After years of downturn, Tucson is beginning to come out of the morass which was the real estate market. 2015 is projected to be a year when the market should appreciate at a normal rate. Most of the foreclosures and short sales will have been sold or auctioned off.

But, we still are influenced by those buyers from other parts of the country who live in judicial foreclosure states. They are about three years behind Arizona and distressed inventory is weighing down their markets.

Potential buyers from those states who are considering a move to Tucson may be hemmed in by lower prices just as we were three years ago and therefore be unable to purchase now.

The average price of a home in Tucson went from $202,342 in December 2013 to $210,454 in October this year.

The median price rose a bit more than 4% from $159,900 to $166,500. Sales statistics are a lagging indicator since they are one month in arrears. The numbers for December 2013 reflect what transpired in November since closing takes approximately 30 days. Seasonal adjustments must also be considered, the normal drop off in sales during the winter holidays when people are celebrating and not thinking about selling their home.

Banks are talking about raising rates and if that happens, buyers may come out of the woodwork to take advantage of their ability to buy more home for the same amount of money. Housing prices have not escalated considerably and the market generally has been quiet.

If you are thinking about purchasing a new home, this is the time. Builders have inventory on hand and especially with spec homes, buyers can take advantage of incentives which include lower interest rates for the loan life. Call me and we can discuss what is out there and where it is located in proximity to your lifestyle. And take advantage of 2014 fiscal year tax deductions.

The Tucson real estate market is experiencing some steam with an increase of 23.08% in volume from $130,258,440 in January 2011 to the $160,319,228 in February 2011. This number is about $15,000,000 higher than February 2010.

Are we out of the woods yet?

The average sales price increased 9.22% from January 2011 to February of 2011;  $166,998 to $182,388 in February, but still short of the 2010 numbers which were $201,219 in January 2010 and $195,996 in February 2010.

The average list price increased 8.43% from $177,036 in January 2011 to $191,957 in February 2011.  This compares to $201,219 in January 2010 and $206,843 in February 2010 .

The median sales price in February 2011 is $137,000 a decrease from February 2010 of $13,000 ($150,000) but an increase from January 2011 from $134,250 or 2.05%. The median sales price in January 2010 was $160,000.

A total of 2,272 properties were under contract at the end of February 2011, an increase of 60.34% from February 2010 when only 1,417 were under contract.  This is a 12.87%  increase  in February 2011 from January 2011 when 2,013 properties were under contract.  This compares to January 2010 when only 1,155 properties were under contract.

Total sales units in February were 879 compared to January 2011 when 780 were sold, an increase of 12.69%.  This is more than January 2010 when 712 units were sold and 741 in February 2010.

The numbers of new listings too have declined which may bode well for the Tucson market, maybe signaling that inventory is decreasing.  February new listings total 1,487 as compared to 1,949 in January and 2,104 in February 2010 and 2,424 in February 2010. The month over month 2011 decrease is 23.70%, a substantial number.

Active listings have declined from January when 7,147 properties were listed, and February numbers of 6,947 active listings, down 2.80%.  This is still higher though than 2010 numbers when 6,739 properties were listed in February and 6,618 in January 2010.

The area with the greatest number of properties on the market is the Northwest with 1772 active listings.  This is followed by the Central area with 869 properties for sale and the North Catalina Foothills areas with 727.  Only 17 properties are available in the extreme Northeast.

Looking at price points, the majority of homes sell between $100,000 and $159,999.   Running the gamut however, Tucson has 44 active properties priced at $29,999 or lower and at the other end of the spectrum, 194 properties price at $1,000,000 or higher.

The average number of days to sell a home in Tucson is 107 days.  The extreme Northwest properties sell in an average of 51 days while the northeast properties take 130 days.

The majority of people are paying cash for their real estate purchases (336), followed by Conventional loans (251) and then FHA financing (195).  VA loans totaled only 55.  The cash purchases may be reflective of the fact investors are active in Tucson.  Resort and second home buyers are also cashing in on the “bargains” here and many second home buyers also pay cash.

Prices are similar to the end of 2003 and the first month of 2004.  As Marshall Vest, Chief Economist at the Eller School of Management at the University of Arizona told the industry at the Economic Summit, “buy all you can buy, hold it for five years, and make a killing!”

