Tucson Housing Market and the Phantom Rebound
January 11, 2007
Post Tags: real-estate-speculators , Tucson Real Estate , tucson-housing-market-trends
I was reading Chris Smith’s blog Real Estate Investing in the Real World. Chris had a post “Cancellations to hit new home sales?” I like the question mark at the end.
Chris had a link to the Sunday January 7, 2007 New York Times article “A Phantom Rebound of the Housing Market“.
If you didn’t stop and read the article, the short version is this:
There were a lot of speculators over the last few years in the hot markets who bought new construction thinking they could close, flip, and turn a nifty profit. When the market slowed they simply walked away from their deposits and those homes are coming back on the market. In some area as many as 20% of the new construction is affected.
Does this hold true for Tucson ?
Not exactly. I don’t know who the first builder was to start this trend, but it quickly caught on. You had to sign a document stating you were buying this home as your personal residence and you would live there and not sell it for a period of time; usually one year after close.
This stopped a lot of speculators from buying new construction. Some still purchased a single home and weren’t exactly honest (they lied) about making it their personal residence. When the market turned some of those simply said their job situation changed and they weren’t going to move and backed out of the contracts.
The end result, Tucson’s New Construction market limited the number of investors and speculators signing contracts during the Frenzy of 2005. There have been a number of cancelled contracts, but far fewer in Tucson than other parts of the country. The net effect is the Tucson Real Estate Market isn’t experiencing a phantom rebound.
There were some frustrated speculators and agents at the time, but it has proven to have been a good decision on the part of the New Construction Builders.
