Tucson market outlook APR 2007

Before looking at the Tucson Market, lets go national for a moment and get the headlines.

The National Association of Realtors (NAR) just came out with their latest market report. For the first time in 40 years they predict a yearly decline in median price fot the U.S residential resale market of 0.7%. With NAR reports always being more or less upbeat in the role of cheerleading its 1.2 million members, this is a rare forecast.

2007 is also set to be a record year of foreclosure. The non-profit organisation "Center for Responsible Lending" estimates that 20% of sub-prime mortgages originated in the last 2 years will end in foreclosure, which will put up to 2.2 million people at risk of losing their home. The global investment bank, Lehman Brothers goes even further with a projetion that 30% of all 2006 subprime loans will default. This will have an effect - ranging from "bad" to "not so bad after all".

1) Lenders will through tightening standards for approval exclude a noticeable chunk of the U.S homebuyers, thus decreasing demand for homes.

2) As homes are forclosed on they go back on the market adding to the already record high levels of inventories.

With less demand and more inventory homeprices are set to retreat, but how it will happen is the question: Will it be a long term model where prices goes flat or slightly drop while being hollowed by inflation or a shorterm solution where prices drops markedly 10-15% ?

...Any good news ?

Yes - as with any hangover after a party (or real estate frenzy) things will get back to normal!

How About The Tucson Market ?
Marts stats form the Tucson Association of Realtors (TAR) just came out. The headline being that of "nor rain neither shine" - inventory and days on the market is slowly ticking up but still comparative of the pre-boom years, 2003 and earlier. Median price is up 2.11% year over year(adjustet for inflation this is more like -0.5%) . Considering that Tucson was in the nations top ten of home appreciation during '05 (38%) things are certainly better than they should be considering the old adage of the higher you fly the deeper.....

All real Estate markets are local - ultimately it is local job growth and immigration that plots the course. What keeps Tucson airborne is Arizonas ranking as the fastest growing state. We are in the sunbelt, but away from hurricanes and skyhigh flood insurances - and babyboomers are coming our way as are the people to service them. Add to that an expanding high tech sector in optics, IT-tech and Aerosopace.

Selling in Tucson ?
Homes that are priced right, typically 8-12% less than what they may have fetched at the peak should sell easily. If you are not willing to, or cannot adjust the price to the 07 market, it may be an idea to either rent out (tenant base is increasing) or wait out the storm and sell in a 1.5 to 2 years.

Buying in Tucson ?
You never had so much to choose from! - there are many many great deals, but do not expect to get away with 20-30K lowballs. The vast majority of Homes in Tucson sells within 5% of asking - keeping in mind that only those priced right to begin with stands a chance. There is no need to wait around for a significant price drop - with net immigration at more than 25.000 new residents a year (3.25%), prices in Tucson are most likely to stay flat +/- 2%. Expect balance to return to the market beginning mid 2008.