptcy or forced developers to change their plans and build fewer homes.
Commercial growth, with the exception of Wal-Mart, has all but halted, leaving many to wonder when all the high expectations and dreams would return.
Between 2005 and 2007 so much growth was slated to come to Southern Arizona that seminars were held to assist reporters from all markets on how to cover everything from commercial growth to large housing developments.
For local Realtor David DiPeso, the dreams of an economic boom in Benson ended when Pulte Homes pulled out of the area.
"Benson's market became active when investors felt that Benson was the next city to boom," he said. "We had many investors buying land for speculation. This drove the market up until the housing market crashed. This is when the planned subdivision by Pulte Homes was dropped and all the investors left the area."
In 2006, the Cochise College Center for Economic Research reported a proposed 20,378 homes to be built in 16 different housing developments throughout the San Pedro Valley.
The Anthem development, proposed by Pulte Homes, called for 13,750 homes.
But as the economy continued downward and local residents were victorious in stopping the 2,000-acre Smith Ranch development proposed by Diamond Ventures, Pulte left town.
"Since that time, the market has been price driven with many foreclosed properties on the market," DiPeso said. "This made for many good deals and a falling market. Buyers were and still are in the drivers seat, and only buy if they feel they are getting a good deal. We will slowly sell all the foreclosed homes and then the inventory will drop and the market should begin to improve. This may still take five to 10 years."
On the plus side, DiPeso said now is a good time to buy since interest rates and prices remain low.
Another downside to the low prices as pointed out by Melissa DiPeso is the fact that foreclosures in Maricopa and Pima counties remain high, which means prices there are low.
At one time, she said, prices were too high in big cities like Tucson and Phoenix, driving people east to communities like Benson where the price of a home used to be cheaper.
Now, because of the foreclosures, buying a home in Tucson and Phoenix is a lot more affordable.
Prices are so low, and the market is so slow that some developers and banks have had to rethink how to move inventory.
In some cases to avoid a total loss, banks have worked with the Southeastern Arizona Economic Development Group (SEAED) to turn a bankrupt project into something viable.
The House Ridge Estates have gone from a bankrupt project of empty lots on Pearl Street to actual homes under construction.
George Scott of SAEDG worked with the bank to take over the project, get a homebuilder who will construct homes on the empty lots and create a plan to sell the homes.
The project once calling for a starting price of $200,000 or more per home is now aimed at first-time homebuyers at a starting price of $120,000 to $130,000.
DiPeso said the lack of a functional economy continues to hurt new-home sales.
"Most of the developments were all set to begin building, and it was the economy that stopped them," he said. "It is now cheaper to buy an existing home than to build. Thus, new construction is very slow, especially for custom-built homes. There is still new construction in the subdivisions and they seem to be selling at this time."
Between 2005 and 2007, talk of growth in the San Pedro Valley came from interested investors and the fact that Vail, east of Tucson, had exploded with growth.
The Vail School District, once on the verge of closing, has now become one of the state's biggest with the construction of thousands of homes in Vail, Corona De Tucson, new homes along State Route 83 and in the Tucson city limits at Rita Ranch.
As construction continued in Vail throughout a 10-year period, developers began sniffing around Benson and purchasing land.
This led to excitement among city officials.
In 2004, former City Manager Boyd Kraemer said, "Benson is on the verge of experiencing explosive growth. A number of new projects that have been planned for a number of years will break ground this year. For example, the new Whetstone Corporate Center eventually will be the new home for 22 businesses. Also in the planning stages are new residential subdivisions, such as the Canyons at Whetstone Ranch, more than 280 homes that will conceptually meet an entire new marketing segment for the greater Benson area."
The corporate center has yet to break ground, and while the Canyons at Whetstone Ranch has made strides, it has not come close to the 280 homes planned.
In a 2009 economic outlook, current City Manger Glenn Nichols called Benson the city that is poised for economic recovery.
DiPeso said there are signs of improvement, as Realtors work through high inventories of home sales and interest rates remain low.
