Tucson Testing the Sand
June 26, 2007
Post Tags: testing-the-waters , tucson-housing-market , Tucson-testing-the-sand
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I know it is usually called testing the waters. Here in Tucson there is talk all the time about conserving water so I called this practice testing the sand.
It is hot enough in Tucson in the summer that you don’t really want to test the sand with your bare feet or our house in the market.
The Process of Testing the Sand
- Find a listing agent willing to list your home
- Price it way above the current market to just “See what happens. . .”
- Don’t allow a keysafe to be placed on the property
- All showings by appointment only
Indicators of Testing the Sand
- The list price of the home is no where close to market selling price.
- The sellers are unwilling to show the home except at their convenience.
- It is never convenient.
I think some sellers are picking the number for the list price right out of the air.
Or “Well, my neighbor sold his home last year for $XXX and my home is worth more than his.”
Totally unrealistic pricing is a sure sign of testing the sand.
Real Estate agents are encountering a high number of people that when asked if they (the agent with a buyer) could show their home (the home of the seller) they are being told,
“No, not today. Maybe, tomorrow.”
“But my clients are only in town for today.”
“Well, they can’t see it today.”
Tucson home sellers that really want to sell their homes put up with the inconvenience of keeping their home clean, tidy, and ready to show.
Testing the Sand can Muddy the waters.
To borrow another phrase,
when there are a lot of homes on the market just to see if someone will buy, the result isn’t good for those really trying to sell their homes in earnest.
- It inflates the number of homes on the market
- It artificially raises the asking prices on the market
- It increases the Days On Market
- It decreases the Absorption Rate making the market appear to be unhealthy
It is unfortunate that so many homes with signs in the yard over the last year seem to be just testing the sand.
June 27th, 2007 at 5:22 pm
Good post Dave. I see quite a few sellers playing this game. It’s a huge waste of time for everyone involved.
June 27th, 2007 at 5:29 pm
Athol,
I debated adding a
5. Wasting a lot of agent’s time and money, but decided it would sound too much like sour grapes. It is amazing how much money a listing agent can spend on advertizing a listing and end up without a sale. I’m talking thousands of dollars over the course of a year.
Great to see the sock looking healthy. Bristol must be beautiful this time of year. You should give us desert rats an update on the water park with some photos of blue water and green grass and trees.
June 28th, 2007 at 7:17 am
What percentage of the nearly 10,000 residential homes on the market here in Tucson do you suppose are “testing the sand”?
Are you suggesting that rising inventories are due to this factor?
June 28th, 2007 at 7:24 am
Inventories are stable at this point, they were only up by 4 listings in May, June numbers won’t be in for a week or two yet.
There are a lot of these properties on the market in Tucson. When running a CMA and finding homes that are up to $50 sq. ft. over others in that area and they are on the market for 6 months to a year they add to this number.
It used to be very uncommon to be setting up appointment so show homes to buyers and have someone say, “No you can’t show it today it isn’t convenient.” Now it happens all the time. On a recent Saturday with 8 selected homes to show 2 said it wasn’t convenient. When they were told the buyers were only in town for the day they didn’t care still no showing.
June 28th, 2007 at 8:53 am
“Inventories are stable at this point, they were only up by 4 listings in May, June numbers won’t be in for a week or two yet.”
I guess I don’t find much usefulness in MoM housing data, the YoY data shows inventory increasing at a 22% clip. Yikes! http://www.housingtracker.net/askingprices/Arizona/Tucson/
”On a recent Saturday with 8 selected homes to show 2 said it wasn’t convenient.”
So getting back to my original question, is it safe to assume from this evidence that 25% of listings are “testing sand”?
June 28th, 2007 at 11:44 am
watcher,
Using the Tucson MLS statistics the increase in May for YoY is 11.47%. Considering 2005 and 06 were anything but normal it is difficult to use these years as a “standard” of the market.
The anacdotal evidence is not enough to assign a percentage with anything other than a guess without doing a lot of analysis. Since the DOM figure can be manipulated you have to research every listing to see if it is a relist or actually DOM, then run comps on all listings to see if they are overpriced by sq. ft. Not enough time for that kind of analysis.
Testing the waters is a common occurance in other markets historically that have experienced a year + of sudden increases in sales price.
We are approaching a point where the numbers from last year are about to converge with the number from this year somewhere around Sept. or Oct. if the trends for the first 5 months of 07 continue as they are currently.
June 28th, 2007 at 2:02 pm
Hi Dave!
I’m curious… How reliable are the TAR MLS numbers? There is an awful lot of independent data and anecdotal evidence that the housing market here is in much worse shape than those with a vested interest in it… lead us to believe.
It would do my heart good to see the data the NAR and TAR spit out get certified by an independent firm with no vested interest in the market itself.
June 28th, 2007 at 2:58 pm
Dave,
“Using the Tucson MLS statistics the increase in May for YoY is 11.47%.”
Please post a link to support your data, thanks. I posted mine.
“Considering 2005 and 06 were anything but normal it is difficult to use these years as a “standard” of the market.”
This is ludicrous. That is the data. You can not simply spin it away by claiming it is not “standard”.
“We are approaching a point where the numbers from last year are about to converge with the number from this year somewhere around Sept. or Oct. if the trends for the first 5 months of 07 continue as they are currently.”
