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Tucson MLS Statistics for July 2007

August 14, 2007

Post Tags: Tucson-Housing-Market-2007 , Tucson-Real-Estate-Trends-July-2007

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The Tucson MLS Statistics are in for July 2007. They were released this morning, August 14, 2007 beating last years July 2006 release by a day. Now that is just what you would expect from a data analyst, right? : )

A quick note to start this post.

• Tucson MLS still comparing Apples to Oranges.
• The Temp withdrawal of 3000 listings over co-op fee entries.

Tucson MLS Apples to Oranges comparisons.

Back in May 07 the Tucson MLS changed the areas included in reporting. This is actually a good thing, but when doing year over year comparisons they still use data for all areas from last year and data from the limited areas this year. Result, skewed reports which we attempt to straighten out.

Temp withdrawal of Approx. 3000 listings over Co-op Fee entries

This Temp withdrawal, was a temp problem running Comps for clients and buyer offers. It appears not to have effected the July Statistics. I say this because there would have been a huge, yes huge swing in the numbers with 1/3 of the listings being withdrawn from the market and put back on if there hadn’t been consideration of this consequence in the reporting.

Here are the tables and analysis:

Tucson MLS Statistics June 07 - July 07 Summary

Average Sale Price is down from June. This is no surprise. The surprise would have been if the average had increased. The high end market in June was very active and it did raise the average sale price. Looking at the numbers for both June and July indicate this is where the bulk of the drop took place. The end result June there were 25 sales of homes 1 million +; in July there were 13. I’ll provide further analysis on this in another post. Anyone wanting to look at this themselves can look at the summary last page on the June and July reports.

Total Units Sold dropped by 128 over June. For the last 4 years July’s units sold have been fewer than June’s. This year the gap is 128, the smallest during this four year period.

Median Sale Price dropped by $10,250. This is the lowest it has been since December of last year. when it was $215,000. Is this a bad thing? No, if it weren’t for the High number of million dollar plus homes in June the number would have been down. Bottom of the market sales can be as big an influence as to of the market sales. In July there was 1 sale recorded for under $29,999 and 4 sales under $50,000. To get a better look at the middle of the market we need to look at where the sales came from breaking down the average sale price by SFR, Condo, Townhome, Manufactured. I’ll try and get to this kind of breakdown of the number in another post. Suffice it to say, a one month drop in the median sale price after 6 months of steady increases from January’s median of $220,365 is good to see, but insignificant unless followed by more months of a steady middle.

Pending Contracts are down slightly from June. Fewer homes sold in July and fewer homes went under contract in July. The most telling feature of this number is the year over year comparison. July 2006 recorded 1,089 pending contract which is 688 fewer than this July’s number of 1777. That is a considerable increase, but when you consider the 1089 last year represents ALL AREAS in the MLS in July of 2006 compared to just the Tucson Areas for July 2007 it is noteworthy. Pending contracts aren’t broken down by areas like many of the categories so we can’t give the actual comparison. However, it shows a stronger market this July than last July when already we were seeing a decrease in sales with an increase in active listings.

Active Listings were down 27 over last month even with 128 fewer closing and 276 fewer contracts written. In the Year Over Year figures the Tucson MLS Report indicates a drop in active listing over July 06 by 2.94% when there were 8955 active listings reported.

Once again we are faced with apples to oranges reporting. Active Listings are broken out by area. When comparing just Tucson Areas for July 06 to July 07 we find an increase in the number of active listings from 8,665 to 8,692 a net of + 27. It isn’t a significant increase but it shouldn’t have been reported as a drop of 2.94%.

New Listings Dropped in July by 140 over June’s 2,820 to 2,766. The heaviest concentration of new listings is in the Northwest with 721 of the 2,766. This has been the area in Tucson with the highest number of sales and listings for most of a year.

I hate to sound like a broken record here, but this is another area where the reporting is skewed. It is reported the number of new listings is down by 3.52% from July of last year with 2867 new listings for ALL AREAS, but if we take just Tucson Areas to Tucson Areas we have 2,764 to 2,766 net + 2 not - 101.
The year over year figures and summary . . .