Resources:

http://www.tucsonrealtors.org/tar-v2/statsFeb2011.pdf

“We are trying to improve the business climate here in Tucson” Mike Letcher, City Manager of Tucson, told the gather of Realtors® last week at the Economic Summit sponsored by the Tucson Association of Realtors®.

“The recovery has caused some painful times,” he said, “but we are getting optimistic.   “We want to make sure we do not miss an opportunity by not being able to take advantage of situations when they present themselves,” he continued.

The goals are to improve the business climate, encourage the economic recovery, and grow the local economy.  The new economy is not driven by rooftops, Letcher said.

The major source of revenue in Tucson is the sales tax, not the property tax as many people think. Tucson is trying to increase the tax base with economic diversity for job creation.

The city has cut back and laid off  employees and cut budgets .  First line supervisors have been told to be more “business friendly.”  This is “critical to the city for it to turn around” Letcher said.

The city along with the other towns represented here today must work as a region, communication between the municipalities is imperative since what one area does impacts other areas.

The Ombudsman Program with the city for business development is cutting the time and paperwork for large construction projects, Letcher said.   This is a portal for businesses and developers.  They have someone to go to who understands the best way to do business with the city.

In an effort to be more business friendly, the city has extended hours and has developed programs to protect developer rights.

“Hopefully we will build a stronger region and a stronger downtown,” Letcher said.

Resources:

City of Tucson

http://cms3.tucsonaz.gov/

City of Tucson Streetcar Project

http://www.tucsontransitstudy.com/

City of Tucson Downtown Development

http://cms3.tucsonaz.gov/rionuevo

“We live in a beautiful part of the state, we have incredible weather, and our issues are unique” Gilbert Davidson, Town Manager of Marana told a gather of Realtors® at the Tucson Association of Realtors® Economic Summit, last week.

Marana has higher sales revenues, projected to be up 5.3% through the first half of 2011 over the same period in 2010.  But the town does have budgetary concerns and is trying to cut back on programs which do not impact the long term growth of Marana.

Additionally, there is some building of new single family homes in Marana.  A total of 343 building permits for single family homes were issued in 2010, an average of 28 homes a month. Comparatively, a total of 75 building permits were issued in 2000.    Certificates of Occupancy totaled 42 in 2010.

The Twin Peaks Interchange, now opened, provides a commercial corridor and runs from I-10 to Dove Mountain. “It is the gateway to the Ritz Carlton”, Gilbertson said.  There is ongoing home building as part of the Ritz project.

With the assistance of Congresswoman Gabriel Giffords, Marana secured a federal government grant and built the 70,000 square foot LEEDS certified Marana Health Center.  It is located near the government offices.

Sargent Aerospace and Defense has expanded facilities in Marana and provides jobs.  “The University of Arizona is a gigantic economic engine” and Marana is looking to workforce connections and internships. “We must support the University,” Gilbertson urged.   Marana is a business friendly community and is courting business especially with U of A partnerships.

Marana hosts top PGA players from throughout the world February 21 through February 27 for Accenture Match Play.  The PGA tournament is televised to more than 200 countries.  Marana is on display to the world and Match Play is a tremendous advertising vehicle for Marana and southern Arizona.

Resources:

Marana Health Center

http://maranahealthcenter.org/

Sargent Aerospace and Defense

http://www.azbiz.com/articles/2010/06/23/news/doc4c222c7d7edf0983802864.txt

Accenture Match Play

http://www.pgatour.com/tournaments/r470/

Town of Marana

http://www.marana.com/

The comprehensive market reports released to the public by the Tucson Association of Realtors monthly are both fun and instructional and provide a wealth of data which can be mined with only an elementary understanding of mathematics.

Combining the data with a zip code map provides the basis of knowing where properties are selling and those which are languishing on the market.  This, in combination with absorption rates, (tomorrow’s topic) will divine where the great buys may be and where the “hot market” is currently.

