Jim Davis/ Arizona Daily Star 2007

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The question of whether we're at the bottom is of special importance to one group of players in the real estate market: land investors.

Seeking big returns down the line, hedge funds and other big investors are eyeing Arizona's acreage and waiting for the market to drop to its lowest possible point before making a move, said Will White, a Tucson broker for Land Advisors Organization. That's the good news.

The bad news is they aren't in any mood to start buying yet, he said.

Prices for new homes — a prime indicator of land values — are still falling. Once considered a fairly scarce resource, land suitable for development looks a lot more plentiful now, White said.

Would-be sellers of land are also playing the waiting game, hoping the market improves, rather than unloading property at bargain-basement prices, he said.

Bob Benedon of Long Realty, who handles smaller land deals for businesses, said he has advised would-be sellers to wait out the slowdown, if they can.

"If they can afford to hold the land for two to three years, they may as well just hang onto it," he said.

Loath to take on the financing cost, builders are also shying away from buying big tracts all at once, White said.

"Today, they just want to buy lots as they sell homes," he said.

All these factors could mean that the slowdown in the new-home and land markets could drag on a lot longer than anticipated, White said. That could affect the outlook for development in Tucson's biggest growth centers — located mainly along Interstates 10 and 19 on the edge of the metro area.

While those areas will still grow, it will likely be at a more modest pace than previously expected, at least for the next few years, he said.

Here is a closer look at what's happening in those areas, according to the Land Advisors Organization and data research company Hanley Wood Market Intelligence. Hanley Wood collects in-depth data on new housing subdivisions with 10 or more units on a monthly basis through a variety of survey methods.

● Northwest Side: For Marana, in particular, "everything has been 'steady as she goes,' " White said. Despite the slowdown, development in the Northwest Side is still chugging along, albeit at a slower pace. More retail development on the horizon, such as Marana Spectrum, will probably help bolster the land market in the Northwest Side, White said.

The average selling price for new single-family homes in the first six months of this year dropped 19.6 percent from the first half of 2006, according to Hanley Wood. The average price per square foot dropped 11 percent over that time, according to the data.

● Sahuarita and Green Valley: New-home sales are still pretty strong, but prices have taken a big hit, mainly because of heavy competition among builders, White said. Hanley Wood data show an 18.8 percent drop in the average new-home selling price from 2006. The average price per square foot fell by an even steeper 19.5 percent.

● Southeast Side: The area is showing relatively strong resistance to steep price drops. Part of the reason is the supply of land is somewhat more limited than in other areas, White said. Also, the University of Arizona Science and Technology Park, near Rita Ranch, is helping to drive growth. The average selling price for new homes is down by a modest 6.8 percent compared with the first half of 2006, according to Hanley Wood. However, the average price per square foot is down by 10.6 percent.

● Southwest Side: Prices were sharply inflated here and are falling hard as builders discount heavily to get rid of inventory, White said. Development may take a while to pick up again as builders work through remaining lots, he said. The average new-home selling price fell 23.1 percent this year from the first half of 2006, according to Hanley Wood. The average price per square foot fell 21.8 percent.