The Catalina Foothills

NAR bashing

The NAR (the National Association of Realtors) has for some time now been getting creamed with criticism because of a perceived lack of candor on the part of the NAR regarding the downturn of the real estate market and the advice that the NAR has offered to consumers during that time. 
During the decline, which has been going on for about two years now, the NAR has relentlessly advocated that this is a great time to buy a home. And often during this time, according to the NAR, it has also been a great time to both buy and sell a home.
Time after time, this advice has proven to be way out of whack with the unfolding reality of the declining real estate markets across much of the country. But despite this, the NAR has persisted in pressing their agenda. And as a result of this overly sunny, and unrealistic self-serving advice regarding the state of the real estate market, the NAR has lost for itself, and very importantly for all it's members, a great deal of credibility.
A post in the Developments blog of today's Wall Street Journal,
NAR Campaign Touts Real Estate as a Great Investment
and the accompanying 70 comments (so far) by consumers, does a good job of dissecting this latest NAR fairy tale for what it is - which btw, is being touted by the NAR as a public awareness campaign.
What gall!
As one commenter put it, "I would expect a little spin, but these numbers are just dishonest. If anyone was thinking that a realtor is a trustworthy source of information, this will surely dissuade them."

Thanks NAR, keep up the good work.

the views have it in La Paloma & Ventana

I'm closing escrow today with some second home buyers,
on a home in the gated-golf course community of La Paloma in the Tucson Foothills. It's a wonderful home on a great lot that overlooks the golf course, and with big views of the Catalina mountains beyond.

But because my clients live in another part of the country, and weren't able to drop everything and get out here licketysplit every time a home that looked good came on the market, it took us almost a year to land this one. And yes, even with the slowdown, the really good homes with golf course and mountain views in La Paloma or Ventana are scarce, and get snapped up quickly - as long as they're reasonably priced. So more than a few that looked very good, were gone before my clients could even get to town. It was frustrating for all of us.
But in the end it was worth the wait, because it's a great second home at a fair price, and they're very happy with it.

On the other hand, some other out of town clients of mine who wanted the same type of second home in La Paloma with great views, ended up buying it sight unseen. From the very beginning they told me that they would never be able to get out here in time to see it first, before making an offer. So as soon as the right one came along, I took a lot pictures and after talking with them about it in some detail, we made an offer, got a counteroffer, and soon had an accepted contract. And we went through inspections and escrow and closed on the house, before they ever saw it. And we did it quickly, start to finish it took about five weeks.
And when they did see it, they too were very pleased.

Every time I've worked with clients wanting this type of home - with a great view in La Paloma or Ventana - it's always been a matter of having to act quickly, or lose out.  It's simple supply and demand -more people want one of these homes than there are homes for sale, particularly at this time of year when the snowbirds are here.

But if having a view isn't important to you, then it's another story.
You can take your time and shop around, because there are usually quite a few to choose from, and of course you'll have a lot more bargaining power to boot.

TheFoothillsToday.com 
to search for and learn more about Tucson Foothills Homes, including second homes in La Paloma, Ventana and other great Foothills locations.

loonies to the rescue

For years now our Canadian neighbors have been flocking to the Tucson Foothills, Scottsdale, Phoenix and other parts of sunny Arizona to escape their harsh winters, defrost and loll around in our sunny climate for a few weeks.

But until recently, the loonie traded at a deep discount to the US dollar, so renting a home or condo and spending winters in Arizona was a fairly expensive proposition for Canadians.
And buying a vacation home in the US was limited to the lucky few who could afford to buck that weak exchange rate in a big way.

U.S. Dollar to Canadian Dollar Exchange Rate


But now with the US dollar weaker and the two currencies trading at about parity for the first time in many years, the US suddenly looks like a bargain to many Canadians. And instead of just renting a place for a few weeks, Canadians are taking advantage of the strong Canadian dollar combined with a weak US housing market, to scoop up bargain-priced vacation homes in Tucson, Phoenix and elsewhere in AZ. With the housing and currency markets both working in their favor, Canadians see this as a window of opportunity that is unlikely to last, or to occur again anytime soon. So there's some urgency
to get it while the getting's good.