Tucson MLS Statistics July 06 - July 07 Summary

Tucson MLS Statistics July 2007 Summary

I’ve already addressed most of the difference in the Year Over Year figures in the analysis above. Right now everyone is watching and waiting to see what happens nationally with:

The Subprime and Forclosure Meltdown

Many people, including us have been wondering how the subprime mortgage meltdown will effect the Tucson Real Estate Market. Much of what is happening on Wall Street and in the Media is like a school of fish all being spooked at the same time, changing direction as a herd but only a few knowing what is really going on and once the school settles down it turns out one nearsighted fish thought a rock was a shark.

How big is the Subprime Meltdown?

Post about the above Article at Bloodhound Blog

The comments on this post at Bloodhound are just a microcosm of what goes on everywhere in this discussion.

Foreclosures.com is a place to go if you really want to rummage around.

Here is pretty much the equation:

Data + Analysis = Conclusions

The rub in this formula is “Analysis”. Why? Because analysis is where we put on our Presuppositional Glasses while looking at the data and drawing our conclusions.

The old Saw, “Glass half Empty; Glass half Full”.

The Last Word

The Absorption Rate Report will be out tomorrow.  It will give a better indication of how well the Tucson Real Estate Market is absorbing available inventory.

I’ve been talking for a month about “Convergence of the Tucson Real Estate Market”.  I held of on this when the % vs $ issue surfaced at the Tucson MLS. Frankly, if the data had been skewed even further over this issue I wasn’t even going to write a July report and considered just thowing up my hands and waiting.  None of us had to do that.

Convergence of the data has been easy to see for several months now.  All anyone has to do is take this months Tucson MLS Statistic Report print it out and look at each category in the report.  The trend is very clear and revealing.  This topic will be covered this week.

Because there is often confusion over data interpretation for some categories I’m going to write about some of these individual categories in detail and describe how I look at the data.

Data Junkies, as usually you can find and print the Tucson MLS July Statistics report by clicking on the link under Documents in the right hand navigation.

Doom and Gloom, Bust or Boom, is often determined by location of your room.  One thing for certain, it isn’t dull, and that really is a horrible rhyme.

No Responses to “Tucson MLS Statistics for July 2007”

1. Concerned Says:
   August 14th, 2007 at 10:00 pm

   Thank you, Dave.:-)

   I was thinking we might’ve hit the bottom, but it doesn’t appear to be true… It’s not surprising. I’ve been reading the builders’ reports and projections, and I believe they’re the ones who should know best (and they have cut new developments substantially) if they wanna save themselves. The most optimistic one was projecting bottom at the end of 2007, the next one - mid 2008, the rest wouldn’t even say much. Of course, that’s on national level. Most of them do better in Arizona than anywhere else. Or is it for now…? I may be digressing a little bit since new construction is not reported here, but those guys with vested interest and big-time falling stocks would be doing good marketing research, I’d imagine. I recall Money magazine projecting bottom for Tucson in mid 2008 long time ago, but didn’t believe them at the time. Everybody expects these reports with his/her own little agenda and selfish interest. The perception all depends on what the results personally mean to them. I’m in this kind of unusual position of not knowing what to wish for…;-), so I’m kind of neutral, even though I’d rather see the market pick up, I guess.

   As far as foreclosures go, the percentage of subprime loans may be miniscule in the big nation-wide picture, but they’re heavily concentrated in some areas and AZ is one of them.

   http://matrix.millersamuel.com/?p=1132

   I did see a map showing the percentage is much lower in Tucson than in Phoenix, but it was still significant. Besides, since we were late to the party, most of them haven’t even reset yet:

   In the Sun Belt, the subprime mortgage mess will take many months to work through as the many borrowers who took out 2/28 and 3/27 ARMs during 2005 and 2006 will hit their reset points this year and next.

   http://tinyurl.com/2lnwxs

   Btw, IMO Alt-As are not any better and should’ve never existed… not only during the boom, but ever. This reminds me AZ ranks pretty well on the mortgage fraud list, too - 7th. Read somewhere that we’re champions not only recently, but have a history of it.