Huh? You’ve lost me here. What numbers, what’s going to converge, what trends?
watcher
June 28th, 2007 at 3:20 pm
Bobby Joe
The TAR MLS data for listings in a given month aren’t as problematic as the Sales data for a given month. The listings data is based on listings that are input into the MLS system. However, the sales figures for a given month is based on the number of reported closed transactions reported to the MLS by the brokerages. There is supposed to be a penalty for not letting the MLS know when a listing has closed but I don’t know if it is imposed. I do know that TAR MLS says the discrepencies from month to month for closed sales is due to brokerage firms turning in closed transactions after the statistics for the previous month have already been tabulated.
As to the NAR, they get their data feeds for Tucson from the Tucson MLS. From now on there will be total discrepencies in the data, because the TAR MLS from May 07 on will base their Tucson reporting on listings and sales in just Tucson. Till now it has been based on all listings input into the Tucson MLS system, some of those are in Benson, Green Valley, Sierra Vista, unincorporated areas in the counties of Cochise, Pinal, etc. and even listings in Mexico that are in the Tucson MLS system.
From now on it will just be the Tucson area listings. However, when looking back for YoY figures the individual areas will have to be added up since the data from 06 includes all listings in the system and from now on will only be Tucson.
John Strobeck that is quoted in the paper often is probably the closest to an independent source and I think he charges for his reports and data analysis. I don’t know what his sources are for the reporting data.
June 28th, 2007 at 3:49 pm
watcher,
When using the YoY figures there comes a point when an improving market converges with a declining market. This is why I don’t like using just YoY figures. If the previous year was a bumper year or abnormal in any way it can make the current data seem inflated or devalued depending on what happened the previous year.
It the same if reporting the corn crop in Iowa or the Almond crop in California. A bumper crop year for almonds in CA this year will result in the reporting of a drop in the harvest next year by YoY figures when in actuality, it could be a very good year for almonds just not as good as the bumper year before.
When looking at the Tucson MLS statistic report for May the point of convergence is approaching. I’m working on a post about the coming convergence. Hopefully it will be available sometime this weekend.
June 28th, 2007 at 4:24 pm
Dave,
Oh, I get it now.
If SFH sales are down YoY, if average aales prices are falling, if median prices are falling, if pulled permits are down YoY and if inventory is growing YoY then all I have to do to make this look good is to compare MoM?
What happens if I put 12 MoM’s in a row?
Does it still look better then?
As for the Tucson MLS manipulating their private database to reflect lower inventories and higher sales prices. Take a look what the Dept. of Justice is doing about it.
http://tinyurl.com/2b7paj
Yeah buddy, you’re being sued by the FEDs for anti-trust violations. Wonder why?
watcher
June 28th, 2007 at 4:33 pm
watcher,
No, read my last comment again. We are talking about YoY data. Not month over month.
As to the DOJ and the NAR that is a red herring to this post and discussion.
What you are calling manipulation of the private database does not reflect lower inventories. Quite the contrary, if the smaller area figures of this year are compared to the larger area figures of last year it will make the figures worse not better.
As to chosing to limit the reporting area, that should have been done a long time ago. Why we have been reporting listings and sales in Benson, Green Valley, Sierra Vista and Mexico as part of the Tucson Real Estate Market makes no sense.
June 28th, 2007 at 5:33 pm
Dave,
Will the Tucson MLS be responsible for reporting the listings and sales from Benson, Green Valley, Sierra Vista, unincorporated areas of Cochise and Pinal Counties? What about the rest of Pima County?
Where will this stuff show up now?
Sled Dog
June 28th, 2007 at 5:57 pm
sled dog,
I’ve been wondering the same thing since they announced in the May stats they weren’t including these areas anymore.
I’ll send an email to Judy Lowe and ask her that very question. The other thing I’ve been wanting is for Condo’s and Townhomes to be split out in the reporting. They slit them in the listings late in 06 so the input of the data has been split but the reporting continues to be lumped together. It would be a better measure of the market if we know the townhome condo information in each category, of new listings, average sale price, median sale price, etc.
Very interesting email address. We never use emails for anything other than personal communication. I prefer a real email address so if I need clarification or further communication I can do it in a less public forum like now.
June 28th, 2007 at 6:47 pm
Thanks for the explanation Dave. Do you think the TAR and NAR could get a little bit of lost credibility back if they went to an independent analysis firm?
“As to chosing to limit the reporting area, that should have been done a long time ago. Why we have been reporting listings and sales in Benson, Green Valley, Sierra Vista and Mexico as part of the Tucson Real Estate Market makes no sense.”
It makes sense to me. I have one friend that just moved to J6 and two other friends that moved to Benson. All of them work in Tucson, and they say its a lot more affordable (more bang for the buck). I work with one fella that lives outside of Wilcox who makes the commute every other day. I’m not trying to be a royal PITA, but there are quite a few people that live well outside of Tucson but work in the city limits.
June 29th, 2007 at 7:27 am
bobby joe,
No PITA here : ). I’m not saying those areas shouldn’t be reported. I’m saying they shouldn’t be reported as a part of the Tucson stats. They are in the Tucson MLS System, and should be reported. But the way it has always been they had no idea of what was going on in their areas, they were lumped in with Tucson.
Since those figures are being excluded I think they should break them out like they do the areas in Tucson and provide the stats for them in that way.
June 29th, 2007 at 6:15 pm
Great article, and a perfect metaphor!
July 1st, 2007 at 12:21 pm
I don’t know who’s more at fault in cases like this – the sellers or the listing agent. Either way, it’s frustrating.
July 1st, 2007 at 12:25 pm
Jane,
You are absolutely right. In the end the seller sets the price. But there are a lot of hungry listing agents that will take the listing no matter the price. This is called “Buying the Listing”.