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