TheTucsonFoothills

The Latest - Tucson Foothills Home Sales, 3/28

Here's a look at the sales activity for single family homes in the Tucson Foothills during the past two weeks - that's 3/15 - 3/28/07. This activity took place against an average of 450 homes listed for sale during this period -priced from $235,000 to $22,000,000.
Here's how it is.
New Listings = 54 (priced from $279,900 - $2,590,000)
Homes gone under contract = 30 (priced from $295,000- $2,950,000)
Homes Sold = 22 (priced $277,000 - $2,500,000)
Price Reductions = 50
Price Increases = 4
Expired Listings = 3
Withdrawn Listings = 19
The 22 homes that SOLD during this period, sold for an average of $240.95/sq. ft, and for an average of 94.43% of their list price.
As compared to the last two week period, 3/1 - 3/14, this time round there have been: 15 fewer New Listings, 5 fewer homes gone under contract, and exactly the same # SOLD, 22. Very little change. Once again the sales numbers are disappointing given that we are at the pinnacle of our season for home sales in the Tucson Foothills.
In 2006, during this same time period 32 homes SOLD. In 2005 29 SOLD, in 2004 40 SOLD, and in 2003 44 SOLD during this same two week period.
This is a buyers market, big time.
Go to my website thefoothillsToday.com  and click on Just Listed/Just Sold to see all the homes that have SOLD in the Tucson Foothills during the last 30 days, including List Price, Sale Price, $/sq. ft and more, updated daily.
For sales numbers during previous two week periods this year, please see:
The Latest - Tucson Foothills Home Sales, 3/14
As always, the source for this data is the Tucson Association of Realtors Multiple Listing Service.   

appreciation bites back

In the last few weeks I've run into affordability issues with a few different people who are interested in buying a home in the Tucson Foothills. I know two of these people very well, Dave and Larry. Coincidentially, both of them emailed me recently and were lamenting the run-up in home prices in Tucson over the last couple of years and seriously questioning whether they could afford to buy a home here.  Dave is a past client who I helped to buy and sell two homes in the Tucson Foothills between 2001 and 2003, at which point he needed to move back east for a while. But now he's ready to come back to Tucson. Larry is a friend that I've known for 20 years or more who wanted to buy a second home here, but wasn't able to sell his large family home in Chicago until just last month, after almost two years on the market and a few price reductions. And now they both fear that since prices in Tucson have risen so much in the last few years, that it has gotten out of reach for them. Then recently I was out with yet another second-home buyer from back east, who'd been referred by a past client, and he discovered that he too would have to spend considerably more than he wanted to in order to buy the kind of home that he would like to buy. So the jury's out for him too, while he considers his options. These are three people who are crazy about the Tucson Foothills and would very much like to buy a home here, either a primary or a second home, yet there's a good chance that the price run-up of the last few years has put them out of the market for a Tucson home. Why is that.
Let's take a look at what's happened to prices in the Foothills since 2004.
In January/February of 2004 the average sale price of a Tucson Foothills home was $483,633-
In January/February of 2007 the average sale price of a Tucson Foothills home is $645,207-   That's a 33% increase in 3 years. It's not peanuts, but it's not outrageous compared to what's happened in other hot markets - and Tucson has been a hot market - during the same time period.
In January/February of 2004 the Avg.$/sq.ft cost of a Tucson Foothills home was $169.81
In January/February of 2007 the Avg.$/sq.ft cost of a Tucson Foothills home is $233.37
A 37% increase in 3 years, also a pretty reasonable increase, when compared to other popular markets around the U.S. during this period of wild appreciation. In the Jan/Feb period of 2004, 97 homes were sold in the Foothills - while this year, Jan/Feb 2007 we had 78 sales - that's 19% fewer sales, but still plenty to make a fair comparison with 2004.
Here's my take on it. In the case of Dave, Larry and many other people who are considering buying a home in the Tucson Foothills, their frame of reference is based on how much they were able to sell their home for in Chicago, Texas, Ohio or Connecticut. Those markets didn't see 11% appreciation/year over the last few years. 3 or 4% was more like it, if they were really lucky. Being behind the rising curve of appreciation, it's understandable that prices in Tucson seem to be, or are, out of reach. Apparently there are huge numbers of people who would like to move here from the east and midwest during the next few years. Yet the disparity in the appreciation of homes over the last few years, is, and I believe will continue to be for the foreseeable future, one of the biggest impediments to people fully realizing their goals of retirement in Arizona, and the growth of home sales along with continued appreciation in Tucson and other desirable destinations in Arizona.

