The 2020 housing market was the best the Old Pueblo has seen in more than a decade.
With interest rates at historic lows and homes taking on new meaning — becoming offices and classrooms during the COVID-19 pandemic — 4,336 new home permits were issued for the year.
That was a 17.28% increase over 2019, according to the Tucson-Southern Arizona Housing Market Letter year-end report.
New home permits pulled in 2007 totaled 5,098 before the housing market began its sharp decline.
“Barring some catastrophic event there is little reason not to anticipate a continuation of strong new housing activity over the next several months and potentially all of 2021 in Tucson,” housing analyst Jim Daniel said.
While many of the national homebuilders have focused on putting more amenities into smaller spaces to keep new home prices down, the median price rose almost 5% to $322,015 in 2020. The resale market saw an 11.8% increase in median sales price to $250,00, which makes it a good time to sell.
However, industry analysts note that the equity in existing homes has appreciated significantly for most homes in the Tucson market so selling for the sake of commanding a higher price may not be advisable if a homeowner does not have solid alternative plans.
The current building enthusiasm could face a hiccup as many developers paused land development in March and April because of the unknown impact of the pandemic.
“The lack of supply is the key factor here,” said land broker Will White, who runs the Tucson office of Land Advisors Organization. “Last cycle, the market was extremely oversupplied, and this time it’s the opposite.
“The demand swing happened quickly in 2020 and the market is still working to respond to it.”
The top five builders in the Tucson market in 2020, and the number of permits they pulled were:
- DR Horton: 787
- Meritage Homes: 663
- Richmond American: 462
- Lennar Homes: 362
- Robson Communities: 357
Master-planned communities Gladden Farms, Dove Mountain, Saguaro Bloom, SaddleBrooke Ranch, Rancho del Lago, La Estancia and Rancho Vistoso all had over 150 sales in 2020. Gladden Farms was at the top with close to 250 sales.
“2020 was a fantastic year at Gladden Farms,” said White, who handles the lot sales to homebuilders in Gladden Farms. “With several homebuilders active in this community, we expect the momentum to continue for some time.”
The highest average sales price in 2020 was just over $1 million in the Foothills ZIP codes 85704, 85718 and 85750. The lowest average sales price of about $210,000 was in the city’s south-side ZIP codes 85706, 85713, 85714 and 85756.
Since April, more than 3,100 permits have been issued in the Tucson area, and homebuilders are expected to continue pulling strong permit numbers in 2021.
“But,” Daniel said, “we do not think they will top 2020 by another 17%.”
National analysts predict home prices across the country will continues to climb in the first half of 2021 because of a shortage of new homes and demand from millennials who are turning 30 and taking advantage of low interest rates.
The U.S. homeownership rate this year is expected to rise to over 69% for the first time since 2005, according to Forbes. The nation had a historic low homeownership rate of 63.7% in 2016.
The Tucson area’s homeownership rate was just above 50% last year.
