Tucson New Home Inventory Shrinks
May 10, 2007
Post Tags: Tucson Real Estate Market , Tucson-New-Home-Inventory-Shrinks
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I thought this would be interesting to our readers as it comes during the week of the “Arizona Daily Star” reporting the Flood of unsold homes in the Tucson Housing Market.
I received this information today May 10, 2007 in an email from Pepper Viner Homes:
We thought you would like to see this favorable article on Tucson’s housing market.… Bill Viner- Pepper Viner Homes
Subject: Newsclip: Latest housing stats
Newsclip to SAHBA Board: Great detailed report on status of market.INSIDE TUCSON BUSINESS: Mon., May 7, 2007
Despite U.S. market, Tucson new home inventory shrinks
While the national economy is filled with contradictions, such as strong job growth but below-par gains in Gross Domestic Product, and lenders remain cautious about the potential for higher interest rates, national housing analyst Metrostudy is forecasting good things for Southern Arizona, and that’s bolstering the sale of new homes.
The analyst reports that 13,100 new jobs created during the last 12 months in Tucson, a 3.5% growth rate, combined with an unemployment rate of 3.8%, the lowest March total for the metropolitan area since 2000, means continued strength in home buying.
With new home construction down 34% to 7,228 starts, between April 1, 2006, and March 31, 2007, oversupply of new homes, due to speculative buying and over-generous lending practices, continues to decline. That is keeping the total of finished vacant homes at 1,593 units.
Only slightly above the equilibrium point of two month’s supply, “Tucson does not appear to be as overbuilt as some other U.S. markets,” said Ben Sage, director of Metrostudy’s Arizona Division. “This could mean a shorter road to recovery.”
The analyst continues to rank Vail-Corona de Tucson as the most active suburban area, with 1,693 annual starts through the first quarter 2007. It surged past Sahuarita and Green Valley, which experienced a 33% drop, due to rising prices and fewer vacant lots available.
Despite the decline, Ranch Sahuarita continued to lead among master-planned communities, with 477 new home starts. Second for the period was Tres Pueblos, near Tucson International Aiport, with 325 homes. Sycamore Park, in Corona de Tucson, was third with 297 starts, and Quail Creek, also in Sahuarita, was ranked fourth, overall, with 237 starts. Fifth and sixth were Dove Mountain and Gladden Farms in Marana, with 220 and 214 starts.
By comparison, the Phoenix metropolitan area continues to experience a much larger inventory of unsold homes. Still at 2.5 month’s supply of new homes by the end of March 2007, Sage said, “one third of all inventory is finished and vacant.”
Like Tucson, he said job growth promised a rebound, ahead. Maricopa County added 80,100 jobs during the last 12 months, ranking third behind Dallas-Ft. Worth and Houston, but with a lower unemployment rate of 3.4%, the lowest March rate for the Phoenix metropolitan area since 2000.
Housing starts were down 46% for the first quarter of 2007, compared to the first quarter of 2006, at 8,070 units. However, closing remained strong, rising 7% from the first quarter of 2006 to 12,563 units.
For the year, the Phoenix area recorded 38,901 new home starts, down 37% from the 62,000 starts recorded during the previous 12-month period, and new home closings were 49,805, down only 2.5% from the 51,079 delivered during same 12-month period, a year ago.
“Builders are not out of the woods yet,” Sage said, “but their efforts to work through their inventories have been effective,” and equilibrium should be restored by the end of 2007.
Roger Yohem, Vice President
Southern Arizona Home Builders Association
2840 N. Country Club ~ Tucson, AZ. 85716
PH: (520) 795-5114 FAX: (520) 326-8665
www.sahba.org ryohem@sahba.org
It also appears on Inside Tucson Business a Territorial Newspaper Publication the Real Estate section on May 10th, 2007. It may have been published earlier in the week.
The Tucson MLS Statistics for April 2007 should be out yet this week. When they are I’ll provide the monthly summary and analysis of the figures.
