Threat: Affordability. The Phoenix metro is seeing a flood of new residents moving from their homes across the nation, especially in dense areas like New York City and high-cost areas like Los Angeles and San Francisco. They are trading their $1 million cookie-cutter homes in California and dense flats in New York for spacious, luxury homes in the Valley.
But with housing inventory near an all-time low, demand is far exceeding the current supply. That is causing home prices to skyrocket, with the Phoenix metro repeatedly topping the nation in home price growth. Rapidly rising prices is a threat to the low cost of living — one of the things that makes the Valley an attractive place to live.
Michael Ingram is doing what he can to offer affordable housing options so the regular worker isn’t priced out of the market.
Ingram, founder of Scottsdale-based El Dorado Holdings Inc., controls 64,000 acres of land throughout metro Phoenix, with thousands of acres on the fringes of the Valley, where home prices start in the low $200,000s making them affordable for entry-level buyers.
Founded in 1987, El Dorado Holdings had sold approximately 57,000 lots until 2008 when the Great Recession decimated the housing industry.
“Then we, like most people, went 10 years without selling lots,” Ingram said. “There were already so many lots out there already developed. Once people realized those have been absorbed, everybody is working their best to bring out the lots really needed.”
With home prices continuing to rise in metro Phoenix, Ingram said he sees trouble down the road.
While affordability isn’t yet a major issue, it’s something to keep an eye on, he said.
“It can quickly get to be a grave concern,” he said.
Homebuilders are facing rising costs of goods — concrete and lumber — while also dealing with a lack of skilled laborers to build these homes.
In an effort to keep costs down, many homebuilders are focusing on density — building smaller homes on smaller lots and offering two-story options.
In addition, more homebuilders are expanding their offerings by getting into the wildly popular build-to-rent market, where single-family homes are built in communities with amenities like a pool or clubhouse.
These rental units, which come with their own small backyards and even doggy doors in some cases, are being offered at a time when many homebuyers can’t find homes to purchase. They also are popular with baby boomers who are looking to downsize and want a lock-and-leave option.
El Dorado currently has 174 of these build-to-rent units under construction at its Spur Cross master-planned community in Queen Creek and is set to break ground on another 200-unit project in the city of Maricopa this spring. Another 500 units are in various planning stages throughout metro Phoenix.
More than 30 years ago, Ingram was instrumental in developing Maricopa’s basic infrastructure, including the roadwork to create John Wayne Parkway and setting up water, wastewater and electric utility service.
Over the years, he developed master-planned communities in Maricopa, offering homebuilders the opportunity to build spacious affordable homes. From 2002 to 2008, El Dorado Holdings developed, zoned, entitled and sold more than 17,000 lots to homebuilders in that area.
“We led the nation in growth from 2002 to 2007,” Ingram said. “We probably led the nation in foreclosures from 2008 to 2014. It really set Maricopa back during that time period because there were so many houses that had been foreclosed on in the subprime deal. But today, it’s good to say that Maricopa is back up and running and most of the available lots are pretty well spoken for down there. Now builders are talking to us about developing new lots.”
His newest master-planned community in Maricopa is a $1 billion, 1,500-acre project called Eagle Shadow.
Ingram also is working on Douglas Ranch, a $10 billion, 37,000-acre master-planned community in the far West Valley.
Douglas Ranch, which will include 119,000 homes and 59 million square feet of commercial and retail space in the northern part of Buckeye, is a joint venture between El Dorado and Jerry Colangelo‘s JDM Partners LLC.
Ingram said he is in talks with homebuilders and commercial users for Douglas Ranch.
“We’re hoping to close with homebuilders March 12, 2022,” he said.
El Dorado Holdings Inc.
What they do: Real estate developer
Outlook: Optimistic as many builders are getting creative to keep costs down.