Tucson Condo Market Fall 2006

New Report Tucson Condo Market Summer 2007

Like the rest of the Tucson real estate market and the national real estate market, the condo market has cooled from it record hot 2005 levels. Here is a brief summary of the condo market now and then, and a quick summary of the way things unfolded for the Tucson Condo Market last year and up to now.

Tucson Condo Conversion Kick-off 2005

The main trigger for the condo craze in Tucson was the condo conversion located by the La Paloma Resort called Tierra Catalina which opened Summer 2005. People camped out overnight to get these units and were sold out within hours. No one expected this, even the developers were taken completely by surprise.

In 2005 people were buying condos for a couple of reasons. Some bought as investments, they saw the prices of existing Tucson real estate appreciating at a rapid rate and they bought condos because they were the least expensive real estate purchase in town and could flip those investments in a few months and walk away with a profit. There were quite a few instances where people would hear that a particular apartment complex was “going condo” so they would rent an apartment there knowing they would be offered an opportunity to purchase for a reduced price as an existing tenant.

Others bought because they were the cheapest purchase in a rapidly appreciating Tucson housing market and it was all they could now afford. These buyers were simply looking for a place to live and wanted to make a purchase of some kind before they were priced out of buying a home of any kind in Tucson. They wanted to stop paying rent and make a personal investment while record low interest rates on loans were still available.

Where are we Now

There is huge competition in the market right now. Location plays a key roll as well as upgrades offered. The most popular areas are the ones bordering the mountains located in the North Catalina Foothills and the Northwest Oro Valley area.

Here is a breakdown of the condo conversions in these areas:

Our newest condo conversion in the North Catalina Foothills area located behind the elite La Encantada Mall called Skyline Villas. They sold 43 units the first week they opened in October.

Early this year Veranda at Ventana Canyon opened with 408 units. They have sold 190 so far this year. HOA fees are 1 br. $174 mo. 2 br. $191 mo. 3 br. $201 mo. Right now they pay the first 6 months.

Pinnacle Canyon, also in the Ventana Canyon area, opened Fall 2005 and have sold 152 units thus far.

The Villas & Sabino Canyon, also in the Ventana Canyon areas, just opened and have sold 7 with 157 active in MLS.

The Greens at Ventana Canyon are just opening as well so no statistics yet.

The only one currently in Oro Valley is called The Boulders. They too opened early 2006 and are about half sold. HOA fee $141 mo. First year free.

There are condo conversions all over town with a new one opening soon within walking distance to the University of Arizona campus formerly know as Arizona Commons now called Campus Walk Condominiums. HOA fee $197 mo.

There is another located centrally called Sunterra.

John Haase with Pinnacle Mortage here in Tucson said yesterday,

“From an investment standpoint the condo market is flooded. I feel if Tucson inventory is up on all other types of properties there isn’t much desire to get into a condo. Additionally, the HOA fees are killing clients with regard to monthly payment and they would rather that money go to a SFR payment than a management company.

On the flip side, 2nd home / condo sound more attractive to people who don’t want to take care of the property and/or are using it for a home seasonally. I personally have had more people from California and Colorado buying condo’s for vacation homes than anyone locally, which I think is smart.”

The desire is not what it was last year when our home inventory was at an all-time low but it is still strong and units sold are running at 2003 levels, which was a record year in and of itself. We have about 9,000 homes, townhomes, condos on the market currently. Builders are offering huge incentives to buyers and raising the coop fees to agents bringing the buyers. Sellers are having to be competitively priced and also offering closing cost assistance to sell their homes.

Our market is stabilizing and our 2006 appreciation is between 5-9%.

Tucson is a great place because of its year-round sunshine with the ability to play golf, tennis, hike, bike all year round. Tucson has wonderful resorts, spas, medical facilities, the University of Arizona, Raytheon, Ventana Medical, Honeywell, etc. While other parts of the national are declining we are, in fact, appreciating.