Last week I blogged about the flurry of land deals in Phoenix that have been transacting since June. Barely three days later, I heard about yet another deal. This time it was a Taylor Morrison deal. The company bought 1,871 home sites in the 569-acre master-planned community of Adora Trails in Gilbert for $21 million, or about $11,224 a lot.

What I don't find all that unusual about this deal is that Taylor Morrison bought the land. Not only had the company been eyeing the property for six-plus years, according to Land Group Real Estate's Tom Tait, who represented the seller of the parcel, but also there's been what I dare say could be characterized as a land-buying frenzy of late. Taylor Morrison reportedly beat out 14 other bidders for the property.

What is wild in my mind, however, is that this deal was for raw land. Most of the deals to date have been for finished lots, lots that can be stuffed in one end of the pipeline and spit out the other in record time. But raw land is different. It's more of an investment. It requires not only more money but lots more money and time to turn the dirt into something that can pass for a home buyer's little piece of heaven on earth.

So, between the volume of land deals transacting and the fact that some deals are being inked on raw land once again, suggesting greater visibility in the market, can we officially say Phoenix has done a 180?

I'll admit it. I've never been through a housing downturn. And I trend toward the pragmatic if not cynical side of things versus being optimistic. So, I'm surprised--and a little skeptical--that a market's recovery could be so overnight. Looking for more insight into what in God's good name was going on out there, I started with the basics.

I got my colleagues over at Hanley Wood Market Intelligence (HWMI) to send me a few topline takeaways on the market. Pluses for the market included continued in-migration, improved housing affordability, and a recent upswing in new-home traffic and sales. Negatives were low permit issuance, negative job growth, and spiking unemployment. Tack on a foreclosure problem, and the market's got swollen existing-home inventory and a drag on pricing.

Even the new-home segment didn't seem to be what I would call a picture of health. According to HWMI, in 2Q2009, builders collectively sold 3,444 new homes in the market, a decrease of 19% from a year ago. Those numbers don't really speak to the order improvements that anecdotally I had been hearing were driving land activity.

So, I checked out some of the submarkets. And at that level things started to make some sense. During the second quarter, the East Valley submarket--think Mesa, Tempe, Chandler, Gilbert, and Queen Creek--clocked a 7.6% increase in new home sales from a year earlier. Back out townhome and condo sales, which were down year over year, and the story gets better. Net sales for single-family detached homes in the area were up 21.8% from a year ago, pushing average absorption rates up from 1.6 sales per community in 2Q2008 to 2.0 sales per community this past quarter.

Very attractive pricing is no doubt driving some of the uptick in sales velocity. If you look, 55.8% of the sales in metro Phoenix were for homes priced under $200,000. And in the East Valley, more homes were sold in the $150,000 to $200,000 range than any other price segment.

I can see why builders think they need to bulk up on land in this submarket. There is a pulse of new-home demand at specific price points, which is creating a pricing floor from which to start evaluating new deals. "Most home builders aren't expecting to make a lot of money," explained Peter Dennehy, a senior vice president with Sullivan Group Real Estate Advisors, who although is California-based does work in Phoenix. "They are just trying to take advantage of volume to sustain their businesses."

But for as much as the demand side of the equation in the East Valley submarket is driving land-buying activity, so is the supply side of things. Many sources in the market have said that not only are there scarce numbers of finished lots in these pockets where new-home demand has surged of late but there's a dearth of lots in general. Consequently, many builders who were looking to get their hands on cheap lots in hot spots have ended up bidding up land prices. (Oh, the irony.)

But for Steve LaTerra of Land Advisors, a local brokerage, the Phoenix land rush may collide with a different reality, one that has nothing to do with people's appetite for new homes. With finished lot supply dwindling in the most desirable locations, the alternative is to go after raw land. But with financing still tight for development, it's iffy whether some builders can even ink such a deal, leaving them stuck with a big question mark.

"What's next?" asked LaTerra. "Are builders going to buy raw land in A locations and try to develop it, or will they try to buy finished lots in B locations?"

LaTerra's best guess is that the public builders, with more access to financing, will swallow up the undeveloped land in primo locations while the smaller, regional players will have to give it a go in second-tier locations.

I don't know if he's right or not, but I think what it all adds up to is that whatever's going on in Phoenix is probably not the leading edge of a full-blown recovery, sad as it is to say. It looks and sounds as though what we are seeing are hot spots, very localized areas where pent-up demand has flared up. And given the scarcity of lots in these areas, that fire of demand could be relatively short-lived. It will take a more fundamental economic shift to reignite the Phoenix market at large.