I’ve been out all day with a buyer, just got back and found your comments trapped in the spam filter otherwise they would have been up as soon as you posted since I’ve approved your first comments it is automatic after that unless, you have more than one link in a comment which triggers the spam filer. That is why both comments here are just now showing up.

First, I’m wondering if you shouldn’t re read the post. I’m saying that because you are saying exactly what I said about what happened to the market with further evidence it was speculators that came in and “ruined” the Tucson Real Estate Market. I agree with you that what happened was a bad thing. I’m saying real investors were out of here, would be investors and speculators caused the huge run up in sale prices.

Your link above to the speculator loosing his shirt in Tucson is exactly what I was pointing out and I quote “I call this part of the current Tucson housing market the Jetsam. These speculators aren’t making money they are loosing it and in some cases a lot of it. They have to get rid of these homes, and they don’t have money to put into them in true marketable condition. They sit on the market, inflating the number of available houses in the Tucson housing market inventory. They are jetsam, because they are being thrown overboard in an effort to keep their financial ship afloat.

For some it has already sunk, for others it is going down.”

What I write about about the buyers in the market is from first hand experience. These are the sources of our buyers.

second home buyers
retirement home buyers
college students
parents of college students
job transfers
military

For more than a decade now Tucson has been a retirement destination. Almost 50% of the homes in Tucson are owned by retired or snowbirds.

Ten years ago when silicon valley took off and housing prices went through the roof there were bus drivers making $70,000 a year living in their cars because they couldn’t afford to buy a home. It was a difficult time, but people are still living there. The asking prices are starting to come back to reality as sale prices continue to increase.

There are cities in California, Washington, and Oregon where the median sale price of homes is over $400,000. The median price in Tucson in March 2007 was 222,700 and that is with over 10,000 homes on the market, The median sale price in March of 2006 was $218,000 there were 7,577 active listings that month.

You as who is going to buy these homes. It sounds like you are making the assumption that everyone trying to buy a home has nothing to put down. They haven’t already saved anything they have never bought a home etc.

For some people they can’t afford to buy a home in tucson, my son was one of them two years ago when he bought a home in Arizona City and started commuting to Tucson everyday to work. He has made improvements to his home, he has some equity built up, he can sell it and have money to put down on another.

That’s how I bought my homes over the years going from a mobile home eating split pea soup over rice for a very long time to make the payments and own it outright.

It is true, there are some people that are priced out of our market. The market has to make adjustments and it will. However, I don’t believe or think it is a doom and gloom market. It has issues, but not like most markets in this country as you mentioned. We can play the “if” game all day long, it isn’t relivant. There will always be the “ifs” that no one can foresee. So we base projections for the future on what was and what is and take it a day at a time.

The figures continue to show sale prices increasing, as stated above about the median sale price March 07 over March 06.

There is more to say and I’ll be covering more in new posts yet this week.

I can say from personal experience, we have new clients coming to town all the time buying homes. We have helped almost a dozen families buy or sell homes since the first of the year. We are very busy in this market.

I thought you would delete my post… cheers to you for a willingness to address a dissenting view… now back to your statement…

Who made the market in 05 and 06 if the investors/speculators didn’t play but a blip in the game? You say snowbirds and people moving here in lieu of cheap prices and taxes; comparatively. I say speculators and investors from San Diego to Santa Barbara.

Check this site out and this post specifically: http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1205179

There were a ton of CA home owners that tapped the HELOC for enough money to buy 3 or 4 homes here in Tucson. Guess what? A number of them actually bought 3 or 4 homes or made deposits on new homes here and are now walking away. They can see the writing on the wall.

Why? No one wants to buy these homes and the REIT market does not support the mortgage payment. I can rent a home for an avg. of a third of the mortgage payment; check craigslist.

Fundamental economics have to take over at some point. When you base the Tucson housing market on injections of capital from an outside SOURCE, you are making a very risky bet. As this model assumes the “opportunity cost” and “comparative advantage” of home buyers. This is like asking a 4 year old what they will study in college.

Every economy needs a base. While not everyone can own a home, those in the upper tiers should be able to afford one. The avg. Tucsonan makes $26K a year: http://www.tucsoncitizen.com/daily/business_edge/28147.php
A person that doubles the avg. Tucson wage can barely afford a house right now. The percentage of Tucsonan’s that make $55k or more is tiny. Who is going to buy all these homes at the median price?

Our city is entirely too large to run off of snowbirds and retiree’s alone. While they certainly play a major role, they are only here for half a year. When you factor in the entire national housing market, you see that most areas are having a rough time. If the snowbirds home area has lost value (Think CA, Boston, New York), the money they had in “equity” suddenly becomes a lot smaller. Thus, not able to buy the second home. If they can’t sell their primary residence to move here, how can they support our housing market?

