Tucson Real Estate 2005 The Frantic Market
October 28, 2008
Post Tags: investment strategy , real-estate-speculators , Tucson Real Estate
In Tucson in 2005 we saw real estate transactions being done so fast you would have thought the Tucson real estate market had gone to the day traders.
Prices were going up so fast no one could keep track and I remember some buyers having to offer $5,000 over asking price just to get their offer considered. Contrary to popular belief this was NOT a good time in real estate for anyone except sellers.
Trying to represent buyers in that market, called “The Frantic Market” at the time was a nightmare.
Tucson's Frantic Market Like a Plague of Locust
The Tucson Real Estate market started into this economic downturn on Thanksgiving weekend 2005. I remember it well. All through the spring and summer of 2005 it was crazy time, as mentioned above. On Thanksgiving weekend it was like the locusts had left the fields. It wasn’t a gradual tapering off of calls and buyers, it was overnight. Everywhere it seemed the buyers were gone. No one expected it to end this way. Oh, we all were hoping it would end and the sooner the better. Why? Because many of the people we were trying to help buy a home and not a day trade investment were being priced out of the market. Simply put “They couldn’t afford to buy a home in Tucson”.
The Buyers weren’t Buyers they were Speculators
I use the term buyers loosely here. Most were speculators not investors and not people looking to buy a home in which to live. They had the idea they could purchase a house, put some paint on the walls and carpet on the floors and flip it in 60 days or less and make 20 or 30 thousand selling to other speculators in the Tucson Day Trading Market. Shows in Television (there’s a good source for reality NOT ) like Flip This Lemon were telling people to go ahead and buy a property with no money down and flip that house and make a small fortune. It might be good TV but it is horrible investment strategy.
This left many real buyers without an opportunity to purchase a home in Tucson.
I don’t know if you see the distinction I’m making here between a house and a home. It is subtle, a house is the physical commodity. A home is something you make when you invest your life and time in that house to make it a home. In 2005 lots of houses were being purchased, not many were being turned into homes. This was not exclusive to Tucson.
Yesterday it was reported that more than 30% of foreclosures are on homes where the buyer had a different address than the property itself.
The way the “Frantic Market” ended is another indicator of it not being a true consumer driving market. Speculators are fickle and most are in “the game” for the quick kill and the fast buck. They know most of these schemes are a matter of not being the last person holding the bag when the music stops. Lots of speculators were holding the bags and are now in foreclosure. A lot of these are not even trying to stay out of foreclosure, they have very little financial investment. These speculators are still the once impacting the economy in a negative way because they never intended to make these properties homes. Now all of us are left to pick up the tab for these properties. If not directly, indirectly by the decrease in home values for all of us paying our mortgages and making our houses into homes for our families.
The year ended with the sense there were not buyers in the Tucson real estate market. Many had been priced out, by the locusts gobbling up properties and creating an artificial demand leading to higher and higher asking and sale prices. While those working in real estate knew the buyer spigot was dribbling the seller’s aware of the heady sales prices their neighbors were getting didn’t get the memo “The Buyer’s (Speculators) have Left the Building).
October 28th, 2008 at 11:33 am
Dave, your posts about 2005 are very informative. You are so right when you say that with the speculators out of the Tucson real estate market that this is good news for families who are interested in a home at an affordable price. Sadly, members of my own family caught the get-rich-quick virus and purchased “investments” in Tucson in ‘05. Needless to say, those so-called investments did not work out too well for them.
But back to your point about the positive nature of what has happened. It is very clear that those families with worthy credit and income can now purchase a fine home in Tucson at a price that makes sense. While there are still plenty of sellers still out there who didn’t get the memo (or if they received it, didn’t read it) there are also a number of sellers who not only received the memo, they read and understood it. These are the sellers who will actually sell their properties.
Keep up the good work. I feel your website continues to be an excellent and objective assessment about the current Tucson real estate market.
Frank.
October 28th, 2008 at 6:18 pm
Frank,
Thanks for your input. I hope you enjoy the rest in this series. It isn’t a fond trip down memory lane. I do hope it is one that will be informative and educational at the same time.