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Tucson Real Estate Dec. 2008 A Quick Peek

January 6, 2009

Post Tags: Tucson Real Estate Market , Tucson Residential Real Estate , Tucson-MLS

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The data is just being pulled for the Tucson MLS Statistics for December 2008.  It will be another week or so before we have the report is release. I thought it would be interested to see a breakdown of Tucson residential real estate for the month with a comparison to December 2007.

ASP= Average Sale Price
MSP= Median Sale Price

Where The Numbers Fall

When compared to December of a year ago there is no doubt home prices have fallen significantly over the past 12 months.

Mobile Homes

Some what surprising is the minimal loss of value in mobile homes. There are several things that probably contribute to this. Not as much value to begin with so not as much to loose in percentage. In 2007 it was very difficult to obtain financing for a mobile home. The result people paid cash, meaning few short sales or foreclosures in this category.

Single Family Residence

In this sector we see pretty close to a 25% decrease in value for both types of single family residences. One of the biggest contributors to this decrease was NEW CONSTRUCTION. Builders dropped the pricing on new homes more than the 25% we see in this decline. When you can buy a new home for more than 25% of what was being paid for a new home the year before it drives down the sale price of resale properties.

A return to reality is also part of this 25% decline in sale price. Homes were over valued, that isn’t easy to say because value is based on what someone is willing to pay. But there were unusual factors at work still in 2007, in this sense, you DIDN’T have to be able to pay for what you bought. That is a big factor and it threw a monkey wrench into our economy as people were able to “purchase” for what they couldn’t “pay for”. Today, the global economy is “paying” for that gaffe in economic policy.

While this is a hard pill to swallow, the five year gains still outpace the last 12 month losses.

Town homes

They aren’t building them anymore. Here is one of the true mysteries to me. It is very difficult to find new town homes being built in Tucson. Part of that has to do with the market and part to do with the economy of construction in Tucson.

Every run up in housing has a signal of the end in sight. That signal is the rapid sale and appreciation of Condos. In 2006 there was an explosion of Condo conversions and new condo units being built in Tucson. This meant that Town Homes were taking a back seat to condos. Town Homes were too expensive and were more or less a “niche” market. There were older town homes around Tucson but that niche wasn’t big enough to merit new construction. It appears it still doesn’t. The demand for Town Homes has remained strong. This has contributed to Town homes holding their value better than any segment of residential property with the exception of mobile homes. Town homes have only lost 11.42% in the median price range.

Condos

Last in First Out. Condos were the last segment of the market to take off. Many apartments were converted to Condos in late 2006 and into 2007. Some of those condo conversions that started late 2007 stopped abruptly and returned to apartments. There were a number of condo projects that went totally on hold or folded all together.

Combining the rapid increase in prices of condos with high monthly associations fees + the sudden shift in the economy and there weren’t enough people who could afford to purchase a condo unit. The number of condo conversions which were underway and couldn’t simply close up shop lead to a rapid decrease in asking prices for newly converted condos in 2008. This is the single most influential contributing factor in the 15/16% decrease in sale price of condos in 2008.

The Cloud in Every Silver Lining

November 2008 Real Estate Sucked all over the country. The economy was in total free fall and lending institutions went AWOL during the month. December has seen a rebound and January 2009 is seeing an increase in buyers in real estate markets all across the country. Tucson is no exception. With November behind us (And December as well) we have seen an increase in the number of closed transactions in December 2008 over December 2007. This is a good thing, especially considering the devastating month of November 2008.

The Cloud, percentages were down almost 25% across the board. Don’t loose sight of the silver lining. More closed transactions means a decrease in inventory. Short sales and foreclosures are having an impact on the market. They are being sold and being removed from the inventory. This is a good thing.

There is a renewed effort to help families keep and afford their homes. This too is a good thing.

Finally, The bad new of the economy and the lack of confidence on the part of consumers is over shadowing the convergence of two factors in real estate all across this country.

1. Interest rates are at a true all time low hovering around 5% for a 30 year fixed rate.
2. Home prices are the lowest they have been in nearly 5 years.

The fog and fear should lift in 2009. The recovery of the economy will start in housing. Many predict the economy will not recover till 2010. This very well could be for the WHOLE economy. But housing will lead that recovery and it will begin in 2009.

One Response to “Tucson Real Estate Dec. 2008 A Quick Peek”

1. Tucson MLS Statistics for December 2008 | Tucson Real Estate | Tucson Homes Says:
   January 17th, 2009 at 12:56 pm

   [...] covered most of these figures, (which did not change dramatically) in the preliminary post last week. The total units sold improved over both November and December last year. November was greatly [...]

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