This reminds me of the 80's and 90's when I worked in the advertising business in Chicago, and frequently went to Toronto and Vancouver to produce television commercials for our clients.
Back then the Canadian dollar was at about 65¢ to the US dollar, so shooting in Canada was a bargain, we'd save 30% or more.
And it was just as easy, and a nice change of pace, to fly up there to produce commercials as it was to fly to LA, so it was a no-brainer.  
Word got around quickly, and soon Toronto and Vancouver were over-run with American advertising, TV and movie producers up there shooting for the American market.
This resulted in big and lasting growth in the Canadian film industry. 
Film crews and equipment, sound stages and related services, which were in short supply at first, ramped up to meet the demand.
This provided a huge boost for the Canadian film industry and all the services related to it. It was a win-win for all.

Right now in the Tucson Foothills, we're in the prime of our season for snowbirds from Canada and elsewhere. And with prices down and sellers quite flexible, in addition to the favorable exchange rate -  
maybe the Canadians will return the favor and give our real estate markets a little boost, while taking advantage of a fleeting opportunity to buy a vacation home in the Tucson Foothills.

TheFoothillsToday.com
to search for and learn more about Tucson Foothills Homes

who's smiling now

Recently I saw a house listed for sale in the Tucson Foothills for $550,000, located in a community where all the homes are very comparable. Not exactly cookie-cutter, but darn close to it.
It caught my eye because it showed up with a price change after being on the market for only a few days.
So I clicked through to see if this was really a new listing or if it had been on the market before and re-listed.
Sure enough, it had a history of changes as long as your arm. 
This house had been on the market for more than 300 days, and during that time it had been listed and re-listed five times, had seven price reductions, and two different agents. And after all that time, it's now finally listed in the mid $500's, which is right about where it should be. And you don't have to be Einstein to figure that out.

Homes in this cookie-cutter like community sell within a very tight price band. Multiply the square footage of the house by the average $$/square foot of houses that have sold in here recently, and you're about 75% of the way to figuring out a marketable list price.
So why has this house been on the market for 300+ days and had umpteen price reductions.
Because instead of listing it at a fair market price of about $550,000, when it was first put up for sale, somebody decided to really go for the gold, and list it for $950,000. Yes 950 thousand dollars!
In the very best of markets, when houses were flying off the shelves, you'd have a better chance of winning the lottery than selling this place at anywhere near that price.
But somehow, someone convinced someone else, that $950,000 was the right price. I'd have liked to have been a fly on the wall during that conversation.
So now, after 300 + days on the market, reality has finally set in.
And while I wish them well, unfortunately at this point, this house is suffering from the stigma of many-many days on the market, along with all the other changes that have taken place during it's long and turbulent history of being for sale.
The real estate market is now weaker, and the economic climate is wobblier, and if this house does sell, it's almost certain that it will sell for substantially less than it would have 300 days ago.

Granted, this is an extreme example, and I don't know who was responsible for pricing this house, the agent or the owner, but in my experience, some home owners choose to ignore reality - they only want to hear what they want to hear.
And if you don't smile brightly and eagerly agree, they'll find someone else who will.

out to dinner in Tucson

Last night we had dinner at the Red Sky Cafe at Plaza Palomino, which is just beyond the southern edge of the Tucson Foothills.
The Red Sky Cafe bills itself as New American cuisine, and does a good job of delivering the goods, with regard to the selections on the menu, the quality and preparation of the food, and all of it in a comfortable dining room with a very pleasant atmosphere.
Prices at Red Sky are at the upper end of Tucson restaurants, with appetizers priced from about $9.00 to $18.00 and entrees from $16.00 to about $38.00, for dinner. There were three of us for dinner, and the tab, not including tip, was $189.00.

