On paper, the real estate market in Tucson looks bad. Well, on paper, it is! However, activity is way up, listings are down, and new listings are down. These are the telltale signs of a market bottoming out. There is no guarantee the Tucson area will see strength in prices for a while, but the number of listings on a steady downtrend tells me the bottom is being found. (We still need this number to be around the 5000’s and pending contracts up over 27%.) I have seen quite an increase in activity on my own listings since the beginning of April over what it has been for a while. There are more phone calls coming in regarding my listings. It’s taking less time for them to go under contract. There is now more general interest from buyers than in months past. In my opinion, buyers may be seeing the lowest prices they are going to see in Tucson for a while. That “bottom” may not be today, but I do expect Tucson to touch it over the next 2-3 months. In 6-8 months from that point, most people will realize that the real estate market in Tucson is gaining strength and is not as soft as it had been for the previous two and a half years. So, what opportunities are there now?

The Tucson real estate market, while still in a depressed state, is showing stats that coincide with a market on the rebound. If these trends continue, Tucson’s market place will emerge from its downtrend and get its legs beneath it for the first time since late 2005. What indicates this to me is the fact that pending contracts have been up substantially for the past two months, meaning that more people are getting under contract to purchase a home. Also, active listings continue to keep coming down. Now the supply (active listings) needs to come down a whole lot more before we are in what I would call a balanced market. I would say active listings need to be around 5500 to suggest a balance. However, one important item to note is that the statistics no longer include the far outlying areas of Southern Arizona (places like Tombstone, and Cochise), so the decrease shown from March 2008 over March of 2007 is not 100% accurate. That being said, there are fewer listings on the market. In addition, the new listings prices are also down roughly 10%, meaning fewer people are trying to “test the market.” (That’s what sellers who overprice their home and want their real estate agent to work super hard to find a buyer at their inflated price call it.) Sellers in Tucson right now are realizing it is not a good time to “test. ” In fact, you need to be at or under the comparables to facilitate a sale these days, and any property outside of those comparables is almost impossible to sell. Plus you will need to get your property exposed and marketed in a very effective manner because of the overwhelming number of properties. Buyers have many, many options now, and if your home isn’t pushed to the forefront, even a low price may not be enough to get their attention.

The Tucson real estate market is still in a downtrend, as it has been for the past 2-1/2 years. It has gone from wildly overbought to — as I have been saying for the past 2 months — what seems to be oversold (or under priced). Now, it can be argued that outside influences have had a greater effect on the local real estate market than any other factor. This means that the very serious credit crunch has disturbed the market much more then anyone, even at this point, can predict. The unavailability of credit is seriously affecting everything in the economy, and Tucson real estate is no different. My guess is that if this credit crunch had not occurred on the scale we are currently seeing (wishful thinking), the local real estate market would have already completely bottomed and would be, at least, stable. I feel that we may not yet have touched absolute bottom. (If we did, I’m not good enough to pretend I could call it spot on. Frankly, NO ONE IS!) I do feel very strongly that current prices are very reasonable, In many areas, homes can be purchased at 2002-2003 prices. Interest rates are lower than they have been historically, even when compared to the boom years. I saw a 30-year-fixed at 5.0% in February with no points. (That’s like FREE!) Now interest rates have gone up, but are currently just under 6.0% for a 30-year-fixed. Considering that the supply of new homes is dwindling, this should help to stabilize things sooner rather than later. BUT, there is one major problem.