Ever since the housing craze of 2005 the growing consensus was that the US was going to experience a housing “crash” across the nation that would weaken, if not cripple, our economy. Fortunately it looks like it has been more of a soft landing and for the most part it has been much softer than many experts predicted.
In the Tucson Real Estate market the results of the past few years of activity is finally becoming evident with home values growing just .01% in the first quarter of 2007, according to the Office of Federal Housing Enterprise Oversight. In a new article on CNN.com from yesterday (May 31, 2007), the National Association of Realtors cited home prices in the Tucson market declining 2.5% from one year ago.
This isn’t really a surprise; there are more than TWICE as many active listings right now than there were two years ago. In April 2005 there were 3,493 active listings. Last month, April 2007, there were 10,185! The Days on Market (DOM) for homes has increased from 37 days to 67 days.
It wasn’t uncommon in 2005 to have multiple offers on a home within days of it being on the market. Homes are now sitting on the market much longer, but to be completely honest, this market is a much more reasonable one. It is much more of a normal market than we experienced in the 2005/2006 period but the prices of homes have not yet come to reflect that. Many homeowners still believe, or want to believe, that their home can fetch the same types of prices that were being fetched a couple years ago.
What should, and will happen, is that as the market becomes more saturated with homes, prices will HAVE to come down. It is simple supply and demand. There is a small percentage of active listings in Tucson with owners who don’t necessarily need to sell right now, they are “feeling” out the market to see if they can still attract the high-dollar offers. Investor homes are also still hanging around in the market but for the most part they have come and gone.
The bottom line is, many people in Tucson ARE trying to sell their homes. To remain competitive in the market with so many other comparable homes for sale I think we will begin to see a combination of the following:
* seller incentives
* price reductions
* more buyer-friendly contract terms.
I think that in the next 4-6 months we will see a slight median price decline to bring the market more in line with what it should be. Tucson has been slowly morphing into a buyer’s market for the past 6 months or so and I believe that in the coming months this will become more evident.
The Tucson Real Estate Market Has Finally Plateaued - What"s Next?
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