   Back to the numbers - the sales activity really doesn’t look bad. It’s very comparable to the normal years back. Slow months are coming up, though, and this huge inventory is not going to disappear any time soon. Besides, it’s anybody’s guess how high it’ll shoot after the resets start here. I personally find even the existing foreclosure numbers quite alarming. Still, for now Tucson’s inventory is not at least going straight up as in Phoenix. Of course, a good portion of the problems in Phoenix involve the far outskirts. Judging by your last report on absorption rates, the problem appears to be the same here. The established neighborhoods didn’t look too bad. Some of them, as you pointed out (North and East), had an inventory which would be considered appropriate in a neutral market.

   On the bright side, yesterday I saw a short list of recommended cities for business development and Tucson was on it. Then today there was an article in AZ Daily Star about it. Didn’t have time to read it, but they were talking about a boom in this area similar to the residential boom of 2005. Hope we don’t end with abandoned business buildings next… Doubt it, though. The long-term forecast for AZ looks promising.

2. Dave (60 comments.) Says:
   August 15th, 2007 at 7:09 am

   Actually the commercial boom here in Tucson has been in full swing for about a year. So it is approriate for the media to finally catch on.

   I don’t focus much on new construction. It is what it is. I certainly don’t use anything happening in NC to guage the health of the market. It does effect jobs and growth, but if someone doesn’t buy a new home so be it.

   The resale market is where individuals and families make loose or break even on buying and selling. I’ve never heard of someone being foreclosed on because they didn’t buy a new home.

   As to bottom, that is a nebulous point depending on where you look. If you look at the statistics coming out of MLS we are pretty much there. This is what I’m refering to as convergence. The point at which the dropping figures from last year cross the raising figures of this year. If you look for bottom to be Year Over Year figures that started a month ago and should be complete with August or September numbers. If you are looking at just month over month figures the upward trend started in January 07 putting bottom at December 06 which is about a year ahead of what is called and probably about right.

   Pinal county had far more subprime loans and defaults than Pima. This might sound crazy to you, but our Tucson Housing boom probably helped keep this to a minimum because even a subprime borrower has to be able to make a payment of some kind and the high cost of buying a home in 05 and 06 meant a lot of people couldn’t even afford to buy anything in Tucson.

   My own son moved to Arizona City almost three years ago because even in 2004 he couldn’t find anything he could afford here. He went to Arizona City and bought a brand new home 3 bedroom 2 bath with a tile roof and granite countertops for $100,000.

   Back to the commercial sector, they know the projections for our continued population growth and they are building for the future. Now for the corny conclusion, “If they build it they think someone is coming”. So do I.

3. Concerned Says:
   August 15th, 2007 at 9:07 am

   It does effect jobs and growth, but if someone doesn’t buy a new home so be it.

   I would disagree with that. New construction may not be your focus, but it does affect the resale market. What if the builders were to continue building like crazy and kept slashing prices… this is not going to have an impact on resale…? How many people would want an old dilapidated house if they can have a new one at the same price be it in the outskirts?

   I wouldn’t be so sure. Seattle showed the same trend for a while (median price increasing - don’t have a link for this, but apparently the news was in the local media) before the inventory started shooting up - http://bubbletracking.blogspot.com/2007/01/tracking-seattleking-snohomish-counties.html. The only reason being the boom started there later, just like it did here.

   Pinal county had far more subprime loans and defaults than Pima. This might sound crazy to you, but our Tucson Housing boom probably helped keep this to a minimum because even a subprime borrower has to be able to make a payment of some kind and the high cost of buying a home in 05 and 06 meant a lot of people couldn’t even afford to buy anything in Tucson.

   I have no doubts Pinal county is in much worse shape, either, but don’t quite relate to the second part of the sentence… How was all this damage done in CA then? It’s possible there are other factors involved there. Just today saw a list from HUD of minor lenders going down (didn’t save the link). They were predominantly CA lenders. Maybe most of ours did have some ethics and common sense… Let’s hope so.

4. Dave (60 comments.) Says:
   August 15th, 2007 at 10:15 am

   Concerned,
   When I was talking about NC wasn’t in the context of overbuilding, it was in the context of people saying the market is in a slump because there is so little NC.

