Tucson Real Estate Market - May 2007 Analysis

Alright everyone, the Tucson Association of Realtors, (TAR),has just released their figures for last month, May 2007. Here is an excerpt of the important news, I’ve gone ahead and highlighted/bolded the important points:

Sales Analysis

Average Sales Price Increases
After falling from January to February 2007, average sales price has continued to climb, reaching $280,589 in May 2007. For the second month in a row, average sales price has increased in year-over-year comparisons. The average sales price in May 2006 was $269,217 - more than $11,000 less than the average sales price in May 2007.

Active Listings Decrease From Last Month
We have reversed an upward trend in active listings we’ve seen since the beginning of the year. The total number of active listings has risen steadily since January, but in May 2007 fell to 9,721. Active listings are up 15.41% compared to May 2006.

Days on Market Reach Their Lowest Point of the Year
In good news for area sellers, the average time on market in May 2007 reached 61 days, the shortest time we’ve seen so far this year. Days on market reached a high of 68 in January 2007 and has hovered in the mid-60s from February to April 2007.

Okay, now that we have the figures out of the way, let’s actually discuss what they mean. At first glance the rise in median sales price, lower amount of active listings, and lower Days on Market (DOM) may be a sign that the Tucson real estate market is finally turning around. If the market really were still coming down than why would prices be rising and homes selling faster, right?

But the one thing that got me thinking was the number of active listings for May 2007 and how they had gone DOWN from April. In my previous post I discussed my thoughts on how the Tucson real estate market had plateaued and that we were going to start seeing signs of a relaxing housing market, and I predicted that housing supply would continue to rise. Now, here is what I think is happening: I think what we are currently experiencing in the Tucson market is a combination of several things not relating to an upturn in the market.

1. The annual summer moving flurry which always tends to re-invigorate sales. Summer is the most active moving season because the kids are out of school, weather tends to be better, and most job changes happen during these months.
2. The decreased active listings isn’t indicative of a more robust housing market, explained below.
3. The rise in median sales price and slightly lower DOM is a result of the summer moving flurry (#1) and Tucson still feeling the aftereffects of Housing Craze ‘05 (HC05).

Now, to explain what I meant above about the decreased active listings. From my post about the Tucson housing market plateauing, we can see the number of active listings from April 2007 was 10,185. Last month it was 9,721. That is difference of only.. *pulls out calculator*.. 464! Not really that big of a decrease, definitely not something indicating a market turnaround.

Furthermore, just because I was curious, I queried the Tucson MLS database to see how many listings during May had either expired or were withdrawn. (Now to be honest, this number doesn’t necessarily take away from active listing number, some listings might have been immediately re-listed). When I did the above search I came away with 2,239. And then I did the same for April, and came up with 2,121. And just to be fair, I did March also, getting 1,923.

So the question is, do those numbers really mean anything? I would think that they DO, if nothing else than showing a steady month-to-month increase in expired/withdrawn listings. Expired listings are pretty self-explanatory, listings that came and went with no agreed upon offers. Withdrawn listings can happen for a couple reasons: 1) Sellers change their minds about selling, 2) Listing agent withdraws and then re-lists either with a lower price or the same price, but mostly to make it appear as a “newer” listing when other agents search for “new” listings in the MLS.

To re-iterate, I still do not think the Tucson real estate market is completely out of it’s funk. I think we may see another month or two of rising median home prices, but then things will calm down. With nearly ten thousand active listings and rising mortgage rates, something will have to come down.

So there you have it, Tucson real estate news for May 2007. If you have any questions or would like a copy of the report from last month please feel to leave a comment below, I look forward to hearing from you!

Technorati Tags: Tucson Association of Realtors, Days on Market, Tucson real estate, Tucson MLS, Expired listings, Tucson real estate news for May 2007

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