If we look at areas where the greatest percentage of homes on the market sold during December, the Rita Ranch area takes the award with 27.73% of properties sold, but the 85747 zip code had only 154 homes for sale and a total of 35 sold.  Closely following is the Midvale area (85757) with 24.58% sold from a total of 118 on the market, which is 29 homes.  The 85714 area, east of Davis Monthan Air Force Base in the Irvington area had 22.86% sold, or 6 out of 35, and the area with 21.60% properties sold, or 35 out of 162 is 85756, south of Tucson International Airport east of I-10.

Now looking to the areas with the most homes available from the December statistics, there are nine zip codes with more than 250 homes actively on the market.  The Foothills-Sabino Canyon area leads the pack with 353 homes on the market (85750), closely followed by the Catalina Foothills zip code with 340 homes on the market, zip code 85718.  Many people wanted to put their home on the market but waited thinking the prices would increase.

The Green Valley area closely follows in 85714 with 292 homes for sale, followed by Corona De Tucson with 282 homes in the 85614 zip.  Both of these areas saw new construction during the mid 2000’s.   Rancho Vistoso in the 85755 area is offering 279 homes, and the Saddlebrook-Catalina area in 85739 has 270 homes on the market.  All of these areas may appeal to people looking to retire in the Tucson area or people looking for second homes.

The northwest, Lambert Lane area south of Tangerine between Cholla and Oracle in 85737, an Oro Valley zip, has 259 homes on the market.  From Golf Links north to Speedway in the 85710 zip, northeast of Davis Monthan has 258 listings, and Sahuarita, a new home subdivision area in 85629 has 252 homes on the market.

The absorption rate, which is a different statistics than discussed today is tomorrow’s topic for the various zip codes in town.  This will tell how long it may take to sell a property in a specified zip.

Resource:

http://www.tucsonrealtors.org/statistics.html

A contrarian doesn’t wait until national magazines and newspapers let the world know prices are on the way up.

Trend analysis is the tool used and is important for those people who want to “get in on the ground floor”.   The buy low, sell high mentality can’t wait for Time or Newsweek to announce home prices are up; by that time, the floor has risen considerably.

Sheer logic tells us this is true, think about the lead time needed for a reporter to first  realize prices are on the way up, then gather information to substantiate the claim, write the story, then the editor has to decide if this is a cover story or not…which may be a few more weeks.  Just as I am purveying this information after the fact, since prices are already on the way up, I too am late to the party!

Tucson Multiple Listing information for December 2010 shows that prices are up 3.13% from an average sales price of $180,736 in November to $186,399 in December.  The average list price of a home is up 3.04% from November, or from $191,637 to $197,457.

The median sales price remained approximately the same between November and December with a .29% decrease from $139,900 in November to $139,500 in December.

Although the total number of homes under contract in December decreased 7.37% from 1900 in November to 1760 in December, traditionally the months of November and December see fewer people putting offers on homes because of the Thanksgiving – Christmas holidays.

Yet the total sales volume rose 16.93%, an impressive amount, from $144,588,779 in November to $169,063,508 in December.  This represents an increase of 13.38% in total units sold within the Tucson Multiple Listing area, from 800 in November to 907 in December.

The holidays also see fewer people listing their homes.  Many wait until January, beginning the new year with new intentions, having put the holidays behind.  December new listings decreased 25.63% to 1,071 from 1,440 in November.   This brought the number of active listings in the Tucson Multiple Listing Service area down to 6,859 in December, which is a decrease of 7.99% over November.

New home construction prices are also on the rise.   In one subdivision I visited this weekend, prices on one model have had two increases in pricing within the last month.

Tomorrow we look at the various areas in Tucson and where the most homes are being sold…later this week we will revisit the numbers of short sales and foreclosures in the various areas.

When trying to decide whether or not to move to an active adult community, several personal behaviors should be considered.  Many people believe they should move to an Active Adult community because it means “immediate friends”. 

Moving from an established community where long term relationships had formed through neighborhoods, places of worship, or careers, to an area which is new and different, but where  the climate is beneficial can be daunting.   Many people feel the best option is an Active Adult Community,

Tucson and Pima County certainly have an abundance of Active Adult Communities; some are golf course communities, and some are not.  It is imporatnt for people who are retiring to think about what kind of life style they desire in their retirement years.