We enjoyed our meal.
The appetizers, entrees, wine and desert, Delicious!
But the service, that's another story. After we were seated, we waited more than 10 minutes before anyone or anything arrived at our table. When the waitress did arrive, she was rushed and flustered.
OK I thought, here we go again. From then on the service alternated between good, to adequate, to no service at all. When our entrees arrived the waitress asked if we would like anything else. Yes, please, I would like another glass of wine. 10 minutes later, and about halfway through my dinner, there was still no wine and no waitress in sight. I got up and went to the bar to get it myself.
On and on it goes, I wont bore you with the details.
Unfortunately, in many Tucson restaurants, regardless of price, that's the way it is.
Hit or miss service, or worse, seems to be the rule.
It's frustrating and annoying and ends up putting a big dent in your enjoyment of the evening.
The Grill at Hacienda del Sol is one of my favorite places, I love to go there and sit out on the patio for dinner. The food's very good, and the atmosphere is incomparable. But the service can be embarrassingly bad. A while ago, I took some friends from Chicago to dinner there, and we spent most of the evening chasing down waiters and sending back food that we hadn't ordered, and trying to get the food that we did order.
We've had similar experiences at VinTabla, and other allegedly high-end restaurants in and around the Tucson Foothills.
And this is NOT a one-time thing, I wouldn't write about it if it were.
It happens often. And on those occasions where the service was particularly abominable, the restaurant has offered to comp the dinner, as payback I guess for the poor service. Great, so instead paying for a frustrating evening, you get to have it for free.
But whatever the issues are, poorly trained or not enough staff, it's a restaurant management problem. I don't blame the individual waiter or waitress.
 
One strategy that seems to work, is to sit at a table in the bar area, or better yet, at the bar itself, and have dinner there.
The waiters are always coming and going from the bar for drinks and wine, so you can snag them more easily. And if you're sitting at the bar, the bartender is always there to help you.
It's unfortunate, but now, before we go out to dinner, I have to mentally prepare myself to not 'lose it' over the lack of service.

get a home inspection

In the picture below, you're looking at the access door to the spa motor, for the spa tub that's located in the master bath of a home in the Tucson Foothills.
If you look real close on the right hand side, that black thing back there is the spa motor.
So when something goes wrong with the motor, this is where the repairman is supposed to go to get to it.
But unless your repairman is Harry Houdini I think your days of luxuriating in a hot bubbly spa may be over.
Somebody goofed here big time, those 2x6's shouldn't be there.


And in the picture below we're looking at the air supply and return vents for the heating/cooling system in one of the bedrooms - of the same house. Those vents are 16" apart, and that's too close. Being that close dilutes the effectiveness of both the supply and return vents. And this happens to be in a west facing bedroom, so in the summer when the afternoon sun is blazing down on that bedroom,
it will be difficult, and maybe impossible, to keep it cool.


These and some other items, that are less photogenic, were discovered during a home inspection where I was representing the buyers of a home in the Tucson Foothills.
The sellers of this house bought it brand new about 4 1/2 years ago, directly from the builder. They didn't use a Realtor, and apparently they didn't have a home inspection done when they bought it.
Like many people, they may have just figured, why have it inspected, it's a new house, what could be wrong, and if anything goes wrong we have a 2 year builder warranty.
If they had discovered these things back then, it's very likely that the builder, anxious to sell the house, would have corrected these items quickly and with no fuss. 
Now, 4 1/2 years later, the builder, though still obligated to correct items that were built incorrectly, is much less likely to jump thru hoops to get it done.
New home, previously owned home, it doesn't matter, get a home inspection.

the first 14 days

Have you noticed a slew of new listings coming on the market in the Tucson Foothills recently. I sure have. A lot it has to do with the start of the new year, and the arrival of winter visitors and second home owners, which marks the beginning of our high season for home sales here in the Tucson Foothills.
Anticipating that increased activity we usually see an increase in the number of new listings, both from actual newly listed homes, and from homes that were previously listed, and have been withdrawn or expired, and then re-listed, so that they too can start the new year as a fresh new listing.
Since January 1st,

