Tucson Market outlook May 2007

April statistics from the Tucson Association of Realtors came out last week - nothing new under the burning Tucson sun. In fact, since the peak of the boom (summer 05) medium prices for Tucson Real Estate has remained flat, except for the seasonal cycle, which goes something like this:

Home Prices start climbing during spring until midsummer, then slowly backs down Aug-Oct. In Oct & Nov we have the first wave of snowbirds coming in, which is often reflected as a slight price increase during Nov. From Thanksgiving until Late Jan the market stays flat until the 2nd wave of snowbirds stirs up prices again beginning Feb/Mar. Price fluctuations during the cycle are typically within 2-3%. Thus local investors does their "shopping" during fall & early winter.

With a record high inventory, the Tucson Real Estate market is out of balance - interestingly prices are holding up and most homes sell within 3% of asking! Instead the correction is seen in the number of homes sold, where the 12 month count is down roughly 20%. This indicates that buyers are essentially OK with the Tucson Price Level, but only open their wallet to the best of properties in their "class". Those properties not selling often becomes rentals as Tucson boast a solid tenant base.

With a healthy 3.25% net immigration and favorable job growth projections it is very likely that the Tucson price level will remain flat for 1-2 years while sales volume slowly increases, thus bringing inventory to balanced levels - either Mid 08 or spring 09. Once in balance we should begin to see market appreciations similar to the pre boom years - a healthy 5-7% pr. year.