There is the classic view of retirement…sunshine, leisurely breakfasts, clubhouse, going to the green for a round of golf, a late lunch, jawing with new found friends, then home to do a few chores and get ready for friends and cocktail hour.   The brochures project this, bur rather than golf, there may be substituted an exercise room, exercise instructors, aerobic swimming classes.  

The question I pose to you…what is it that you want to do when you are retired? 

This is not an easy question to answer.  

The automatic reaction is “to do the things I’ve always wanted to do” and an active adult community, when reading the brochure, provides easy answers to thing you think you might want to do.

But let’s say you decide to live in town rather than an Active Adult Community on the outskirts, you are close to world class restarurants, many live theaters, The University of Arizona and classes offered to Senior Citizens, close to crafts and recreational programs offered by Pima County and the City of Tucson, close to a Pima College branch to take exercise classes, or classes in a foreign language, social sciences, science, mathematics, or an abundance of informational fun classes. 

Buyers should think about what they want in retirement community before they buy.  Buying the image will not satisfy.  Often buying the tried and true is the most satisfiying and can be kinder on the pocketbook because association fees may be much less.

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   We have been working for a few weeks now trying to determine what type of property to purchase…single family, duplex, home with a guest house…for an investment property.   Trying to sort out what is most advantageous for a new investor is not always easy since there are so many things to consider. 

   What area?

   What type of property?  A property= high end;  B property=middle of the road; or C property= lower end.

    What price range?

    Who is the audience to whom the rental is targeted?

    Laying the appropriate groundwork is paramount to success; understanding the accounting when one owns rental property; understanding the advantages of a 1031 tax deferred exchange;  deciding whether to form an LLC,  all are important considerations.   This means talking with professionals; the accountant, the facilitator for information, and possibly an attorney.  Formulating some type of long term plan with short term goals so we are all on the same page regarding the map to success comes next.

   But in the meantime, we have been looking at various types of property to familiarize my client with the maket.  There seemed to be plenty of potential candidates for purchase on the market a month or so ago, but suddenly, she said, everything she liked has a contract on it.

   The real estate market is definitely stirring.  Properties priced correctly and which show well are not languishing on the market as they were a few months ago.   Second homes and retirement homes are showing signs of life.  Adding steam to the market is Tucson’s AARP designation as the number one place to live which is both an affordable and desirable retirement area.

    Real estate prices are still low, interest rates remain below 6%, and although requirements for loans have tightened somewhat, money is available.  People are putting their homes on the market, there still is an abundance of short sales and foreclosure properties, and savy investors are purchasing properties on the steps of the courthouse.

   A good cross section of housing is available and Tucson remains a buyer’s market.   It is time to scoop up there bargains because this market will not last.   It always boils down to supply and demand.  

   If you are thinking Tucson, now is the time to act.  Use a local lender who knows and understands our market here, and a good Realtor who listens to your needs and wants.  Take a look at my web site to garner information which will help you as well as provide the opportunity to input your own criteria and see what is out there, and if you don’t have a Realtor now, contact me.  I am always willing to help! 

   Take the comments of my client seriously…”all the good properties suddenly have contracts on them!”

Lenders:

Lance Dickson –  Nova Home Loans –  http://www.lancedickson.com

Tom Heath – The Heath Team   – http://www.theheathteam.com

Jerry Sundt – VIP Mortgage http://www.sundtmortgage.com

Realtor:    Terry Bishop  http://www.terrybishop.com

   Tucson real estate sales, although improving, now is also adversely impacted by the Home Valuation Code of Conduct (HVCC), a de facto regulation promulgated by Andrew Cuomo, Attorney General of the state of New York in conjunction with Freddie Mac and Fannie Mae.  Loans which are not Fannie Mae or Freddie Mac loans are not governed by the HVCC.

   The intent originally was to insure appraisals are done in accordance with independent safeguards, that appraisers were not coerced to hit a value specified by the lender or loan officer.  The HVCC lays out ten areas of concern Cuomo had regarding lenders and appraisers.  But rather than independent appraisers, Appraisal Management Companies (AMC) have surfaced and are a profit center for large banks which underwrite many of the Fannie Mae and Freddie Mac loans.  Appraisals must be ordered and “The Code requires the lender or any third party specifically authorized by the lender to select, retain, and provide for all compensation to the appraiser”1

   As a result, many independent appraisers and small appraisal companies can not longer afford to remain in business unless they join one of the AMC pools.   Lenders, erring on the side of caution, may no longer use these small independent companies because they are not an AMC. 