I seriously thought you would delete my post… cheers to you for a willingness to address a dissenting view… now back to your statement…

Who made the market in 05 and 06 if the investors/speculators didn’t play but a blip in the game? You say snowbirds and people moving here in lieu of cheap prices and taxes; comparatively. I say speculators and investors from San Diego to Santa Barbara.

Check this site out and this post specifically: http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1205179

There were a ton of CA home owners that tapped the HELOC for enough money to buy 3 or 4 homes here in Tucson. Guess what? A number of them actually bought 3 or 4 homes or made deposits on new homes here and are now walking away. They can see the writing on the wall.

Why? No one wants to buy these homes and the REIT market does not support the mortgage payment. I can rent a home for an avg. of a third of the mortgage payment; check craigslist.

Fundamental economics have to take over at some point. When you base the Tucson housing market on injections of capital from an outside SOURCE, you are making a very risky bet. As this model assumes the “opportunity cost” and “comparative advantage” of home buyers. This is like asking a 4 year old what they will study in college.

Every economy needs a base. While not everyone can own a home, those in the upper tiers should be able to afford one. The avg. Tucsonan makes $26K a year: http://www.tucsoncitizen.com/daily/business_edge/28147.php
A person that doubles that wage can barely afford a house right now. The percentage of Tucsonan’s that make $55k or more is tiny. Who is going to buy all these homes at these prices?

Our city is entirely too large to run off of snowbirds and retiree’s alone. While they certainly play a major role, they are only here for half a year. When you factor in the entire national housing market, you see that most areas are having a rough time. If the snowbirds home area has lost value (Think CA, Boston, New York), the money they had in “equity” suddenly becomes a lot smaller. Thus, not able to buy the second home. If they can’t sell their primary residence to move here, how can they support our housing market?

How about crime? Tucson consistently ranks in the top ten for property crime… you think snowbirds don’t notice? How long before they stop coming here for places like Rocky point Mexico which has almost more Americans than Mexicans living there?

There is plenty of anecdotal evidence that suggests snowbirds are leaving Tucson for Rocky point and other destinations in Mexico, even Costa Rica. Been down there lately? Giant towers of condos and new homes going up 30 to 60 minutes outside of Rocky Point proper in every direction. Tucson prices with an Ocean View.

This post isn’t about investors, it is about what happened to the market in 05 and 06. Investors never made the market and they will never rescue the market. When they do return it won’t be even a blip on the screen.

There are more posts to follow this one on the condition of the market. Credit is a huge issue as well.

The majority of the people buying homes in Tucson aren’t from here. They are coming from California or the east coast where housing prices are way over what they are in Tucson. They look at our market and see our property taxes and think our prices and taxes are low. These are the people buying homes in Tucson.

The projection is that in the next 10 years 33,000 baby boomers will be coming to the Tucson area each year. They will be buying second homes as winter visitors, or retirement homes.

The chink in your logic is thinking that people already living in Tucson will be buying Tucson homes. For the most part they won’t. It is the out of state buyers that have been and will continue to buy homes here.

As bad as it may seem the Tucson Real Estate Market is in much better shape than most of the real estate markets in the rest of the country.

How many “investors” would it take to bring the housing inventory down to normal levels? Where are these “investors” going to get their money when the MEW is tapped out and the Banks have “more rules”?

Why don’t you focus on the real issues of Tucson Housing? Over priced homes that very few in the Tucson area can afford. I think you will have plenty of time to think in the coming months, and thats not a slam on you. Its a realization of the “actual market.”

Most people with a very basic understanding of economics can see that the economy is headed in the wrong direction in “macro” terms. As the value of the dollar erodes and as inflation of life’s necessities creeps in (gas, food, walmart prices), the picture becomes more bleak for the short term.

Then we look at credit. The majority of Americans are leveraged to the hilt right now. They tapped the MEW for all it was worth and are barely surviving on credit cards. The credit well is running low and many are barely holding on. A slight change in the interest rate will be catastrophic for them, lets not talk about inflation.

The investors are not going to be around by the end of the year. It would be a financial folly to think that the avg. person in Tucson could afford a home in the next seven months. Why?

The wages in Tucson area would need to raise “at least” 30% in the next 7 months to make a sound price to wage curve. look here: Leading Indicators show pockets of softening . . Take a look at the date of the article. Many have been postulating this downturn for sometime.

From investor to basic home dweller; The basic economics of home ownership do NOT make sense right now, and until we revert to the mean in home prices they won’t.