Current Market Analysis
Tucson News & Views -- August 1, 2008
Market Update
Courtesy of The Murray Group
Barbara A Murray, ABR, E-Pro, GRI
Jack N. Murray, Realtor®, Long Realty
520-918-5958/800-551-1253
www.GoTucsonRealEstate.Com
Info@ABMurray.com
It’s a great time to buy property in Tucson, Arizona.
Good news may be on the horizon! What a challenging year it has been for some who wish to sell their homes, very rewarding for others when the price trend has been down, and what an opportunity for buyers to purchase a new or resale home at some of the best prices in years. As they say, “All real estate is local.” That certainly holds true in Tucson. Where a home is located makes a big difference on how much prices have decreased. The increased FHA loan limits of March ($316,250) have had a beneficial impact on home sales over the past four months. FHA loans have now been the preferred loan for many unlike in the past few years.
The media tend to present a bleak picture. However, Jonathan Lang wrote in Barron’s (July 14, 2008) that “This real-estate rout has been more painful than prior ones, but it may be shorter-lived. Indeed there are early signs of recovery.” We’re seeing that in Tucson with the inventory of homes dropping to 8140 at the end of June 2008, compared to the all-time high of 10,387, April 2007 or a decline in inventory of 29%. June’s median sale price of $200,000 is only 11% below the high of $226,465 in November 2006. June’s “Average Sale Price” was $257,449, only a decrease of 9% from the March 2006 high. We haven’t read that number in the newspaper!
The squeeze on extending credit beyond the conventional loan limits of $417,000 has affected negatively sales of mid-range properties ($400,000 - $900,000). We do have lenders who will loan above the $417,000, but the options are more limited than before the “bubble.” Jumbo loans now require higher down payments than a year or two ago. While no one has a crystal ball, we think we’re at or near the bottom; buyers have pent up desires and are ready to buy; newcomers still wish to relocate to Tucson. Our real estate prices are very tempting. But don’t look for the inventory to plummet soon to the ridiculously low 3262 (February 2005)—many clients and friends are “in the wings,” waiting for the market to pick up before putting their homes on the market.
Welcoming Our New Clients
Welcome some of our new clients: Dr. Dennis and Beverly Saran, from Greater Milwaukee, purchased a beautiful home in NW, Rancho Escondido, from our Internet pictures. The seller, our long time client and friend, Linda Sousa, who just retired from Raytheon in October, relocated to Tampa, FL with her mother. Mary Souza’s home in The Bluffs showed so well we were able to sell her home, too, at full price in one week. We miss Linda and Mary. Richard and Beth Cruz from Walla Walla, WA relocated to Tucson this past year. We’ve enjoyed a delightful friendship with Rich and Beth, and their daughters, Olivia, five, and Julia, now 1 1/2. They no sooner closed on their charming Rancho del Lago home when they received word their second adoption (Julia) would happen soon. They immediately flew to Kazakhstan for a tedious interviewing process. We savored the frequent reports and pictures from Asia as they waited. . . Lisa Holt and Brian Phillips were happy we could bring top dollar for their central Tucson home, despite some nervous times with the buyers’ “no-name lender” making poor decisions. The buyers switched to Long Mortgage who promptly changed the loan to an FHA (where it should have been in the first place) and it closed at the sale price.
Jack’s friends, Dan and Cherie Douglass, made a great buy on a Meritage new home in Sycamore Park with an ideal Great Room plan. They love their new neighborhood. Chris Heape joined the ranks of new homeowners in a 2000 sq ft two-story D R Horton plan with a huge loft (which fits a pool table) in Rancho Valencia, convenient to his work at Raytheon. Tobias Trejo and Michelle Trevino were able to welcome their first child (Tobias Ivan Trejo) into the world in their lovely new home in the Midvale area. Ron and Fran Bishop are doubly fortunate. We were able to sell their well-maintained NW home quickly, so they were free to proceed with building their favorite floor plan with Richmond American at the inviting new neighborhood, Tangerine Crossing. Jack Hesketh, Flagstaff, made a wise and sharp investment in a west side property for his two sons, Matt and Ben, who are attending U of A and U of A Law School.
And, many thanks to Dan O’Neill and Kay Kozak and Fred Brinckerhoff for their confidence in our service as they referred us to other very special clients.