   I think it helps the health of the market if NC is down for the very reasons you mention. Too many new homes on the market hurt resale. That was exactly my point.

   As to CA completely different dynamic. Tucson as you have mentioned flies under the radar because of our uniqueness as a place to live. We see a huge swelling of population in the winter months because of all the winter visitors and boomers are expected to continue this trend. There aren’t very many cities in the nation that have as many homes empty half the year as Tucson.

   Seattle is another of those unique markets due to its ties to the computer and software industries. It is very difficult to apply any kind of national formula to local markets.

   Maybe at one time this was possible, but in the last decade we find more and more economic indicators being pulled back to the local level due to the high specialization of local economies as a part of the global economy.

   The Tucson Real Estate Market is my main focus, is it impacted by the National trends, yes to some extent but more so by its own local dynamics. It isn’t the infrastructure, or the urban renewal, or the possibility of light rail. It is the weather and the mountains. It is also a very desireable place for those that bike, play golf, and are interested in astronomy as well as being where their friends are in the winter. No hurricanes or tornadoes, no alligators in the backyard, low humidity, (except monsoon of course). These are factors for our local market.

   I’m glad to see NC slowing, it needed to. As I’ve mentioned before two things that happend in the boom that were good.

   1. Builder’s stopped selling to investors only people that intended to live in the home for at least 1 year after completion. This limited the number of new homes that would have come back and flooded the market even worse than it was.

   2. Many HOA would not allow investors to buy homes in their neighborhoods. You had to live in the home, not buy and rent.

   If those two things hadn’t happend when they did, the impact on the Tucson Real Estate Market would have been worse.

5. Concerned Says:
   August 15th, 2007 at 11:27 am

   When I was talking about NC wasn’t in the context of overbuilding, it was in the context of people saying the market is in a slump because there is so little NC.

   Well, yeah, it is the other way around. There’s so little NC because the market’s in a slump.
   As to CA completely different dynamic.

   I was asking about CA in the context of prices. You said:

   This might sound crazy to you, but our Tucson Housing boom probably helped keep this to a minimum because even a subprime borrower has to be able to make a payment of some kind and the high cost of buying a home in 05 and 06 meant a lot of people couldn’t even afford to buy anything in Tucson.

   How come so many people did it in CA, at much higher prices? After that Californians came here, too. Granted, the incomes in AZ don’t match CA, but a lot of investors from CA and later from NV came here.

   Seattle is another of those unique markets due to its ties to the computer and software industries. It is very difficult to apply any kind of national formula to local markets.

   I don’t disagree with the idea of the markets being local. I was just trying to say it might be too early to count our chickens and Seattle was just an example.

   The Tucson Real Estate Market is my main focus, is it impacted by the National trends, yes to some extent but more so by its own local dynamics. It isn’t the infrastructure, or the urban renewal, or the possibility of light rail. It is the weather and the mountains. It is also a very desireable place for those that bike, play golf, and are interested in astronomy as well as being where their friends are in the winter. No hurricanes or tornadoes, no alligators in the backyard, low humidity, (except monsoon of course). These are factors for our local market.

   Hmm… if the place continues growing like this and nothing is done about the infrastructure, primarily the roads, a lot of people eventually WILL get sick of it.

   I’m glad to see NC slowing, it needed to. As I’ve mentioned before two things that happend in the boom that were good.

   They’ve got no choice. They’re not idiots. Seems like Tucson got lucky. Since it took part in the last wave of insanity, the builders maybe already had hints of the slowdown in other markets and stopped on time. Phoenix seems to suffer a lot more in this department.

   1. Builder’s stopped selling to investors only people that intended to live in the home for at least 1 year after completion. This limited the number of new homes that would have come back and flooded the market even worse than it was.

   I know that’s how it is in theory, but I have my doubts if that’s how it works in practice. I’ve seen way too many “for sale” signs in new subdivisions… Hard to believe all these owners have been there for longer than a year. It’s possible, though… I’m just speculating on this one.

   2. Many HOA would not allow investors to buy homes in their neighborhoods. You had to live in the home, not buy and rent.

   That’s good to know.