151 homes have been listed for sale

77  have had price reductions

21  homes have gone under contract

13  homes have sold

New year or not, 151 looks like an extraordinary number of homes listed for sale in just the last two weeks. More so when you consider that there are only about 500 homes for sale in all of the Foothills.
But in the last two weeks there were also 108 listings that either Expired or were Withdrawn, and probably another 25 or so during the week before the new year. Those Expired and Withdrawn listings, which have now been relisted, make up the bulk of the 151 new listings that we're seeing. And that leaves us with about 25 actual new listings. And that's more like it.
As far as sales go, the low numbers are a reflection of the typical sales slowdown that occurs during the holidays.
Not too many people buy houses around Thanksgiving and Christmas.
So we'll have to wait a month or two before we begin to get a real reading on where we're headed in the Tucson Foothills for 2008.
I hope we're headed up.

making a real estate deal, the old fashioned way

In representing some second home buyers recently in the Tucson Foothills, I had the rare pleasure of doing the deal for the purchase of the home with a verbal agreement.
Circumstances necessitated this.

I had filled out the 9 page purchase contract plus 3 additional pages of required addendum and faxed it all to the listing agent.
As I was faxing it, I called him to be sure that he was receiving the fax. Time was of the essence here, and we needed a quick response with no glitches. So of course his fax machine broke down after receiving the first two pages of the contract, kaput, and because of circumstances he was not able to leave where he was to receive the fax somewhere else. 
So we talked about it, and agreed that we'd do the offer verbally.
I conveyed the details of the offer to him as he asked a few questions and took some notes.
And the seller, who was in a wilderness mountain top area for the next day and a half, and only available sporadically by cell phone, did not have access to the internet or a fax machine either.
So the listing agent verbally conveyed our offer to the seller, whereupon he and the seller came up with a counter offer and verbally conveyed that counter offer to me. And after discussing the counter offer with my client, we came up with a second counter offer, and I verbally conveyed that to the listing agent.
After discussing counter offer #2 with his client, the listing agent called me back to convey their acceptance of our counter offer.
We had a deal, and we did it all in about 90 minutes, with no paperwork and no signatures, just our word.
A day and a half later, when everyone was re-connected to the grid, we simply reduced our verbal agreements to writing, everyone signed on the dotted line, and now we had a written binding agreement.

During the 90 minutes of verbal negotiation, my client asked whether we could depend on the listing agent and the seller to live up to the verbal agreement, as I'm sure the listing agent had a similar conversation with his client. I know the listing agent, and I assured my client that in my judgement, the listing agent's word was good, and that he would not have agreed to this if he was not confident that his client would follow through as agreed. And that was that.
We proceeded as if we had a deal, and in the end we did, with no squabbling, quibbling, and no back-pedaling. 
What a pleasure.

looking back in the Tucson Foothills

2007 was a difficult year for real estate just about everywhere.
Gloomy headlines dominated the news with ever-more dreadful stories of crumbling markets, and then the financial markets collapsed and drop kicked real estate into semi-consciousness.
And though the Tucson Foothills didn't make it on any of the headline grabbing lists of seriously declining markets - with the double whammy of fewer homes sold, plus a first-time drop in the average sale price -the Tucson Foothills did not escape unscathed. 
And as this new year unfolds and home sales data becomes available, we'll soon be comparing this new year to 07 in order to help us gauge how the real estate market is doing here in the Foothills.
But in doing so, we tend to lose perspective and forget what occurred in previous years, which may provide some insight, a few surprises, and perhaps an inkling as to where things may be headed this year.

The charts below provide a snapshot of the key data for number of homes sold and average sale price for single family homes in the Tucson Foothills for the past five years, for all price ranges.

