Arizona sets out to disprove the notion that someday the West will run out of water


BUCKEYE, Arizona — The housing market may be cooling off, but the news doesn’t seem to have reached Arizona. In the West Valley, 45 minutes from downtown Phoenix, the small farming community of Buckeye has the feel of a Wild West boomtown. Fresh-pressed housing developments sprawl across the desert. In some neighborhoods, newly occupied houses sit next to half-built homes with tiles still stacked on their roofs. Even in neighborhoods that are still uninhabited, the traffic is endless; framing crews, roofers, drywall crews, painters and convoys of linemen from APS, the local power company, prowl the streets. And on the constantly expanding edge of the city, construction crews are grading pads for the next installment of the more than 4,000 new houses built in the Phoenix area every month.

Amid the sea of new rooftops, the homebuilders’ modular sales centers and model homes can be impossible to find. Companies have taken to hoisting gigantic American flags. On weekends, they launch an additional flotilla of blimps and balloons, and deploy an army of sign-toting hucksters at freeway off-ramps and intersections.

One Saturday in May, local high schooler Marco Gutierrez and a friend stand at the intersection of Yuma and Cotton roads. Marco waves a sign for Beazer Homes while his friend holds one for homebuilder Centex. The two look as if they’ve narrowly escaped being paved over. Cotton Road has recently been rebuilt and shifted to one side, and cars are backing up on the smooth, new pavement. Gutierrez stands on the old road, a decrepit ribbon of blacktop. "Last week," he says, "this road was open. I used to stand" — he stabs his finger toward the growing line of cars on the new road — "right there."

Many of these neighborhoods feel like they’re a suburb of somewhere else. New homeowners speak of mistakenly thinking they had crossed a state line the first time they came to look for a house out here, because there are so many California license plates on the cars.

In a subdivision called Sundance, Maria Lozano and her four children relax in the shade of their garage. Lozano, a formidable woman with an unsentimental take on the world, says she and her husband, Vincent, bounced around California before finally coming to Arizona three years ago. They sold their home in Fontana — the Los Angeles suburb where the Hells Angels got their start — "because of the traffic, the crowdedness," she says, and moved their family here. Lozano now works as an office manager for a dental practice in Buckeye, and hopes the move to Arizona is her last one. "I don’t want to do it again. I hate moving. To move again is almost like … uh, no."

Lozano says that when she moved here, housing prices were a third of what they were in California. The Phoenix area is filled with people like her — "equity refugees" who have cashed out and fled the traffic, crime, and high cost of living, primarily in California but elsewhere as well. They have created a phenomenal demand for housing, which the homebuilding industry here has happily met.

With the real estate market going soft nationwide, however, a cloud has drifted over the Sunbelt. If you’re of an apocalyptic cast of mind, it’s easy to wonder whether this Wild West economy will tank and leave legions of homeowners with over-inflated mortgages, homes they can’t sell, and foreclosure notices piling up in the mailbox. But local leaders insist that Phoenix will never lose its allure. They contend that the state has put in place the protections needed to keep Arizona livable — and growing — almost indefinitely.

The question that may ultimately reveal the most is this: What if the boom keeps going? That’s exactly what Arizona’s water managers are beginning to ask, as they work to line up the water necessary to sustain the millions of people projected to move here in coming decades. Arizona is leading the way into a stark — and very complicated — new reality, one that it shares with much of the West: Development can continue only if water is taken from someone else. And the true costs and consequences of sustaining the boom, particularly in the face of climate variability and change, are only now beginning to suggest themselves.

The homebuilding industry in Phoenix is frequently likened to a giant machine. "It’s the old cliché that growth in Phoenix is like automobiles in Detroit: It’s the major industry," says John Hall, a professor at Arizona State University’s School of Public Affairs. "If you want to build a tract house, then there are five or six of the best outfits in the world here." Those companies, including Pulte, Centex and Fulton Homes, have honed what he calls "a real good assembly-line manufacturing process: The builders here are big builders and they can put a lot of homes down in a fast way."

Pulte Homes, for instance, has brought many of its construction crews in-house after years of using subcontractors. It slots houses — each of which takes about eight months to build — into a tight schedule to ensure what one company employee calls "a steady flow of production: Everybody has Web sites where they can log on and see where they’re supposed to be, when."

Much more is coming: Forty miles west of downtown Phoenix, on the back side of the White Tank Mountains, archaeological crews are surveying a 34,000-acre patch of creosote, ocotillo and shot-up kitchen appliances for the largest development ever built in the state. The 83,000-house project, called Douglas Ranch, could be home to a quarter-million people.

The development, originally put together by an East Coast pension fund, is owned by a group of high-profile local investors. They include Jerry Colangelo — who has also been an owner of the Arizona Diamondbacks baseball team and the Phoenix Suns basketball team — and real estate moguls Mike Ingram and Monty Ortman, who have amassed nearly a billion dollars’ worth of land in Arizona.

Douglas Ranch will be big, but it also represents something of a new direction for development. Initially, the project would have simply created a giant bedroom community. But Tom Hennessy, a former Pulte Homes manager who is overseeing the development, says, "We’re taking a fresh look at it. There’s really an opportunity out here to do things differently."

As re-imagined, Douglas Ranch will at once embrace the landscape and be something of a world apart. It will include large swaths of open space designed to preserve a migration corridor for mule deer that summer in the nearby White Tanks. But it will also be an economically self-sustaining community, complete with a working downtown that provides jobs for its residents. Hennessy, whose office is in downtown Phoenix, spends a lot of time driving back and forth between there and Douglas Ranch. That’s something he hopes the people who buy homes in the development won’t have to do. "It would be a failure," says Hennessy, "if we had everybody who was living out here driving into Phoenix every day."

Douglas Ranch’s investors have hired an economic-development consultant to attract businesses. But Hennessy seems particularly concerned about ensuring adequate "workforce housing" for the kinds of low- to moderate-wage workers, such as elementary schoolteachers and police officers, that a self-sufficient community can’t do without.

Behind all of these plans looms a potentially significant worry: The housing market in Phoenix, like the one nationwide, is cooling off. But Hennessy is not concerned: "You couldn’t sustain the pace that was happening a year ago. The price increases, the rising land costs, the housing costs, it was driving people out of the market. Now we’re getting back to what the Phoenix market really was."