"People still love the climate in our area and will still want to live here," he said.
But optimism comes with caution warnings, as DiPeso stressed there are still issues over a more than 10 percent unemployment rate in Arizona, and just under 9 percent nationally.
"The economy and unemployment are the most troubling signs. I believe we must increase employment in order to come out of the recession, and to do that we must stimulate business," he said. "I see at least five more years of a depressed market while we work through the high inventories, and as employment begins to increase, the market will improve."
Scott said the problem will continue as long as there is a lack of incentive for actual growth.
"There continues to be a lack of jobs, double digit unemployment, no real effort by the city or county to bring in new jobs or help retain the businesses we already have," Scott said. "There are zero incentive programs for business. Businesses don't trust the current group of politicians federal, state or local. Every day when we open the paper or listen to the news, there's a new plan to tax and or regulate business. Look at the number of businesses that have closed up in Benson in the last couple of years. The only job growth I have seen is in the government sector."
While the economy remains slow in Arizona, some projects in Benson are optimistically moving forward.
The Benson City Council approved amendments to the city General Development Plan that will allow San Pedro Partners LLC to move forward with an 850-home development west of State Route 90.
The council also approved the preliminary plat for the 390-home Whetstone Hills estate along SR-90.
Scott said he is confident homes will continue to be built in Benson, but the projects will be small and the buyers will likely be government employees, Border Patrol, military or retirees.
In 2004, Benson city officials talked of "explosive" growth coming this way, corporate centers preparing for construction, housing developments set to bring hundreds to thousands of new homes to the area and dreams of how much all this growth would bring in added revenues to city coffers.
But reality set in along with a recession that has sent many housing developments into bankruptcy or forced developers to change their plans and build fewer homes.
Commercial growth, with the exception of Wal-Mart, has all but halted, leaving many to wonder when all the high expectations and dreams would return.
Between 2005 and 2007 so much growth was slated to come to Southern Arizona that seminars were held to assist reporters from all markets on how to cover everything from commercial growth to large housing developments.
For local Realtor David DiPeso, the dreams of an economic boom in Benson ended when Pulte Homes pulled out of the area.
"Benson's market became active when investors felt that Benson was the next city to boom," he said. "We had many investors buying land for speculation. This drove the market up until the housing market crashed. This is when the planned subdivision by Pulte Homes was dropped and all the investors left the area."
In 2006, the Cochise College Center for Economic Research reported a proposed 20,378 homes to be built in 16 different housing developments throughout the San Pedro Valley.
The Anthem development, proposed by Pulte Homes, called for 13,750 homes.
But as the economy continued downward and local residents were victorious in stopping the 2,000-acre Smith Ranch development proposed by Diamond Ventures, Pulte left town.
"Since that time, the market has been price driven with many foreclosed properties on the market," DiPeso said. "This made for many good deals and a falling market. Buyers were and still are in the drivers seat, and only buy if they feel they are getting a good deal. We will slowly sell all the foreclosed homes and then the inventory will drop and the market should begin to improve. This may still take five to 10 years."
On the plus side, DiPeso said now is a good time to buy since interest rates and prices remain low.
Another downside to the low prices as pointed out by Melissa DiPeso is the fact that foreclosures in Maricopa and Pima counties remain high, which means prices there are low.
At one time, she said, prices were too high in big cities like Tucson and Phoenix, driving people east to communities like Benson where the price of a home used to be cheaper.
Now, because of the foreclosures, buying a home in Tucson and Phoenix is a lot more affordable.
Prices are so low, and the market is so slow that some developers and banks have had to rethink how to move inventory.
In some cases to avoid a total loss, banks have worked with the Southeastern Arizona Economic Development Group (SEAED) to turn a bankrupt project into something viable.
The House Ridge Estates have gone from a bankrupt project of empty lots on Pearl Street to actual homes under construction.
George Scott of SAEDG worked with the bank to take over the project, get a homebuilder who will construct homes on the empty lots and create a plan to sell the homes.
