I was reading the Las Vegas Review Journal today and saw an article that showed new construction home prices have fallen to a ten year low, pushed downward by a glut of short sales and foreclosures in the Vegas market. They just couldn’t compete with the lower priced properties and have finally decided to be realistic about market pricing and match what buyers have been seeing in the housing market for months.

I took a look at some similar statistics for Tucson and found some interesting results. Below are the new home construction pricing statistics from ten years ago (2000):

Statistical Market Analysis 2000

I then began tracing statistics from 2004 forward figuring that was just before the enormous bubble was encountered. Below are the year by year stats with the average price per square foot highlighted; I think this is the best overall stat to track as a benchmark.

Statistical Market Analysis 2004

Statistical Market Analysis 2005

Statistical Market Analysis 2006

Statistical Market Analysis 2007

Statistical Market Analysis 2008

Statistical Market Analysis 2009

Statistical Market Analysis 2010 (Year to Date)

Conclusion

From looking at the average price per square foot we can see that we are indeed approaching new home pricing from ten years ago but we aren’t quite there. It is likely that we may reach that level next year, however, and I think the sooner we reach that point the better.

Now the question is, what does that really mean? I suppose it is less of a benchmark and more of a wait-and-see because it isn’t really a predictor of the market as much as a state of the market.

I think prices will come down a bit more as short sales and foreclosures are still prevalent in our market but only time will tell.

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What’s the Deal?

Cash buyers have come out of the woodwork in Tucson and are snapping up properties left and right. Take a look at the trends over the last five years:

And just an FYI, to keep things simple I only included Single Family Residences (SFRs) in these statistics but I”m sure if I included everything else (condos/townhomes/rental properties/land) the trend would be similar; cash buyers are just making moves left and right.

Where Is This Happening?

This trend is not just in Tucson but is occurring all over the US:

Las Vegas:

Buyers who appear to have used cash to purchase their homes accounted for 46.7 percent of all May sales, down from 48.0 percent in April but up from 42.0 percent a year earlier, based on an analysis of public property records. The median price paid in these seemingly all-cash deals in May was $105,000, down from $112,000 in April but up from $89,250 a year ago.

…

All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who can’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

Los Angeles:

Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 27.1 percent of March sales. In February it was a revised 30.0 percent – an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

Miami:

With financing still difficult to obtain, all-cash buyers and deep discounts on distressed properties are propping up sales, said Peter Zalewski, a principal at Bal-Harbour-based Condo Vultures.

About 60 percent of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit.

So What Does This Mean?

Cash buyers coming out of the woodwork can only be a good sign. It shows people are finally seeing opportunity for investment/growth/return and are willing (and able) to put their cash back into the market.

Any market recovery will start with investors trying to make their money and while the rest of the economy may be sluggish the real estate market will be the first to turn around.

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New Vista and the National Community Stabilization Trust are working together to create a unique opportunity to assist NSP homebuyers and help rebuild the Tucson community. The great part is 35 local area properties will be part of this event and they have all homes have been removed from the market, inspected, repaired, and are ready for purchase by an eligible.

Here are the basic details:

YOUR WAY HOME ARIZONA PROGRAM
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It really does drive me crazy. Why don’t they call up one of the 5,000 agents in Tucson and ask them for concrete statistics and evidence of housing activity in Tucson?

In today’s AZ Daily Star there is an article (South side hit hardest by housing value drop) that has the following graphic:

Year over Year Statistics for Tucson Housing Market

Look I like Zillow.com and the service they provide, but their “Zestimates” and housing statistics in general are never going to be as solid as talking to a local agent who can run actual comparables for you.

If you ever have a question about a home’s value or price trending in a particular area please contact a local agent.

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Take a look at the map below, I did a quick search for all bank-owned properties that sold in Tucson since the beginning of the year and expected to see localized clusters of REOs.  I was surprised to see that the carnage was pretty uniformly widespread with total sales in the amount of 1,863.

Tucson Foreclosure Map - Jan 1 2010 to Aug 9 2010

Guess everyone is feeling the pinch now; with the large amount of short sales we currently have on the market these REOs will be around for awhile. Give me a buzz if you’re interested in some great or search for Tucson Foreclosures here.

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The Tucson market has shown a level of stability over the past few months that we have not seen for quite awhile; most of the past few years has been a story of gradual but continual decline.

It appears that the market is beginning to right itself from the foundation up as evidenced by the data below. The bulk of sales in the Tucson market resides with homes under the $250,000 level (as it always has) and just as this segment of the market was the first to fall out in the sudden decline 4 years ago it also is the first to recover and appears to indicate a coming upswing in the market.

Market Comparison Snapshot

The data above paints an interesting picture, that of the “luxury market” (homes priced at least twice the market average) still feeling the effects of the economic slowdown while the foundation of the market is already in recovery mode. I wonder if this lag time is indicative of natural progression of a recession where the lower classes are affected immediately while the upper class feels the pinch later as the economy contracts?

Also, the average sales price of homes from $250k-$500k dropped nearly 25% from 2006 to 2010 but that makes sense as the bulk of foreclosures and short sales originate in this same section of the market.

At the very least the data above is encouraging in that it shows a stable market is beginning to emerge and I expect the trend to continue. With mortgage rates at historic lows and with Obama pushing for a small-business friendly bill that will loosen community bank purse strings, lending money should become available for consumers to help aid the recovery of the housing market.

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Information is taken from ARMLS, TARMLS, WARDEX, GV/SAH MLS, PAAR MLS & White Mntns MLS on 12/16/09 and includes All Residential Actives, all dwelling types. Solds are for the period 11/15/09 – 12/15/09. REOs are Foreclosures (Real Estate Owned)

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Actives: The average price for the 6,447 properties is $331,419.
The average Market Time is 119 days
Solds: The average price for the 1,031 properties is $188,582.
The average Market time was 73 days

Property Type  Residential     Areas  Extended Southwest, Central, Northeast, Extended Northwest, Extended West, Pima Northwest, Pima Far West, South, Extended Northeast, Southwest, West, Extended South, North, Northwest, Pima Southwest, Pima East, East, Southeast, Pima South Statuses  Active, Active Capa, Active Contingent. Statistic from TARLS. Listings as of 11/7/2009. Information deemed reliable but not guaranteed.

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Information is taken from ARMLS, TARMLS, WARDEX, GV/SAH MLS, PAAR MLS & White Mntns MLS on 11/13/09 and includes All Residential Actives, all dwelling types. Solds are for the period 10/12/09 – 11/12/09. REOs are Foreclosures (Real Estate Owned)

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