   Working on the absorption rates, Dave?!;-) Am I pushing my luck.;-)

6. Dave (60 comments.) Says:
   August 15th, 2007 at 11:41 am

   CA is a different animal all together. Depending on where in CA Average sale prices are over $600,000, I knew of bus drivers in CA making $70,000 a year sleeping in their cars. I don’t think we have too many $70,000 a year bus drivers in Tucson. This is by way of saying you hit the nail on the head. Tucson wages are nothing like those in CA which meant many couldn’t even afford a subprime loan.

   The builders didn’t start the no investor policy soon enough, I know because I used to process all of this data for a realty company and many “investors” I still call them “speculators” were putting contracts on 3 or 4 homes expecting to flip them by the time they were built. NC sales practices during 05 were to raise the price $5,000 every 5th home sold. So speculators figured they could sell those homes at a profit and still be under the builders price at the time construction was completed. But like a pyramid scheme, it all comes apart if the market changes, the market changed.

   Infrastucture does need to change, but honestly I don’t expect it to. There are a lot of people here in Tucson that don’t want to see it grow no matter the indicators. About the only hope they have is cry “WE ARE RUNNING OUT OF WATER” and “RAISE THE IMPACT FEES” to try and hold back the tide of growth coming to Tucson.

   The city and Pima county continue to show an astounding depth of ineptness when it comes to infrastructure.

   Yes, absorption rate tables are completed, I’ll be posting that shortly. : )

7. Concerned Says:
   August 15th, 2007 at 1:25 pm

   Infrastucture does need to change, but honestly I don’t expect it to. There are a lot of people here in Tucson that don’t want to see it grow no matter the indicators. About the only hope they have is cry “WE ARE RUNNING OUT OF WATER” and “RAISE THE IMPACT FEES” to try and hold back the tide of growth coming to Tucson.

   The city and Pima county continue to show an astounding depth of ineptness when it comes to infrastructure.

   Ooooh, yeah, I’m aware of these attitudes…;-) And yet they were perfectly happy with their homes’ values in 05, weren’t they? I think they should take Economics 101 or just the old saying “you can’t have your pie and eat it, too.”

   You mentioned the water. I read that no new development can be started unless it’s proven that there’s water available for at least 100 years. Don’t know if it’s true. I look at it this way: either we’ll run out of water and somehow new sources will be found, or we’ll run out of water for further growth and the property values will go through the roof if people keep wanting to be in the sun.;-) I think both alternatives will work for the crying babies.

   Yeah, I totally agree about the speculators. Investing presumes long-term plans. Flip-flopping houses is no different than day trading.

   P.S. What happened with bobbie joe…?;-) Long time, no see.

8. Dave (60 comments.) Says:
   August 15th, 2007 at 1:56 pm

   Ha! I never worry about bobby joe, trust me with these two new post on stats, he’ll be here. : ) Won’t you bobby joe.

9. Concerned Says:
   August 15th, 2007 at 2:48 pm

   He-he, I thought it was a “she.” Oh, well, I’m kinda taking over on the pessimistic side.;-) Or as I like to say - “a pessimist is just an informed optimist.” ;-))

10. bobby joe Says:
    August 16th, 2007 at 9:36 pm

    Hey, hey… my ears are burning…

    Hi Dave… Concerned!

    Well, what do we have here… apples and oranges? You bet. Am I upset? No way!

    I used to get all bent out of shape about these damn stats. I really don’t care anymore. It has become too big for the TAR® to stop through stat manipulation.

    Home prices will revert to the mean. period. A 40% shaving off the price of homes across the board would be a good start. Will it happen anytime soon? Probably not. Again, I don’t care right now because its going to happen regardless of what the sellers think their stucco boxes are worth.

    Is this doom and gloom? Nope, It never was. Any farmer in Marana will tell you that this market was out of control. You know what “they” call that? Common Sense.

    The mortgage market is absolutely imploding all due to devices of their own making. Ironic? Perhaps, but I think its comical because so many people claim to be surprised and taken aback.

    The writing has been on the wall for a LONG time. Shame greedy Wall St., Shame on Imprudent lenders, Shame on buyers that live beyond their means.

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