December 22nd, 2009 by Michael Oliver

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Existing home sales are up again across the nation as existing home sales rose 7.4% in November to a seasonally adjusted rate of 6.54 million units a year pace. As expected sales are way up over last years levels on a percentage the gain was 44% over last November. As most people realize last year from roughly October until the end of February the real estate markets were almost essentially locked up as lending froze, and buyers headed for the sidelines not knowing what was going to happen in the general economy. That being said the next couple months of home sales should show large increases in a year over year basis.

In Tucson the local real estate market is much more robust then many realize. Buyers and sellers are coming together and ending in most situations the large disconnect between the two sides that had been common for over 3 years. Not all markets in Tucson are seeing strong demand however, the high end of the Tucson market is extremely slow as those buyers have yet to show up. On the other end of the spectrum the first time buyer segment is very strong as all those buyers want to take advantage of their $8,000 tax credit for making a home purchase before April 30th of 2010. Without looking up exact numbers I would say the first time buyer segment of the market is making up at least 50% of all sales occurring currently.

The real estate market across the nation should stay strong as home prices and interest rates have become in my mind just too good to pass up. Throw in the $8k tax credit and making a case for not buying a home if your a first time buyer is pretty hard to do. I also expect after the first time buyer credit expires in April the real estate markets will cool down a bit but still be at a much higher pace then 2008 or even 2009 saw. The bottom in my mind has been reached and now as sales return to higher more traditional levels the distress inventory can be absorbed and taken out of the market. One expectation of the markets that I keep hearing experts talk about is two fold; interest rates are expected to be at the 6% level (up from the high 4% range now) and there is an expectation of a glut of foreclosure homes that will hit the market in 2010. The interest rate increase I can almost for sure say will happen as the government will stop buying MBS’s that are artificially keeping rates so low. The other the glut of foreclosures I can also almost guarantee as banks have been holding off placing foreclosed homes on the market to allow the real estate markets to heal somewhat. There was a large back log of foreclosure proceedings and now the banks are just getting caught up with them (sorta) this in turn suggests that newly cleared backlog of foreclosures homes is due to start hitting the market in February and March of 2010. This is something to especially pay attention to in my mind. The good news is pent-up home buying demand should be able to meet most of this new supply unlike the years past as afford ability is exceptionally high right now especially in the Tucson Arizona metro region.

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