Tucson Market Statistics - February 2008
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| Feb 07 | Feb 08 | % change | ||||
| Home Sales Volume | $259,256,105 | $186,129,758 |  28.2% | |||
| Home Sales Units |
999 | 710 | 28.92% |
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| Average Sales Price |
$259,516 | $262,155 |  1.01% |
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| Median Sales Price |
$219,500 | $199,900 | 8.92% |
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| Pending Contracts* | 1094 | 1317 | 20.38% |
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| Active Listings |
9847 | 9168 | 6.89% |
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| New Listings |
2376 | 2432 | 2.35% |
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| Average Days on Market |
63 | 81 | 28% |
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*Has not yet closed escrow. | ||||||
| Information provided by Tucson Association of Realtors Multiple Listing Service | ||||||
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Additional information and a complete run down of the Tucson real estate market is available HERE. This MLS report is sent to all Realtors in Tucson, and is complete with color graphs and charts to help potential clients get a better understanding of the underlying real estate market conditions. Michael assists potential clients in this manner with NO COST to them! | ||||||
| ARCHIVED STATISTICS | ||||||
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Market Recap: By Michael Oliver
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.
The credit crunch is causing havoc! The fifth largest investment bank, Bear Sterns, essentially became insolvent and would have gone bankrupt without JP Morgan making a rock bottom purchase for $2 a share. That has since been raised to $10/share, but is still a long way away from the $70/share it was at the beginning of March. This sounds awfully familiar to anyone who can remember 5 months ago, when the same sort of thing happened to Countrywide until Bank of America stepped in. And that was still less of a crisis than Bear Sterns. What does this all have to do with local real estate in Tucson Arizona? Well, the short explanation is EVERYTHING! Banks see other banks going out of business because of their loan practices, and as a result, no bank now wants to lend on a house. Yet they have to because, unfortunately, a bank's business revolves around making loans. No loans = no profit. All banks have shut down any type of loan that is not very solid from the bank's standpoint. This means 100%-loans are out the window. If you have less then a 680 FICO, no bank is interested. Or if you have a debt ratio that is not in line with around 36% (with all your monthly payments and mortgage included), then they are not lending on a home. Oh wait, it gets worse. Most of AZ, CA, NV, FL, OH, MI and other states and areas are what's referred to as "declining areas." While banks are already restricting their funds to the best borrowers, if you want to purchase in a "declining area," then you must meet an even stricter set of guidelines and pay a higher interest rate. The bank is taking on more risk to loan on a home in Tucson vs. one in North Carolina where prices are still raising. Unfortunately, if homebuyers can't get loans, it dramatically affects real estate prices. Now believe it or not, the credit crisis will subside (eventually) and those 100% loans and all the other ones will come back, although they will be highly regulated. Only those who are truly qualified will receive them rather than anyone just capable of signing their name, as was the case during the run up of real estate. Even with this turmoil, I see homes in Tucson, at least, as a buy. (I think Phoenix still has a way to go before homes are "cheap" and a buy.) If you need or want to sell, it is best to wait until the market strengthens unless you are buying more home or a home in a more distressed area. Here's an example: if you were to move from Oro Valley to Sahuarita, you will benefit. The market in Sahuarita is very depressed whereas the Oro Valley market, in my mind, is just slow. Don't get me wrong. Oro Valley is not hopping, but it for sure is a way better market for selling then Sahuarita.
What is in store next? That is tough to say. I think we will see prices still trend downward, but deals are there to be taken. Bank-owned properties are especially prime for purchasing. REO (also known as foreclosures) are going to run their course throughout the end of the year in all areas and all price ranges. They have been around in a high number since the beginning of the year and will continue to assault the value of your home all year long. After that, the credit crunch should be most of the way through the system. The credit crunch is the worst of its kind in at least 30 years. Ben Bernanke and the Fed, in my opinion, are doing a great job trying to soften the issues that the market is facing. I think their proactive stance is very good and the most the markets could really expect. Homebuilders' spec homes are, in many cases, below cost, so those are going to be sold and very few homes will be built in Tucson this year, which is a very good thing. It is another reason I truly believe that 2008 will be the climax of the real estate/credit crisis storm. Those who can weather it, or even better yet, take advantage of it, should do very well.
The Tucson stats are worth mentioning. You can see that the number of home sales is down drastically --28.92%. Also, the median sales price is down year over year at 8.92% less than February of 2007. The silver lining is that active listings are down 6.89%. In my opinion, this number has to get worked down to a 4500-6000 number to be in a growth (price appreciation) trend. Pending contracts are up 20.38% and I can testify that there has been A LOT more activity in February than in just about any month all last year. I have been very busy placing listings under contract and representing several buyers in purchases as well.
One last prediction for this month is that the high end in Tucson ($1 million +), and even homes just under, will start having a much harder time procuring sales than in years past. The DOW/NASDAQ has been falling since the beginning of the year, and this significantly will depress the desire and ability of high-end buyers to want to make a move or buy a second or third home here in Tucson. (Tucson ranks very high in this marketplace, worldwide.) In addition, many want-to-be high-end developers who started their high-end custom spec homes at the end of 2005 to early 2006 when the market was much stronger are putting these spec homes on the market right now. Since there fewer buyers in the market, this will lead to many high-end newly built spec homes being foreclosed on by the banks that lent the money to have them built. So counter to everything I said about the general Tucson real estate market, if you think you may "need" to sell a high-end home, it's best to get it on the market ASAP rather than later. I think this is even more important if you are in a high-end area that has a lot of newly constructed spec homes in the area. Chances are those will become bank owned foreclosures in the next several months. Now if the stock markets reverse their trends, then staying put may be best because it will bring confidence and buying power to the high-end home buyers and will strengthen that high-end market -- much like it was around fall of 2007 when the DOW was well over 14,000.
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