Today it was reported that the State Land Department is planning for a 15,900 home development that will more than quadruple the area of northern Pima County’s population when completed. The Department released a draft of the development plans, called the Arroyo Grande plan. The new area will be large enough to house about 38,000 people, roughly the current size of Oro Valley (estimated at 44,000). This super development will span across 14 square miles bordered by Oro Valley on the south, Pinal County on the north, Oracle Road on the east, and the Tortolita Mountains on the west. That’s a HUGE AREA!

Yesterday KB Home reported their 4th quarter results and they were dismal, to be optimistic about it. For the quarter ended Nov. 30, the company posted a loss of $772.7 million. That’s a $ 772.7 MILLION LOSS in 3 months! This just goes to show how bad things really are for all builders. KB Home, in my opinion, runs a pretty good operation building homes for primarily first time homebuyers. Other homebuilders have faired just as badly. Pulte, DR Horton, Richmond American, and Standard Pacific (who just sold their Tucson operations earlier this month) have all been beaten down pretty hard.

National homebuilder Standard Pacific has left the Tucson marketplace, selling their business to local Arizona real estate executives Chris Kemmerly and Steve Quinlan. Standard Pacific entered the Tucson market in 2004 when they purchased Chris Kemmerly’s Kemmerly Homes which owned and built the Miramonte brand, which was very successful and well known in Tucson. I believe the reasons for their departure are self-evident. Standard Pacific was taking significant losses. Their stock price indicated serious trouble at the company. Standard Pacific is selling their Tucson operations to raise cash and prevent future losses. Standard Pacific sold about 700 lots ready for homes to be built and about 70 homes that are all currently in some phase of construction. The new company says they will be also be looking to purchase more land and subdivisions later in the year for additional building.

Tucson AZ has just been selected by a publicly traded company — Stanley, Inc. (NYSE: SXE) — a leading provider of systems integration and professional services to the US federal government. Stanley, Inc. will be building and managing a secure passport production center in Tucson AZ for the U.S. Department of State. The company will immediately begin construction of the secure facility with production operations expected to begin in spring of 2008. Stanley will hire more than 150 full time and part time employees in the next 12-18 months.

With all the resetting of ARM’s and the generally bad market conditions across the country, the mortgage companies that were raking in billions upon billions during the boom are now losing billions. This is a real threat to the whole economy. If it persists or gets worse, it could easily lead the country into a recession. The banks and mortgage companies have no clue how to stop the bleeding. As more ARM’s reset, fewer borrowers can afford the mortgage, and since the real estate market is so competitive, they are having a very difficult time selling as well. The only thing left for these borrowers is a foreclosure or a bank-granted “short sale,” either of which costs the lender tens of thousands. A foreclosure especially eats up money due to attorney’s fees and the condition of the property after a foreclosure has occurred.

Local real estate land baron and real estate developing icon of the Tucson area, Don Diamond, has given 15 million dollars of his own money to get a $55 million children’s hospital off the ground. This new children’s hospital, Diamond Children’s Medical Center, will also be a national player in children’s research and medical technology because it will be one of only a few national children’s hospitals across the Unites States. It is to be affiliated with the University of Arizona.

As many people are aware, the Ritz-Carlton is building its first hotel in the Tucson area. A luxury residential community — the largest one Ritz-Carlton has ever been involved with — will be constructed adjacent to the hotel. The first phase of this development will consist of more than 90 residences. The total project will number close to 300 residences to be built in the Ritz-Carlton community. They will be offering 5 different floor plans, from 2771 to 4836 sq ft. The homes will be completely customizable and, I imagine, will offer a standards list that will be one of the most luxurious of any new home development in Arizona.

Will it start to show soon? I have been talking with many buyers who are starting to think about purchasing but are still very concerned about what the market is doing and only want to buy “at the bottom”. Don’t we all? But, here’s the point. There are a great many potential buyers in the current marketplace. In normal market conditions, they would buy a home due to real needs: larger family size, relocation to Tucson, or care of a loved one requiring additional room or a different configuration of home. These buyers would be in the marketplace and buying homes, but due to the very unknown state of the Tucson real estate market, these buyers are trying to delay the purchase and wait for what they perceive as a bottom of the market. Now all these people cannot or will not wait that long. If you live in a 1100 sq ft home that you bought 4 years ago when you got married and now you have a couple of kids and another on the way, its difficult to wait around for the market to bottom (assuming you can afford a larger home). This is what is called “pent-up demand”. It’s essentially people who have a need or a real desire to make a purchase but are putting it off for as long as possible. These people are still going to buy but as time goes on, the pressure mounts for them to take action. What I feel will happen is that as soon as there is a hint that our real estate market has the worst behind it, this pent-up demand will show itself, and I imagine we in the industry will see a rally in the Tucson market.

Garfield Traub was recommended by the city selection committee to develop a new 707-room Sheraton. Now that the city selection committee has chosen Garfield Traub’s plan, it will go to the city council for final approval before Thanksgiving. Initially, the plan calls for the 250-room Hotel Arizona located on Broadway just past Granada Avenue to be completely renovated. Then, if market conditions allow, a 28-story 450-room expansion would be built.

A property in Ventana Canyon most likely set a record for the most expensive single family residence to ever sell in Tucson. The home was a 7,200 square foot structure located northeast of North Kolb and East Sunrise Dr. The home sold for $8,000,000, which included $1,000,000 in artwork and home furnishings that were included in the sale. The home also included a glass bridge walkway, an expensive patio, and a tile pool with a waterfall.