Tucson real estate market short of inventory, sellers should look to cash in!

January 2nd, 2017 by Michael Oliver

The Tucson real estate market is strong but if you are thinking of selling a property 2017 is probably the year to do so.

In today’s Tucson real estate market inventory or the number of home for sale at levels below $800,000 are low. Updated move-in-ready homes specifically in the inner areas of Tucson are very difficult to find for most buyers. After 7-8 years of massive inventory levels that had given buyers too many options 2017 finally looks to be the year that if you are thinking of selling will allow you to get your home sold for a good to great price.

I expect home prices in Tucson to accelerate in price faster than we have seen at any time over the last 10 years. Supply levels are simply too low for anything else to happen. Buyer demand should get heavier in the beginning of the year as interest rates continue their rapid increase. In today’s market if you are thinking of selling in the next 1-3 years early in 2017 will be your best chance in at least 10 years to do so.

Many sellers will think to themselves “If prices are headed higher then why would I not wait?” On the surface this makes sense, but here are the main issues I see with waiting to sell until 2018-2019.

1) Interest rates; If the mortgage rates continue going up then you will lose significant pricing power in your home. In today’s world of sub 5% mortgage rates, it allows ALL buyers to reach higher price points than they otherwise¬†could reach. More buyers in each price point equals much higher and rigid pricing available to you as a seller.

2) Home Inventory¬†Supply levels; In all markets anytime prices go up almost instantly supply levels start to rise cutting off the pricing power of the sellers late to the game. This cannot be appreciated enough, as home prices in Tucson go up more and more sellers will think to themselves; “This is a great time to cash out”. This herd mentality to sell will again crush pricing power and limit your ability to sell into a strong market.

All markets have this common denominator of price destruction. The Tucson real estate market of late 2005 saw this; Selling in the summer of 2005 would in a lot of situations earn you as a seller an additional $50,000-$100,000 MORE on your home sale then trying to sell in late 2006 to early 2007 after the market had started to collapse. The common thought in the summer of 2005 was “Home prices in Tucson are going to the moon so why would I sell now?”, the reason is markets will bring on more supply as prices escalate, eventually crushing the the overall demand and pricing levels that the market can sustain. The oil markets of 2008-2009 show this example as well as hundreds of other examples it’s simply what occurs when prices start to increase with limited supply available.

3) If you want to sell your home and get a new one in Tucson; I think the 2017 Tucson real estate market would make sense to do this in. The main reason is that you can get a great price on your current home and a low mortgage rate on your new home. Even if home prices start to weaken (which I do NOT see happening anytime soon) due to higher mortgage rates, the rates of today are historically/ incredibly low. (Some of the lowest interest rates seen in 5,000 years happening this summer.)

These low mortgage rates have a compounding effect of savings over the long term. Over hundreds and hundreds of mortgage payments, a 1% or 3% lower mortgage rate equals tens of thousands if not hundreds of thousands of savings (Depending on your initial mortgage loan amount). This compounding effect can’t be understated so if you need or would like a larger, or even smaller home that you will be in for the next 5-30 years selling today and buying that home in 2017 should make a world of difference as mortgage rates move higher.

In summary, I predict the 2017 Tucson real estate market to be a fast-moving, highly competitive market for buyers. Sellers that are aware of what’s going on and can position themselves to take advantage of the situation stand to do extremely well over the long term. If you would like our advice for your situation please give us a call today and we will be happy to go over what we think would be the best course of action in regards to your Tucson real estate goals.



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Michael Oliver - Best Tucson Realtor