The State of Tucson Real Estate...Continued

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