Local Market Trends
“The toughest markets in this downturn - Northwest & Southeast”
Those in the northwest and southeast have seen the toughest markets because of the numerous new construction price reductions on inventory homes and dramatic incentives for upgrades in new construction. The result has handicapped many in the resale market who must compete with “new builds” at a discount. Add to this a large number of foreclosures. Sellers have now learned to reduce their asking price so that their home is competitive. One of the numbers Barbara has been tracking for over ten years is the percent of homes under contract (Percent Pending). Twenty-five percent is “normal,” a balance between buyers and sellers. Above 25% is a sellers’ market; below is a buyers’ market. While we’re still a buyers’ market, that trend is up in several areas. These statistics are for the 6 months ending July 28 for Single Family Residences (condos and townhomes are not included).
Uptrend in the northwest: Very positively the percent pending just increased to almost 20% versus 13.77% one year ago. True, the median price dropped 13.5% over a year ago, but that is far less than the 25% and 28% drops seen in LA, Las Vegas and Phoenix, numbers strongly publicized in the newscasts. The Bluffs subdivision at La Cholla and Overton has remained strong—the price only declined from $255,000 (2006) to $239,000 today. The Bluffs enjoys a “pending ratio” of almost 24%! In age restricted Heritage Highlands you see another story. The “pending ratio” is only 7.25% and a 16 month supply of inventory (4-6 months being “normal”). Saddlebrooke similarly is challenging with 11% pending, but sales are up with 8 months of inventory (the current citywide average). Competition with new construction at Robson both there and in the new Saddlebrooke Ranch to the north keep sellers on their toes.
The northwest “high end” has picked up! In February 2008 there was a 6 year supply of million $ plus homes. Now that number is only 26 months. As you may have noticed building at Dove Mountain, Canyon Pass, the Ritz Carlton has been strong with new construction high-end homes. Only twelve $1 million plus had sold in the six months prior to February 2008. In the current six months some 25 have sold in this price range.
The Dove Mountain area will attract much attention over the next few years. Many new shopping amenities now exist and are planned for the area. Tangerine Crossings is a major new subdivision for area residents with very attractive floor plans. Higher up Dove Mountain Blvd you have multiple choices and magnificent vistas in affordable to luxury price ranges. The new Ritz Carlton, the Jack Nicklaus golf courses, the beautiful Gallery courses suggest it will become one of Tucson/Marana’s prized addresses in the near future.
News in the southeast is the strong interest we see in our clients for the Vail area and Rancho del Lago. If you haven’t driven that way for awhile, we invite you to have lunch or dinner at the lovely golf haven at Rancho del Lago. With homemade soups daily and super service, it is a great spot to visit and enjoy the magnificent Catalina and Rincon vistas high above the golf course and Pantano Wash. A.F. Sterling and Hovnanian have some very enticingly priced new homes. Just beyond to the north you’ll find some exceptional choices along Camino Loma Alta, many with larger lots and affordably priced. Soon to open is a new shopping center which will be welcome to the Vail residents.
Rita Ranch has bounced back. Currently pending sales are over 26%. Sales in the past six months were 143 versus only 65 for the same period in 2007. Prices have come down which is good—in 2005 buyers had to offer $10,000 - $20,000 over the asking prices just to have a “chance” to buy a house! The median price in Rita Ranch is now $195,500, down from a high of $239,000 just two years ago. The Houghton/Rita Road corridor is bustling with new businesses. It’s quite a contrast from even six years ago when the Safeway was the primary amenity.
Strongest Markets currently are East, Southwest, and West. But, these are areas where in many cases we’ve seen the strongest price reductions.
“East” refers to the area east of Wilmot generally between Speedway and Golf Links. The median price has dropped 17% in the past year to $190,000. That fact may also be reflected in the strong sales, with pending contracts at 24%. The monthly supply of homes is 5.26, the lowest of any MLS market area in Tucson.
As for “Southwest:” Currently with 26% of homes pending, it remains an affordable and appealing area for many with the current median price at $165,000, a decrease of 21% from the same six months one year ago. New construction is tempting also, as a new Richmond American home there is priced some $30,000 less than in the Vail School District for the identical floor plan. Some of our clients love the openness of the Southwest and “backside” of the Tucson Mountains. It’s beautiful and retains some of that frequently lost “country feel.”
