This week the Arizona Daily Star featured a couple of stories about the state of the housing market in Tucson that have raised a few hairs. Analyst: Housing slowdown will linger until 2010 &
A Bright Future turns gloomy in real estate
Sales statistics and forecasts for a market recovery were quoted from John Strobeck of Bright Futures Business Consultants and from
Judy Lowe, president of the Tucson Association of Realtors Multiple Listing Service.
While these reports are not encouraging, keep in mind as you read them, that they include sales for all of the greater Tucson metro area. So they're an average of what's happening all over town, the southeast, northwest, central, etc, etc. And I'm sure that if we looked at individual areas in Tucson (and we'll look at the Foothills later on) that we'd find substantial differences in sales, and in the relative well-being of the market.
If you're buying or selling be sure to find out what's happening in your area.
As reported in the story, Strobeck's numbers indicate that existing home sales in Tucson were down about 18% this September vs September 2006, while new home sales were down about 20%.
Strobeck said, it (the market) might not recover until 2010 if inventory levels remain high and the sales pace stays the same.
He went on to say, tighter mortgage-lending standards, a growing number of foreclosures and other financial problems may have a greater impact on the market in the future.
"It will be at least that long, maybe longer," he said about the 2010 projection and joked that he is now "wearing black all the time."
Judy Lowe's numbers indicate that sales were down about 36% this September vs September 2006. (I assume this includes both existing and new home sales, though the story did not indicate)
Judy Lowe noted that, pending sales — those yet to close — were up more than 32 percent from the same month last year.
"That's an indicator that our closings in six weeks to two months will also be ahead of the closings of the same month a year ago," Lowe said. "To me, that shows the market is no longer in decline."
But, Pending contracts have been up for the past four months, according to the Realtors' report. And the number of sales has still been lower than in the same months in 2006.
Lowe also said, Tucson's growing population and employment will likely help the area emerge from the slowdown before 2010.
Who do you thinks got the better crystal ball. hmm.
Well anyway, there are two issues here that I'd like to touch on.
Reporting sales numbers on a month vs month basis is fine for tracking the very latest twists and turns of the market, but putting too much weight behind what happens in any one 30 day period can be very misleading. The other is that both reports fail to mention that by last September the Tucson metro area was already into the real estate market slowdown, which had started some months earlier.
So comparing this September with September 06, is comparing how much slower this September is than the already slowing September 06.
Ok, here's how the Tucson Foothills area differs from the greater Tucson metro.
For the Tucson Foothills, sales are actually better this September than last, but this is a small niche market within Tucson.
For perspective, Judy Lowe states that there were 9,190 homes for sale in Tucson in September. In the Foothills there were just 490 homes for sale in September.
In September 2006, 35 homes sold in the Tucson Foothills.
In September 2007, 42 homes sold in the Tucson Foothills, 20% more.
Yeah!
Not so fast,
-from 1/1/2006 thru 9/30/2006, 572 homes sold in the Foothills.
-from 1/1/2007 thru 9/30/2007, 506 homes sold in the Foothills,
11% less.
So sales in the Tucson Foothills have been appreciably better, or less bad, depending on how you look at it, than sales for the greater Tucson metro area. And I predict, and you don't need to be a swami to see it, that it will continue to be better in the Foothills than for the greater metro area.
Why? Because there has been no large scale building, speculative or otherwise, and the accompanying speculative investing, in the Tucson Foothills, like in some other areas of Tucson. So we don't have hordes of investor owned homes sitting empty, with investors now walking away from these homes. Nor do we have big builders slashing prices and driving down the value of existing area homes, because we don't have any big builders doing business in the Foothills.
And there is no land available for future large scale building. Just a few acres here and there. We're now into the realm of teardowns in the Foothills, because there is so little land available, and many of the older homes are worth more for their land, and what can be built on it.
