What sells newspapers, brings in dollars for TV news advertising and creates interest for magazines, is often a brand of subdued sensationalism.   And the topic of conversation has been the real estate market and the alleged looming “recession”.

     Some buyers are staying on the sidelines, and some sellers are not putting their homes on the market for fear they will “lose” too much money.  In all the news I’ve read or listened to, none talks about the extreme run up in prices which would put the present situation in perspective.

     As an exercise, I took the Tucson Multiple Listing numbers and computed the increase in average sales pricing since 1993 which was $105,193.  In 2007, the average sales price was $272,601, an increase of 159.14% or about 11.37% per year.  But what the numbers don’t tell is that more than 39% of that increase came during 2004 and 2005.

     Price increases, numbers of units, and days on the market were as follows:

Numbers given and percentage increases are year over year increase.  These numbers are taken from the Tucson Multiple Listing Service and are for Tucson only. These numbers are compounded annually , whereas the number in the next paragraph are not.

                   What do these numbers tell us?  Excluding the years of 2004 and 2005, the average rate of increase in sales price is about 5.12% per year.  Indexing at 5.12% from 2003 would put the value of that house at $188,537 in 2004;  $198,190.01 in 2005; $208,337 in 2006 and $219,004 in 2007 – a difference of $53,597.

      No wonder the market needs to readjust!

      Tomorrow:  What about 2008?