Day after day we are bombarded with articles regarding the decline and fall of the national real estate market. While it is true that nationally, sales are down, what does that really mean to you and me.
Only by analyzing the local market can we truly get a measure of the impact of this "downturn". In the Tucson, Arizona market and surrounding area, we enjoyed a tremendous boom in sales and increase in values from the first quarter of 2004 through the first quarter of 2006. From January 2004 through the high water mark of March 2006, our prices increased a cumulative 57%. Any rational person would expect that could not continue.
Currently, prices have stabilized, down 2% from the high of last year. Market indicators appear to suggest that sales this year will more closely follow those of 2003, which was the 4th most active year in the Tucson real estate market. Average and median sale prices look to remain at about 1% to 2% below last year.
Our current inventory of available housing is at an all time high. We have 8 - 10 months of inventory, where normally we have seen 4 - 6 months of availability. This means buyers have a good selection of homes to choose from and it will take a house longer to sell due to increased competition.
How much longer? Currently, homes are averaging 67 days on market from the time they list to the time they go under contract. In only 2 of the last 10 years, has we seen our marketing time drop below 50 days (49 days in 2004 and 33 days in 2005). This means, on average, it will take an extra two and one half weeks to sell a property.
So what does it all mean? Houses are still selling and selling in all price ranges. Increased competition will probably increase the amount of time it takes to sell a property. Testing the market by pricing at the highest end of a price range is not an effective strategy. As always, properties that are competitively priced and in good shape will still sell and sell relatively quickly.
We can't ignore the obvious. There are lending, over supply, and affordability issues. However, by analyzing and understanding the issues, we can and will continue to see a healthy real estate market in our area.