“West” is basically west of downtown but on the eastern side of the Tucson Mountains. There the pending sales are almost 31% versus 11% one year ago! Quite dramatic. . .Median sales prices are only down 11.7% since July 28, 2007 now at $205,000..
Likewise the “South” region has seen major price decreases (-24% this year but up 11% the previous year). Sellers are rewarded by receiving 93% of their asking price when their home sells. The median price in the south region is now at $140,000. Adding to the brisk activity are new builds such as at Rancho Valencia, which are very appealing. You can get a great house with upgrades such as granite and tile floors for just over $200,000.
Moving to the North side (mainly north of the Rillito between Oracle and Sabino Canyon) we see a difficult market. Pending sales are only at 10.4%; the median is down 8.6% at $525,000 from a high in 2007 of $570,000. The Foothills sports an 11.7 month supply compared to the citywide 8.35 months. A positive is the increase in sales of $1 million plus where the inventory is now 26 months as opposed to 35 months in February.
Below $1 million it appears that the availability of financing at reasonable rates is keeping buyers on hold. There remain some great opportunities to purchase that house with a great view for a very good price. Of special note is the increased activity at Pima Canyon with 12 homes currently available and 25% pending. In February there were 17 available and only one pending. The various Catalina Foothills Estates subdivisions (in Catalina Foothills School District) are now at a median price of $807,000, down 9% from 2006).
The northeast remains a challenge, as there is an 11.3 month inventory of homes with values down almost 11% from one year ago, and only 11% pending. While the Tanque Verde Valley is a refuge and favorite spot for many, it did take the northeast longer to “come back” after the downturn following 9/11, also, and come back it did! As a buyer, you have some great opportunities here.
Good News?
The good news is that homes ARE selling! Even in the areas with the highest inventory such as the Northwest where in the last six months 1274 homes (single family residences) sold with an active inventory of 1838 homes. Now that sounds like a large inventory, but only a year ago it was as high as 2800 homes with a 23 month supply. This year we only have an 8.7 month supply of homes.
How are they selling? In this market where your home feels like a needle in a hay stack, it is critical to make it the biggest, brightest and shiniest needle in that haystack of homes! That requires a great marketing plan, sometimes a cosmetic check up and proper pricing. Marketing is our specialty and we make our plans unique for each home in this diverse market. The cosmetic check ups can be as simple as some cleaning and pruning, but sometimes there is a little more to it. What is important is we need to make your home the most attractive, best conditioned and smartest priced home available in order for it to sell before all the other 8100 homes on the market. We always analyze the market thoroughly for you to find the correct price point that will yield the greatest return for you on your property. There are still plenty of profits to be made selling a home in this market!
If you or someone you know is thinking of buying a property, boy is this ever the time! Jack is constantly previewing homes whether new construction or resale to stay on top of the best investments. There are some great investment opportunities with foreclosures, but one needs to be very careful with what they are buying. Past clients recently made a great purchase with a bank owned home, but it took everything we had to get it, secure a jumbo loan, and make sure our clients were protected throughout the purchase. We routinely observe prime properties where price reductions have been ten, fifteen, and even twenty percent, including many in the Foothills. Tucson home sellers are becoming realistic.
Please do not hesitate to call us with any questions you may have about this current market. We always appreciate all of your referrals. We treat every referral as if they are part of our real estate family, which has helped us build a successful referral business--we thank you for your support.
What’s New with The Murray Group
On the “non-real estate front” we’ve enjoyed some special time with daughter/sister Alicia and Rob Beers (granddaughters/nieces now 2 ½ and 5) , with Uncle Jack as fishing and activity director in the Black Hills, where everyone gathered at our family cabin the end of June through the 4th of July. Travels this summer also included two special weddings.
Barbara spent a very delightful week in April with six college friends in magical San Miguel de Allende, Guanajuato, Mexico, where we rented a home. Such a charming place in the Mexican altiplano (high plains), filled with lovely people, many fine artists, a wide variety of outstanding restaurants, and cobblestone winding streets. I recommend it highly. You can fly non-stop from LAX.
We’d love to hear from you. Send us an e-mail update, and let us know whether you enjoy and wish to continue to receive the Home By Design magazine and the new 2009 calendars. If someone you know might like these or the newsletter, simply send us their address.
We have also created a new website, which is much easier for you to navigate. Check it out at www.GoTucsonRealEstate.com.
Working to keep the real estate market strong and to maximize your investment. . .
Jack and Barbara