It's probably no big surprise that in 2007 single family home sales in the Foothills were down by 15% from 2006. It would be a surprise if they weren't down.
But did you realize that despite all the headlines, all the gloomy news and the collapse of the financial markets, that that was an improvement from 2006 vs 2005, when sales dropped by 25%.
And the peak year for sales, albeit by only 8 homes, was actually in 2004, with 988 homes sold in the Tucson Foothills.
2003 came in a close 3rd, with 920 homes sold.
And during all that time, even when sales took a big drop in 06, prices continued to rise. Until 2007.
The average sale price rose 68% between 2003 and 2006, then finally slipped by 3.7% in 2007, the first decline in memory.
So we're coming off two years of declining sales- the second of which declined less than the first, with a measurable drop in the average sale price last year, and about 500 homes listed for sale, some of them for an extended period.
On the other hand, interest rates are very low, and in the Tucson Foothills, we don't have the added burden of an abundance of subprime borrowers, Or large numbers of investor owned properties, or high foreclosure rates, or big developments of new home builders with a glut of  inventory now slashing prices and undercutting existing home sales.
What does this portend for 2008?

The final tally, 2007 home sales in the Tucson Foothills

Here they are, the sales numbers for the full year in the Tucson Foothills - compared by price range to those of 2006.
This is for single family homes (no condos, no townhomes) SOLD through the Tucson Association of Realtors MLS.
During this period there was an average of just 320 homes for sale priced from $500,000 and UP in the Tucson Foothills.

Price Range	2006 # Homes Sold	2007 # Homes Sold	+/- %
$500 - $750K	230	202	-12%
$750 - 1mil	103	77	-25
$1mil - $1.5mil	86	57	-33
$1.5 - $2.0mil	16	19	+19
$2.0mil & UP	19	12	-36
Total Homes SOLD	454	367	-19
*Avg List Price	$732,143	$710,646	-2.9
Avg SOLD Price	$703,616	$677,512	-3.7
Median List Price	$589,500	$561,900	-4.6
Median SOLD Price	$571,000	$540,000	-5.4
$$ Value of Homes SOLD	$512,232,360	$416,670,023	-18

*The Avg. & Median List and Sold prices, and the Total $$ Value figures, include ALL homes SOLD in ALL price ranges in the Tucson Foothills - not just those from $500K & UP

Sales down 19% overall, average Sold price down 3.7%, median SOLD price down 5.4% from 2006.
That's the year we had in Tucson Foothills home sales.

The year started off with home sales on an upward swing, and for a brief time it looked as if we might escape much of the doom that was afflicting other formerly HOT markets. But soon that upward swing lost momentum, and sales slowed. But they did so erratically, with little upticks here and there that teased us into believing that we might yet escape the worst of it. And then came August, and the mess that the financial markets wrought in cahoots with unsavory lenders, came down hard on home sales in the Tucson Foothills.
Jumbo loans took a big hit, and with the average sale price in the Tucson Foothills hovering near $700K, sales skidded to a halt.
And while sales have recovered somewhat from that initial fear and uncertainty that gripped the markets, and despite the fact that mortgage money is once again available for qualified buyers at great rates, the effects of the unraveling of the mortgage markets
continues to haunt us and exert a drag on home sales. 
And unfortunately, when the national media reports on the state of the real estate market, though Tucson is seldom a part of the story, and the Tucson Foothills are never-ever mentioned, we end up being cast in the same light as what's happening in Arizona in general and Phoenix in particular. While sales have certainly slowed here in the Foothills, the issues effecting the market are different from those in Tucson overall, and vastly different from the issues facing the Phoenix market.
-an abundance of subprime borrowers, large numbers of investor owned properties, high foreclosure rates, big developments of new home builders with a glut of  inventory now slashing prices and undercutting existing home sales.
These are not significant issues in the Tucson Foothills.
They exist, but in very small numbers, and in the case of those big developments of new homes, not at all, there are none in the Tucson Foothills.
So with fewer issues dragging on home sales, I have reason to hope, and expect, that the slump in the Tucson Foothills market will be less severe and shorter-lived than in many of the markets making headlines.
That was 07.
This is 08, and I wish you a Happy and Prosperous New Year.