   Additionally, the cost of an appraisal has escalated.  There is another level of management involved with the AMC.   Appraisals used to cost between $325 and $375; now they are $400 plus.  Ironically, the appraiser, the person with the expertise, is now paid at least $100 less than pre-AMC.   The differential goes to the AMC.

    Appraisers new to the market join the pools to beef their resume and gain experience.   Lenders request the appraisal from an AMC approved by the entitity subsequently underwriting the loan.   Appraisals may be done by people who do not know the area,

      Appraisers have guidelines and take some of  their comps from within a mile of the  property.  Tucson properties have been appraised by out of area appraisers and these appraisals may come in unusually low.  In a one mile segment, one 1/2 mile area may have custom built homes valued at $800,000 whereas the other 1/2 mile segment may have tract homes valued at $250,000.   Each property may be 3,000 square feet but looking at paper, the appraiser does not know the difference.  This skewing would occur  with automated valuation models which are not prohibited by the code. (http://en.wikipedia.org/wiki/Automated_Valuation_Model)

         As a Realtor representing my client, I often spoke with the appraiser and provided my comps with other pertinent  information.   If I represented a property and knew the comps showed two distressed properties, I made sure the appraiser understood.   Perhaps I knew a property had been flooded or there had been a fire, this information materially impacts the value of that home…it should not materially impact the value of the home I am trying to sell.   Understanding the area or the history of the area and properties is part of the knowledge base used to make good decisions.  

 1- Fannie Mae guidelines FM 0109 page 2 2009

Resources:

Home Valuation Code of Conduct 

http://www.freddiemac.com/singlefamily/pdf/122308_valuationcodeofconduct.pdf 

http://www.appraisalinstitute.org/ano/current.aspx?volume=10&numbr=11/12

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/appraisalguidance.pdf

http://www.freddiemac.com/singlefamily/hvcc_faq.html

http://www.fhfa.gov/webfiles/277/HVCC122308.pdf

http://narblog1.realtors.org/mvtype/president/2009/06/all_is_not_quiet_on_the_midwes.html

  http://narblog1.realtors.org/mvtype/appraisalinsight/cuomo_agreement/

http://appraiseractive.blogspot.com/2009/07/hvcc-update-nar-president-charles.html

 Tucson real estate market trends begin to appear with numbers analysis over a period of months, often providing suprises.  Relative to the numbers of properties sold compared to the number of listings in the area, the locations of Tucson showing the greatest number of sales include the Central area, the East, the South, the Southeast, and the Southwest.  Each one of those areas in June had greater than 22% of listings sold. 

Tracking the numbers, we can see improvement in almost all areas.  Many homeowners, however, are keeping their properties off the market until the price points improve.  This is particularly true in high dollar areas.  Many properties which have been on the market more than six or nine months, are taken off the market by their owners.

The numbers of days on the market for listings sold was 83 in January, 85 in February, 85 in March, 78 in April, 85 in May and 80 in June.  Sellers know in order to compete in today’s market, properties must be priced “ahead of the curve” and show better than competing properties.  Much of the competition today is in short sales and foreclosure properties. 

By far, the greatest numbers of properties currently on the market are priced between $200,000 and $249,999.  This is followed by properties between $300,000 and $399,999.  Collectively, about three times as many properties priced between $100,000 and $200,000 with approximate $20,000 steps, are listed. 

On the upper end of the price scale, as of June 2009, 432 properties are listed between $400,000 and $499,999;  519 between $500,000 and $749,999; 258 properties between $750,000 and $999,999 and 301 properties priced $1,000,000 or above.

The chart below shows the numbers of properties sold each month since January 2009 and the total number of listings for each of the 14 Multiple Listing areas.   Looking at the percentages, one can discern where the properties are moving,  The upside is most all areas have experienced increase in sales since January 2009.

Resources:

http://www.tucsonrealtors.org/tar-v2/MLS_Stats_June.pdf

Again, thank you Scott Weidamoyer who compiles statistics from where I generate these numbers for the Tucson Association of Realtors.