The year 2010 is off and moving in Tucson Real Estate. Sales are moving, Pending contracts are moving, New Listings are moving. What does this all mean. Well, it really depends on what direction they are moving. New Listings moved up a bunch; Red Flag? Maybe!
For now let’s take a look at the month to month comparison.
It is interesting to see the relative small changes between December and January. When you consider the huge swings that have taken place on Wall St. in January there was some question if the panic on the street would spill over into the real estate market. Quite the contrary. What we are hearing from people is the continued frustration with the wild panic induced swings in the market. To the point some are putting their money in real estate.
The real estate market is pretty stable. And the only place on this month to month that might raise an eyebrow is the number of Active Listings and New Listings in January. I even took pause when I saw the number of new listings at 2424. Then I remembered it was January. There are a lot of people that simply don’t want the hassle of keeping their home “Ready to Show” during the holidays. They pull their house off the market till January. Once the new year starts and they have had a break from keeping the house clean, the beds made and the odors from last nights dinner removed from the air. They are ready to get back to the business of selling their house.
Every January going back for years on the report reflects this bump in new and active listings. Therefore, no red flag here, simply normal fluctuation in the Tucson real estate market.
The good bump is in the number of Pending Contracts. Always good to see that above 1000 going into the next month. An increase of just over 300 from December is a positive in our plus column for the market.
Year over Year Statistics Comparison
What a difference a year makes. Last year we saw huge decreases in value in both Average Sale Price and Median Sale Price. But we all knew property was over valued. No one wanted “Their” value to go down, but we all knew that property values were not realistic in 07 and 08.
Looking at the year over year figures there is a stability that hasn’t been visible for over a year. Increased units sold and pending contracts going into 2010 are refreshing. Even with the increase in New Listings in January the number of active listings in January this year, were done almost 1000 from the beginning of 2009.
February is moving along. Those pending contracts are now going closed. The 30 and 15 year interest rates are still holding around 5%. Which in any other time of our economy would be remarkable. But credit remains amazingly tight. Not much is or has been done to loosen it.
Yes, I’m also not one that favored the big bank bailouts or the way it was handled. I’m even less enthusiastic about the way the government has literally failed to in this last year get substantial help to home owners needed mortgage adjustments to stay in their homes.
All this by way of closing commentary on where we are in Tucson. Compared to many parts of the country (Even other parts of AZ) we are doing pretty good. The rest of the country has faced a terrible winter. We on the other hand have received much needed moisture in January and so far in February. The spring looks to bloom with some amazing color in the desert.
Finally, yes, there are buyers in the market. They are finding some really good deals. Some are seeing those deals but don’t realize what they are looking at. They will look back in a couple of years say, “Geez, I really should have bought back in 2010″.
The full January Tucson MLS Statistics report is linked to under Documents in the sidebar.
but we all knew that property values were not realistic in 07 and 08
We did? I don’t remember you saying this in ’07 & ’08…
Concerned,
I said it a lot. I kept saying it through out both years. There are a number of posts in both years about unrealistic expectations on the part of sellers asking way more for their homes than they were worth.
I talked about them riding the market down instead of pricing right.
I talked about the housing market in terms of Valentine’s Day. Right now Roses are selling for $60 a dozen. Fry’s has them for less. But once Valentines Day is over I can buy that same dozen roses for $9.99. Where is the value? What is the difference. (It is what people are willing to pay) I won’t pay $60 for a dozen roses anytime.
I talked about the horrible lending practice of “Fog a spoon get a loan”.
I reported on what the prices were in statistics reports.
Every where in the media and the blogosphere was saying “This can’t last, it is unsustainable” I agreed, but people have to live somewhere. It was and is our job to find homes for people that need them that they can afford. We bought during that same time. We needed a home. We didn’t buy an investment to flip. We bought a home.
Sometimes you don’t get to pick when to buy. For Valentines Day lasting one day, I can pick. But in a housing market where homes were going up in price $5,000 a month, you buy what you can when you can. Overpriced, of course, it was obvious but we couldn’t live in our cars.
We have been fortunate. Our clients bought what they could afford and as far as I know they are all still in those homes with a couple of exceptions that moved for job relocation.
If you want links to some of those posts I could look them up. But they are all there.
Have a Great weekend.
Dave
The problem I am having as a buyer, is that the values have been depressed not only by the general economy, but also the number of short sales and foreclosures that are starting to make their way into the comparables used for appraisals. The sellers are not willing to sell at appraisal or slightly above; which knocks the buyer away who is trying to purhase with a conventional loan. When are the sellers going to be realistic about the market? If they want to sell, they have to be ready to embrace the current market or take the property off the market. If they don’t need to sell, then all the more power to them but the sellers shouldn’t be offended by the buyer who is trying to make a purchase at the appraised market value.
Rookie,
It’s Valentine’s Day and if I take the time to respond to you tonight, I’ll be the rookie.
I’ll get back to you tomorrow.
Dave
Rookie,
In every real estate market, whether it is high or low there are unrealistic sellers and buyers. When home prices were going up $5000 a month there were unrealistic sellers and buyers. In this economy where as you say “the number of short sales and foreclosures that are starting to make their way into the comparables used for appraisals” there are still unrealistic buyers and sellers.
