It does have a large segment of its population having Tucson homes as their second homes not their primary homes.

Dave, I understand that we are a service based economy. As such, in order to perform local services… local people need to be able to “live” here. They need the basic things in life that everyone else needs too. How many people make $45K a year in Tucson? Of them, how many can truly afford a $250K median priced home?

Who is going to be able to afford second homes with credit contracting while the net total of Mortgage Equity Withdrawals (MEW) continue to slide month after month? The rich or the super rich? Either way, the second home buyers are not coming here in numbers that will buy up the excess inventory, no?

The national trends say that the housing market is in a world of hurt, right now. The national trends say that we are going to be in this mess until, at least, ’08.

My point was you have said that a significant portion of our market is determined by outsiders moving in. How, prey tell, can these outsiders avoid all the housing market problems that will slam the rest of the country, only giving Tucson (7th overpriced market in the U.S. in ’06 according to Forbes) a slight hiccup?

We will have to wait to see if this question ever becomes an issue. Right now neither of the ifs are in effect. Local homes are selling and many buyers are still coming from Calif, and the Northeast. So we will have to wait to see what would happen “if” these two things come to pass.

How can you say that? Have you read ANY news or looked at ANY data from California, Mass.,Florida, etc.? They are tanking faster than the titanic.

it seems obvious to me from national markets as well that jobs don’t have much bearing on the price of housing. Some markets see run ups in prices for various reasons, some times it is actually an industry moving into the area, but sometimes it isn’t.

I can’t imagine home prices where the average is $600,000+, but they certainly do exist and people still buy homes in those markets. Don’t ask me how they do it, but they do.

I remember back during the Carter administration people were buying homes and paying 21% interest on their loans. I don’t know how they did that either

Re-read what you wrote here. This doesn’t set off any common sense alarms? Nothing? Do you think this a rational mental state?

Why do you think so many people are up in arms about the prices? It just doesn’t make sense. at all. From San Diego to Phoenix to Tucson to Las Vegas and beyond… people acted like they had lost their minds; prices never come down, buy now of be forever priced out. We are obviously still in the denial stage of grief.

Phx has 53,000 homes on the market we have 9,700. They have a lot of water and we don’t. They have more industry but a market the is more depressed than ours. They have highway systems we will never have, they have water, they have state government etc. So I don’t know the why but this is some of the what that makes us different.

My point here was that Phoenix is our best leading indicator of things to come. Yeah we are a giant city that acts like a tiny one horse village. It’s sad, but for you to think our housing market is contained and stabilizing is telling. We are not different. Your right in that every market is local, but they all follow the same basic economic rules. period.

And you’re doing a pretty good job too.

I fixed the typo on Lereah’s name. I never read the guy and had no reason to read him. I’m met Laurence Yun, he seems like a nice person and not given to the politics of numbers, time will tell.

bobby joe, your questions, not sure I understand all of them since some are short. I’ll do my best to answer, some I have already addressed in other posts.

1.Do you think Tucson is immune to national trends?

No, I don’t think it is immune, but all real estate is local. National trends are just that trends, they effect some places more than others.

Tucson is not an industrial town, it seems to get a lot of its employement from:

Education, Medical, Military, Service, Defence.

It does have a large segment of its population having Tucson homes as their second homes not their primary homes.

2. Where is Tucson going to get people to buy homes if the local market is priced out and the people that usually buy (retiree’s from Calif., and the NorthEast) can’t sell?

We will have to wait to see if this question ever becomes an issue. Right now neither of the ifs are in effect. Local homes are selling and many buyers are still coming from Calif, and the Northeast. So we will have to wait to see what would happen “if” these two things come to pass.

3. What kind of job creation can Tucson claim to support these home prices?

Nothing that I can tell, it seems obvious to me from national markets as well that jobs don’t have much bearing on the price of housing. Some markets see run ups in prices for various reasons, some times it is actually an industry moving into the area, but sometimes it isn’t.

I can’t imagine home prices where the average is $600,000+, but they certainly do exist and people still buy homes in those markets. Don’t ask me how they do it, but they do.

I remember back during the Carter administration people were buying homes and paying 21% interest on their loans. I don’t know how they did that either.

4. Why are we different than Phoenix?

This is the one I’m not sure what you mean. Phx has 53,000 homes on the market we have 9,700. They have a lot of water and we don’t. They have more industry but a market the is more depressed than ours. They have highway systems we will never have, they have water, they have state government etc. So I don’t know the why but this is some of the what that makes us different.

watcher, what do you mean by calling bottom here? I’m talking about the news media and the way they bend things to put the worst possible twist on the news. What does this have to do with some kind of bottom? Bottom of what? I don’t think I’ve ever used the term.

As far as calling, I don’t make calls or predictions that’s for people supposedly smarter than I am.

I try and give competent analysis of the data not skewed to either swing of the pendulem. As unbiased an opinion as I can to provide buyers and sellers with the best possible analysis of the data when making decisions about Tucson Residential Real Estate.

bobby joe,
Great post!
I’m waiting for Dave’s reply to your questions.

watcher

You calling bottom here?

bobby joe,

His name was David Lereah. He was the Chief Economist for the NAR. Take a look at this blog for the plethora of reasons he was pitched forked by the bloggers: http://davidlereahwatch.blogspot.com/

I submit that the entire problem with the giant run-up in prices was due to the media and NAR. Now that the media isn’t playing nice with Realtors(r) you are not happy. Thank the good one above the media has finally come to their collective senses and asked someone else what was going on.

If the media continued to interview people “in real estate” we would continue to see false and misleading headlines, as we saw during the BOOM. The media was your biggest asset during the good times. With the NAR’s help they gave everyone the false sense of security with ads and headlines like these: price’s never go down in Real Estate, They are not making anymore land, buy now or be forever priced out of the market, just to name a few.

The media should have “yelled fire” about 22 months ago. Any sane individual could plainly see that the prices were not supported with fundamentals. Couple that to exotic and toxic finance and “we have a problem Houston.”

Take away all the headlines and look at the numbers. Look at the numbers posted by the big home builders on Wall St. – Bad, Bad, Bad. Look at the CDO Hedge fund markets imploding. Look at the CPI. Look at the avg. household’s debt ratio. It is not pretty.

Tucson RE:

A healthy RE market is one in which rent per month x 12 x 10 = price. Basically, people should buy a home when it is near or at what it would cost to rent using the metric I posted above. Anything more and the market is overpriced. Plain and simple.

When common sense comes back into the market you will see a few more buyers. Owning a home costs a lot more than the price you pay at closing. Thankfully, the media is educating potential homeowners with this crucial advice. Sometimes, and I would say right now qualifies, simple common sense tells you to rent.

A few questions:

Do you think Tucson is immune to national trends?

Where is Tucson going to get people to buy homes if the local market is priced out and the people that usually buy (retiree’s from Calif., and the NorthEast) can’t sell?

What kind of job creation can Tucson claim to support these home prices?

Why are we different than Phoenix?