May 12th, 2007 at 9:48 pm
I’m sorry… could you please help me out here…
Quote: “… analyst reports that 13,100 new jobs created during the last 12 months in Tucson, a 3.5% growth rate, combined with an unemployment rate of 3.8%, the lowest March total for the metropolitan area since 2000, means continued strength in home buying.”
Read this first please: http://www.tucsoncitizen.com/daily/business_edge/28147.php
Are these Walmart, Tacobell, Strip mall or Jobs? $10 dollars an hour will not buy the McMansion Frame/Stucco box for $225K. Period. Do we have jobs being created for folks that can afford a $200K home, right now? If so, please show me where. Tucsonan’s only make an avg. of 26K a year according to the article cited above…
What this article doesn’t take into account:
1. Resetting Mortgages
2. Inflation AKA the silent tax
3. Tighter lending standards
4. The 10K + homes on the market
5. Wage data of these housing miracle jobs
Tucson is floating down the same river that the other bubble markets are currently enjoying. The next two quarters will absolutely astonish you. Then its going to get worse.
There are so many people that are leveraged to their eyeballs. The equity ATM has tapped out and the credit cards are chalk full. What are these people, the majority, going to do? They are going to Walk. That is what they are going to do.
Look at Craigslist for rentals. Two years ago you were lucky to see 10 listings a day. Now its close to 70 per day and the number keeps going up while the price is going down. How do you ’splain that?
Inflation:
With gas at $3/gal the number of folks that thought of commuting to work just got a tad bit smaller. Everything is more expensive; from gas to food to clothes and even wine. Inflation is here to stay, due to the dollar getting decimated on the global market.
Ben Bernake is backed into a corner. His options as I see ‘em; Raise interest rates and finally nail the coffin shut on the great housing bubble OR lower interest rates and let the dollar slide even further while pushing inflation higher and higher. We’ll see… but either way calls for a GIANT price correction in the Tucson Metro area.
Loan standards:
Got loan? With the subprime mess and the massive fraud that took place in the broker boiler rooms; We no longer have access to easy money. Geez, too bad the avg. person only makes $26K a year in Tucson or the massive inventory would be gone in 1.5 months…. right?
You see, back in them old days a person had to bring a, try not to laugh, 20% down payment when buying a home. Not too mention a metric was used to see if you could afford the home in the first place. It was really simple; multiply your annual gross income by 3 and you have a great place to start your price search.
Lets do some math:
$26K x 3 = 78K (not many house in this range, eh?)
$35K x 3 = 105K (still not close)
$50K x 3 = 150K (looking for a double wide?)
$60K x 3 = 180K (good for a townhouse or a small “fixer upper”)
$70K x 3 = 210K (now we are talking)
Question: Given that the median per capita income is $26K in Tucson and these people can no longer get funny money. How many people make over $50K and are actively looking to buy one of the 10K homes on the market?
Question: With rising costs in everything under the burning hot sun; how is a person that makes a great salary of $50K a year able to afford, furnish and maintain a $200K plus median valued home?
I imagine you’ll delete this post and ban my IP… thats fine. The game is up and everybody knows it, but If you do decide to engage in some non-inflamatory debate… I’m in.
May 14th, 2007 at 7:19 pm
bobby joe,
I’m reporting what is in the news. You are free to comment that is why I have no reason to delete or ban your comments.
Your issue is with the author of the email not the messenger. In the post I’ve provided names, address, website, and email address so anyone wanting to ask questions or comment can contact the author.
Your link is to an article that is now 8 months old. In todays world that is old news. I’m not saying there isn’t relevant data in the article. I am saying it is aged data.
You have mentioned in several comments about the average $26K income affording a home in Tucson. If they have never saved, if they have never owned before and have some equity, if they only have that 40 hour paycheck, then the answer to the question is a simple one. They can’t afford to buy a home in Tucson. And there are many other cities in the country where they couldn’t buy as well.
How are the people living in San Diego, San Francisco, LA, Seattle, Redington, Boston, New York . . . making 26K a year housing themselves when the median sale price for homes in most of those markets are more than double what it is in Tucson?
The median priced home in Silicon Valley in April 2007 was $868,406. You can read about the situation in Silicon Valley here.