The project once calling for a starting price of $200,000 or more per home is now aimed at first-time homebuyers at a starting price of $120,000 to $130,000.
DiPeso said the lack of a functional economy continues to hurt new-home sales.
"Most of the developments were all set to begin building, and it was the economy that stopped them," he said. "It is now cheaper to buy an existing home than to build. Thus, new construction is very slow, especially for custom-built homes. There is still new construction in the subdivisions and they seem to be selling at this time."
Between 2005 and 2007, talk of growth in the San Pedro Valley came from interested investors and the fact that Vail, east of Tucson, had exploded with growth.
The Vail School District, once on the verge of closing, has now become one of the state's biggest with the construction of thousands of homes in Vail, Corona De Tucson, new homes along State Route 83 and in the Tucson city limits at Rita Ranch.
As construction continued in Vail throughout a 10-year period, developers began sniffing around Benson and purchasing land.
This led to excitement among city officials.
In 2004, former City Manager Boyd Kraemer said, "Benson is on the verge of experiencing explosive growth. A number of new projects that have been planned for a number of years will break ground this year. For example, the new Whetstone Corporate Center eventually will be the new home for 22 businesses. Also in the planning stages are new residential subdivisions, such as the Canyons at Whetstone Ranch, more than 280 homes that will conceptually meet an entire new marketing segment for the greater Benson area."
The corporate center has yet to break ground, and while the Canyons at Whetstone Ranch has made strides, it has not come close to the 280 homes planned.
In a 2009 economic outlook, current City Manger Glenn Nichols called Benson the city that is poised for economic recovery.
DiPeso said there are signs of improvement, as Realtors work through high inventories of home sales and interest rates remain low.
"People still love the climate in our area and will still want to live here," he said.
But optimism comes with caution warnings, as DiPeso stressed there are still issues over a more than 10 percent unemployment rate in Arizona, and just under 9 percent nationally.
"The economy and unemployment are the most troubling signs. I believe we must increase employment in order to come out of the recession, and to do that we must stimulate business," he said. "I see at least five more years of a depressed market while we work through the high inventories, and as employment begins to increase, the market will improve."
Scott said the problem will continue as long as there is a lack of incentive for actual growth.
"There continues to be a lack of jobs, double digit unemployment, no real effort by the city or county to bring in new jobs or help retain the businesses we already have," Scott said. "There are zero incentive programs for business. Businesses don't trust the current group of politicians federal, state or local. Every day when we open the paper or listen to the news, there's a new plan to tax and or regulate business. Look at the number of businesses that have closed up in Benson in the last couple of years. The only job growth I have seen is in the government sector."
While the economy remains slow in Arizona, some projects in Benson are optimistically moving forward.
The Benson City Council approved amendments to the city General Development Plan that will allow San Pedro Partners LLC to move forward with an 850-home development west of State Route 90.
The council also approved the preliminary plat for the 390-home Whetstone Hills estate along SR-90.
Scott said he is confident homes will continue to be built in Benson, but the projects will be small and the buyers will likely be government employees, Border Patrol, military or retirees.
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The following are comments from the readers. In no way do they represent the view of bensonnews-sun.com.
J-6 wrote on Aug 11, 2010 5:24 PM:
" It's a very good thing that everyone wasn't drinking the developer's Kool - Aid back when all this development was being promoted. We'd have a couple hundred concrete slabs on bare ground being eroded by each rainstorm out at Smith Ranch. Economic growth needs to stimulate housing development, not the other way around. Kudos to the people behind Prop 400. "
don wrote on Aug 15, 2010 3:19 PM:
" benson has never had an economy except for hookers and walmart. get real "
Reply to Don wrote on Aug 18, 2010 2:02 AM:
" Thanks for the optimism Don. How long have you lived here? Because AEPCO, ranching, Raytheon/Ft Huachuca employees the car businesses, shopping centers, etc don't count? Uhm, they do and it is an economy. Could be better but not near as bad as you make it out. "
Jim C wrote on Aug 11, 2010 12:45 PM: