This morning the CEO of Long Realty, Rosey Koberlein, came to our Long Realty branch office to give a power point presentation about the state of the market in Tucson. My last posting was entitled "The state of Tucson real estate." This posting will further elaborate on what I've already brought to light in the previous posting, expounding on topics covered in Rosey Koberlein's presentation.
The media would love to have you buy into all the 'gloom & doom' scenarios, after all- that's how they sell newspapers! A different gloom & doom outlook is presented in our local newspapers on an almost daily basis. Last Sunday, December 16th there was an article stating that real estate agents are 'taking to the streets' and/or getting second jobs to create new business for themselves and cover their expenses in a down real estate market. As a professional Realtor with 9 years of experience, I am here to offer a testament that that is the exception rather than the rule. Perhaps desperate times call for desperate measures, but professional Realtors (such as myself) are not taking second jobs or standing out on street corners to draw attention to ourselves. Rather, when you are a professional (and you understand the dynamics of the market), by constantly striving to create a quality experience for your clients by exceeding their expectations, the business will come to you. It's the whole "Field of Dreams" mind set of, "If you build it, they will come." Despite the dismal portrayal of the housing market in both local and national media, there is a steadiness in the local Tucson market. It may not come close to matching the 'freight train' speed of the 2005 market, but it is vibrant in comparison with markets even as little as 5 years ago. Our sales numbers in 2007 are comparable to the number of sales of 2002, but the average sales price is much higher today than five years ago.
So, what's up with the market you may wonder? Tucson buyers and sellers need to know that there is an active market (even a week before Christmas), and we are seeing signs that the market is building steam. "What signs?" you may want to know. Well, traffic at open houses held by professional Realtors from our company is picking up. Inquiries by investors are picking up. Investors are calling their agents asking, "Is it time to come out from the wood work now?" These are what we can consider preliminary indicators that the market may be at the beginning stages of undergoing a shift (from a buyer's market to a more balanced market). There is still one year of existing resale inventory in the Tucson area, and that fact hasn't changed much in the last several months. But buyer apathy seems to be diminishing, and buyers are realizing, "Hey, this may not be such a bad time to buy a house after all!"
I know I said this in last week's posting, but I'll say it again- it's actually a great time to buy! Buyers can afford to be picky- there are numerous choices of homes in all price ranges. Couple that with low interest rates (still hovering in that 6% range for a 30 year fixed rate mortgage). The deals are out there, and buyers are starting to act instead of waiting for the media to tell us which shoe will be the next to drop. There may not be as many financing options as there were even four months ago, but that may not be a bad thing, as part of the mess we are in today can be directly attributed to lenders making (high risk or subprime) loans to consumers that they had no business making loans to.
As foreclosures in many fringe areas outside Tucson peak (anticipated to happen in 2008), prices may have one final drop, but are not expected to plunge to all time lows. In Tucson, we still have a strong economy, low unemployement, and a relatively low cost of living. Tucson is a prime retirement destination. For all these reasons (and more), it may take a year for the market to absorb the existing inventory, but we have reason to hope for a stronger buyer demand than in the past six months, especially considering that the worst of the lender fallout from the subprime fiascos is over. With lenders being more cautious about new loans, buyers with lackluster credit scores and low downpayments may need to seek alternatives. One of these alternatives is the return of our old friend FHA. FHA is working to develop new guidelines with higher loan amounts and lower downpayments. The new FHA downpayment will be reduced to 1.5%, and the conforming loan limit amount may be increased to around $500,000. This is great news for borrowers! It means that the government is stepping in to make sure there are alternatives for first time home buyers.
So, don't sweat the real estate market, it's coming around. And like any good thing, it certainly doesn't happen overnight! Please feel free to contact me with any questions and/or topics you would like to see in my future postings.
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA
Tucson Realtor with
Long Realty Company
(520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Tuesday, December 18, 2007
Thursday, December 13, 2007
The State of Tucson Real Estate
A lot of people are rightly concerned with what's happening with the Tucson real estate market. The goal of my blog is to provide insight into the goings on of the market. This article will hopefully give you some perspective (and ease your worries) on the 'state of Tucson real estate.'
After record breaking years in 2003- 2006, in which new highs were set for home prices, the market has now done an almost complete reversal and has all the components of a buyer's market. Go figure! At the end of 2007, we are faced with a classic buyer's market, the components of which being: excess inventory (12 months may be a conservative estimate), increasing foreclosures (compounded by the subprime fallout), waning demand (many prospective buyers are choosing to rent vs. buy), builders with surplus inventory, combined with economic pressures (there's plenty of talk by top local economists that we are likely in the midst of a recession that will last well into the summer of 2008). How long this buyer's market will last is anyone's guess. And guess what? None of us has a crystal ball. I can only state my professional opinion based on 9 years of real estate sales experience, and a degree in business from the University of Arizona. The most practical thing I learned in the U of A college of business was in Economics 101- it's all about supply and demand! When supply exceeds demand, prices will drop. So in order for the demand to equalize with supply- (in my guess) prices are going to have to come down some more before leveling off. Since many buyers and sellers don't like the uncertainty of the market, there is a standoff. Sellers are holding out for their price, but buyers are refusing to pay. I don't think prices (overall) are going to come down that much more. Here in Tucson we have a lot of factors that make this a great place to live: an outstanding climate, a great quality of life, relatively low unemployment, a prime retirement destination, and the list goes on.
In my opinion, it's a great time to buy! Interest rates are low (hovering around the 6% level). Seller's are willing to make price concessions, and they (sellers) are coming to terms and realizing that their timing may be more important than wishful thinking for a bottom line dollar amount that they may never get. So- venture out and make that home purchase that you've been putting off! If you're thinking of buying an investment property, this is also a great time to buy, assuming that you can get it to have a positive cash flow. You will need to make sure that you're putting enough of a down payment and can rent the property for enough to cover the mortgage payment and all of the misc. expenses that you will need to cover as a landlord. And of course, as always- cash is king! If you have the cash, you are really calling the shots, and you should think about buying real estate. I never understand why there is always such a frenzy to buy a home in a seller's market. The goal of investing (whether it be in the real estate market or the stock market) is to buy low and sell high.
On the other hand, if you're stuck holding a property right now that you haven't been able to sell- why not convert it to a rental property and 'ride out' the rough spots of the market. You may be pleasantly surprised at the amount of money your home can rent for. You can use your equity to purchase your new home (hopefully at a much reduced price due to desperation on that seller's part), and when the market rebounds (which it will), you can then sell for a much higher price. Obviously being a residential resale agent, I do not stay in business recommending this to all of my clients, but if you have enough equity in the house, it may be a viable option. If you want to explore some more options feel free to contact me. I would be happy to give you my opinion- no obligation.
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA
Tucson Realtor with
Long Realty Company
(520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
After record breaking years in 2003- 2006, in which new highs were set for home prices, the market has now done an almost complete reversal and has all the components of a buyer's market. Go figure! At the end of 2007, we are faced with a classic buyer's market, the components of which being: excess inventory (12 months may be a conservative estimate), increasing foreclosures (compounded by the subprime fallout), waning demand (many prospective buyers are choosing to rent vs. buy), builders with surplus inventory, combined with economic pressures (there's plenty of talk by top local economists that we are likely in the midst of a recession that will last well into the summer of 2008). How long this buyer's market will last is anyone's guess. And guess what? None of us has a crystal ball. I can only state my professional opinion based on 9 years of real estate sales experience, and a degree in business from the University of Arizona. The most practical thing I learned in the U of A college of business was in Economics 101- it's all about supply and demand! When supply exceeds demand, prices will drop. So in order for the demand to equalize with supply- (in my guess) prices are going to have to come down some more before leveling off. Since many buyers and sellers don't like the uncertainty of the market, there is a standoff. Sellers are holding out for their price, but buyers are refusing to pay. I don't think prices (overall) are going to come down that much more. Here in Tucson we have a lot of factors that make this a great place to live: an outstanding climate, a great quality of life, relatively low unemployment, a prime retirement destination, and the list goes on.
In my opinion, it's a great time to buy! Interest rates are low (hovering around the 6% level). Seller's are willing to make price concessions, and they (sellers) are coming to terms and realizing that their timing may be more important than wishful thinking for a bottom line dollar amount that they may never get. So- venture out and make that home purchase that you've been putting off! If you're thinking of buying an investment property, this is also a great time to buy, assuming that you can get it to have a positive cash flow. You will need to make sure that you're putting enough of a down payment and can rent the property for enough to cover the mortgage payment and all of the misc. expenses that you will need to cover as a landlord. And of course, as always- cash is king! If you have the cash, you are really calling the shots, and you should think about buying real estate. I never understand why there is always such a frenzy to buy a home in a seller's market. The goal of investing (whether it be in the real estate market or the stock market) is to buy low and sell high.
On the other hand, if you're stuck holding a property right now that you haven't been able to sell- why not convert it to a rental property and 'ride out' the rough spots of the market. You may be pleasantly surprised at the amount of money your home can rent for. You can use your equity to purchase your new home (hopefully at a much reduced price due to desperation on that seller's part), and when the market rebounds (which it will), you can then sell for a much higher price. Obviously being a residential resale agent, I do not stay in business recommending this to all of my clients, but if you have enough equity in the house, it may be a viable option. If you want to explore some more options feel free to contact me. I would be happy to give you my opinion- no obligation.
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA
Tucson Realtor with
Long Realty Company
(520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
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