A Look at the Tucson Area Real Estate Market
I’ve dreaded looking at comparable homes in appraisals over the past few years. It’s been a long, discouraging trend. Each sale was about so much more than a house. It was about a seller struggling in some way. Occasionally, I ran across an exception, but overall, it’s been tough for everyone. Lately, I’ve noticed an improvement in comparable data. More and more homes are selling for MORE than they did in the previous sale.
So this seemed like a good time to check in with the Tucson Real Estate market and evaluate where things are. Were my observations supported by numbers from the larger Tucson metro area? Every month, the Tucson Association of Realtors publishes a number of sales related statistics. March 2011 stats can be found at http://www.tucsonrealtors.org/tar-v2/statsMar2011.pdf . There are pages of information about sales and prices in the Tucson area market. You’ll find a breakout of sales by zip code at the end of the report. And yes, the data is generally encouraging.
All in all, sales volume is steady for now. The same number of homes were sold in March 2010 as in March 2011 (n=1169). The March volume of sold homes increased 20% over February. But in 2010 that increase was over 60%. It’s possible that March’s unit increase over February’s may be more about time of year, than a trend in sales volume.
An encouraging trend is the 2011 month over month increase of properties newly under contract. New contracts in 2011 outpaced 2010 numbers for the same months by at least 30%. That should help boost unit sales in the upcoming months. You can’t assume new contracts in February (n=1184) translate into closed sales in March (n=1169), but 30 days is a typical close. We’ll know in the next month or so if those written contracts translated into closed sales. The sharp increase in new contracts follows 5 good, stable months at the end of 2011. The good news is that contracts are being written like gangbusters. Buyers are out there looking and trying to buy. Lesson Being: If you see a house you want, write an offer, because it won’t be available long.
There is also an interesting change in the trend of “Newly Under Contract” units. For years June and July were the busy contracts month. I hypothesized it was because families move before the children’s new school year begins. Interesting to note that last year, there were more new contracts written in April. I wonder if it’s a reflection of the current employment challenges. Is the spike because adults want to make a job transfer or search after school is out? Or possibly people are using their tax refund for a down payment on a home? The good news is that every month this year has shown an increase in contracts written.
More homes are sold in the Northwest and Central parts of town and that’s a consistent trend across four years. In March, dominant sales prices were in the $90,000-$160,000 range, with spikes at $200,000 to $250,000, and again in the $300,000-$400,000 range. I was surprised to see that 5 homes over a million dollars also sold in March. That’s a good volume at that price.
The median sales price is the exact point at which there are an equal number of homes that sold below it as above it. I compare it to the midpoint in a teeter totter. An increase in median price can reflect an increase in value over time. A monthly to month dip in the median just means more sales under the median than over. Unlike “new contracts”, the median price is a stable indicator; it isn’t subject to much extraneous measurement. The average median sales price crept up month by month from 2001 to mid 2006. It dips in late 2006, goes back and forth in 2007, until September
when it slowly sinks to it’s lowest point, March, 2011. So, the local housing market hasn’t reached a “recovery point”. We are still seeing houses sell for less than previous values, but we are also starting to see some recovery at lower prices and that is what will drive an improvement in values.
Almost 37% of March sales were cash sales, which would be consistent with lower end investment purchases and a dropping median price. Many of the homes on the market are in need of repair. With that amount of cash volume, we can hope that these homes will be repaired, renovated and placed back on the market for a profit. This would also help increase sales prices over time, which would increase home values. Many of the properties previously purchased in the $ 70 to $ 80 thousand dollar range are being resold in the $ 100 to $ 120 thousand range.
I’m looking forward to the summer numbers. I think we’ll see a stabilization in median price and hopefully the continued activity in new contracts will translate into a high percentage of sales. I’ll be sure to give you an update in mid-summer.
In the meantime, hope you’re having a great May – enjoying all the celebrations that seem to happen this time of year.