And in almost every case on the seller side they are not really sellers. They are toe-dippers, water testers, Oh lets put it on and see what happens. At any given time these “sellers” I would guess, make up 20% of the homes on the market. But they aren’t really on the market.
You said, “If they want to sell” they don’t really want to sell unless someone is willing to pay their price. They don’t care if it won’t appraise in their minds it is worth what they are asking and if a bank won’t fund that’s the buyers problem not theirs.
There are aspects of the real estate market (and not just in Tucson) that for a rookie make no sense. Well, rookie, as someone who has been writing and observing this market for over 5 years now it doesn’t make sense (common sense at least) to put a home on the market when you aren’t really interested in selling it. To them it is like buying a lottery ticket. They might find a cash buyer that falls in love with their home and will pay their asking price to get it. That is like winning the lottery.
On the other side of the equation are the buyers that spend their time looking at these homes, making offers on these homes and in general wasting their time, because the home isn’t really for sale. These properties, muddy the market and frustrate buyers and the agents working with them because they truly do waste the time of everyone on the buyer side of the equation.
Dave
Thanks….It confirms my suspicions of some sellers. It not only wastes the time of the buyer and his agent, but the repeated expense of an appraisal and inspection starts to sting. Plus, its an emotional roller coaster. Have a good week.
Well Dave, it’s been a long time since we’ve emailed each other. In fact, I believe it was before the day the music stopped, which was Monday, September 15, 2008, when Lehman Brothers declared bankruptcy. On that day, whether people realize it or not, the world as we Americans knew it changed forever. The reason? We had spent the world’s money and the consequences of a country where the majority of people came to believe they were upper middle class came crashing down on our heads.
Sadly, our country has been going through convulsions since that now infamous week. You might remember the next day, September 16, AIG had to be nationalized because it was going down, and right about the same time Fannie Mae and Freddie Mac, holding 50% of America’s mortgages, also had to be nationalized. In late September ’08 over the course of 8 consecutive business days the Dow Jones Industrials dropped 2,200 points.
Is it any wonder that the national housing bubble burst? People can forget about buying a house as an active investment, it is now the passive investment it was meant to be. That is, expect small gains year after year, and after several years of paying the mortagage, the home is owned free and clear.
All this is to say, that yes Dave continue with your statistical analysis, but you know what? The real estate gravy train is over and it just might make more sense to rent right now, and in the years ahead, than to own. So, I think your comment about people saying, “Oh gosh, we should have bought back in 2010″, is more than a little off the mark. The residential real estate market will be flat for many, many years– unfortunately.
Sorry to be such a party pooper folks, but unless you are a banker, lobbyist or politician it’s going to continue to be gruesome times as we all work ourselves to the bone to pay off the massive debt brought on by prodigious consumption based on money that wasn’t ours.
We had this coming to us; did we really think we could own SUV’s, homes beyond our incomes, have cell phone family plans, pay over $100 a month for Directv, Dish, Comcast, whatever, take regular trips to Costco dropping 2 to 3 hundred dollars per visit and put it all on plastic? The Economic Rules of the Universe are asserting themselves with full force. Reality bites!
Frank,
Good to hear from you. I guess time will tell. I agree with almost all of your analysis. As to renting vs owning. I’ll take owning. I can’t rent a house like I have now for my house payment. If I’m renting, I’m buying for the owner. And the combination of interest rates below or at 5% is an historic low. Combine that with the price of real estate and it makes sense to own. I’m not talking here about real estate as an investment. I always leave that to others. I’m talking about a house as a home.
Renters have found themselves evicted all across the country because they were paying their rent, but the owner wasn’t paying the mortgage. Suddenly they found they needed to move.
As to the rest of your analysis, I’ve been saying the same thing for years. We can’t live on plastic, paying the minimum amount each month and have all the things you mentioned above and still afford to own a home.
The market may be flat for a long time. There isn’t anything wrong with a flat market for a home owner. The investor looking to make money by flipping, not so good. The investor looking to turn a property into a rental. It’s fine to have a flat market. But don’t forget, people do have to live somewhere, and not all of them want to be in an apartment. For me it makes more sense to drive an older car. Pay my credit card off each month and own my home.
Dave
Dave, we are on the same page. You are so right, that the way to buy a home these days is to do it the way we did it years and years ago. That is, work hard and save, save and save for that down payment. Then buy a nice home that’s affordable given one’s income. Maybe stretch a little, because after all we are young and we will get raises and promotions if we work hard enough.
In the early years of owning a home, don’t go overboard and buy fancy new cars and eat out and take expense vacations. With the passage of time then move up to that nicer home we’ve had our eyes on for a while, thus permitting the family in that home to consider moving up. This way the residential real estate market moves in a steady, responsible manner.
There is a way out of this and it involves being hard working responsible people who save and remember the most important things in life are our family, friends and the community. If we can do this then, with the passage of some time, we can return to the glory that was once our legacy.
I hope the people who read your wonderful site understand and appreciate the highly competent professional that you are and the invaluable service you are providing the people of Tucson, and those who want to live here, by continuing your site. Good luck to us all.
Amen Frank,
Great to hear from you.
Dave