Arizona Homeowner associations

Home owner associations, love 'em or hate 'em, but they're a fact of life for the majority of homeowners in the Tucson Foothills because most of the homes in the Tucson Foothills are located within subdivisions with HOA's. HOA's are a nonprofit association of homeowners charged with enforcing the CC&R'S, the Covenants, Conditions & Restrictions. John W. Murphey the original developer of Catalina Foothills Estates first introduced CC&R's in the Foothills in the 1930's with the fairly lofty goal of establishing minimum lot sizes and the preservation of desert vegetation. The CC&R's are an agreement, usually included in the deed to a property, restricting the manner in which the property can be used and to control the nature and character of a property development for the benefit of current and future owners. That was the ideal when CC&R's were conceived. Since then, CC&R's have become much more complex with a myriad of conditions and restrictions pertaining to what a resident can and cannot do. A covenant or condition may require a property owner to maintain the property according to aesthetic guidelines, such as how high you can build fences or what colors you can paint your house. They may contain building height and style restrictions, set-back requirements, forbid for sale signs on homes, restrict whether or not and when you can park on the street, prohibit lot divisions, or even what kind of plants you can plant in your front yard. CC&R's vary widely from one subdivision to another, as does the manner and degree to which they are enforced. In many subdivisions in the Foothills you can paint your house whatever color you want, as long as it's desert tan.
In any case, all of these convenants and restrictions are spelled out in the CC&R's, which in Arizona must be provided to a home buyer during the escrow period. And the home buyer has a right to cancel the contract to buy the home, with no penalties, if they find elements of the CC&R's that that are not acceptable to them. Yet many home buyers do not read the CC&R's when they receive them during the escrow period, and later they find out that they can't build a studio over the garage, or indulge their love of palm trees by planting a grove of them around the house. Worse yet is when someone buys a home which has an as-yet undiscovered violation of the CC&R's, which is later discovered by the HOA, and must now be corrected by the the new homeowner, at their expense. That almost happened to me on a house I was in escrow to buy that had two small supplemental heating/cooling units on the roof. These units were barely visible from the ground, but they were there and you could see them if you looked from just the right angle, and amongst the 30 of so pages of the CC&R's was a restriction that no heating/cooling apparatus was permitted on the roof. So I spoke to the listing agent about this and asked him if the current owners had a waiver from the HOA for these units. He said they didn't. And apparently they didn't want to go through the expense and trouble of having them moved to satisfy me, and apparently they didn't think that I'd cancel the contract over this. But I did, because I didn't want to inherit their violation of the CC&R's and then have to go through the expense and trouble of having them moved. There was more to it than that, but that's another story. Meanwhile this same listing agent told me that he thought that the no heating/cooling on the roof restriction was one of those things that are on the books but not really enforced. Ah hah. So I called the president of the HOA to have a friendly chat and try and get a sense of how the CC&R's are enforced. During our discussion, when I brought up the subject of heating/cooling units on the roof, and the fact that I could have sworn that I'd seen one or two in the neighborhood -I didn't let him know that the house I was intending to buy had them on the roof - he was very emphatic in letting me know that they were not permitted and that it was strictly enforced. Well not too strictly, these units had been up on the roof for a year or more.
HOA's have been getting a lot of ink lately about what are considered their overly restrictive practices and the manner in which they attempt to enforce the rules on residents who are found to be in violation. This enforcement has gone so far as to attempt to foreclose on the homes of noncomplying residents. Homeowners associations should not have that kind of power, foreclosing on someone's home is not something to be decided by a group of people who may have a vested interest or a conflict of interest, or who are at the very least, likely to be emotionally involved in the situation. That kind of power and authority goes way beyond the intent of why HOA's were created, and any reasonable interpretation of what their role should be in enforcing the CC&R's as a way to control the nature and character of a property development for the benefit of current and future owners.
For the latest on HOA's see this story on the AZ legislature and HOA's from the AZ Daily Star, Legislation would rein in power of homeowners associations.   

Open houses

Last week I wrote about an Open House that I held for another agent who's a friend of mine.
The house was hers, her personal residence, priced at $2,875,000 in Pima Canyon, a popular luxury home community in the Tucson Foothills. In that post - slower sales in the Tucson Foothills? -I talked about how disappointed I was at the low turnout for that Open House. Left unsaid, was the fact that given the poor turnout, amongst other signs of weaker buyer demand, I worried about the prospects for her to sell that house anytime soon. Later on she and I talked about it, and we talked about the fact that there are 22 $1,000,000 + homes for sale in Pima Canyon alone, and many more elsewhere in the Foothills. We didn't encourage each other very much, we just commiserated on what she could do to stimulate more interest in the house, and discussed the odds, which didn't seem too good, of her selling it anytime soon. So a few days later, it was Sunday again and she held the house Open. And again the turnout was pretty low. But this Sunday someone walked in who loved the house, and they loved it so much that they wrote an offer, and after a bit of negotiation the house is now in escrow. And the person who made the offer on that $2,875,000 house, did not have an agent, they just wandered in on their own. Open Houses, you just never know.

The Latest - Tucson Foothills Home Sales, 3/14

Here's a look at the sales activity for single family homes in the Tucson Foothills during the past two weeks - that's 3/1 - 3/14/07. This activity took place against an average of 445 homes listed for sale during this period -priced from $235,000 to $22,000,000.
We're well into our winter sales season for homes in the Tucson Foothills, and yet, while the sales numbers are not bleak, they continue to be disappointing for this time of year.
Here's how it is,
New Listings = 69 (priced from $250,000 - $2,000,000)
Homes gone under contract = 35 (priced from $255,000- $2,875,000)
Homes Sold = 22 (priced $319,000 - $1,275,000)
Price Reductions = 36
Price Increases = 2
Expired Listings = 10
Withdrawn Listings = 19
About twice as many New Listings as homes going under contract, three times as many New Listings as homes Sold, and still lots of Price Reductions.     
For sales for previous two week periods see
The Latest - Tucson Foothills Home Sales, 2/25

lots to choose from in Tucson

These latest reports - courtesy of Long Realty - graphically illustrate the state of the housing market for the Greater Tucson metro area. They compare Active Listings, New Listings, Unit Sales and Days of Inventory for 2007 with prior years. And see the notes below each report which highlight and clarify the key issues in a no nonsense manner.
**Click on the charts for a slightly larger and more legible version**

Also from Long Realty, here's some additional analysis and explanation for each of the charts listed above.
Active Listings Report
We have never had a market like this, with such high numbers of unsold houses. We can expect longer market times and continued aggressive bargaining by buyers. Even the low interest rates and strong employment that exist in Tucson will not rapidly reduce inventories.
Unit Sales Report
There are no indicators that the market is about to pick up, although there appears to be a good supply of ready, willing and able buyers. Prices are under continued pressure. This is a buyer’s market.
Sellers are continuing to reduce prices. As properties are selling at less speculative prices, new comparable sales establish new levels of pricing, and there will continue to be downward pressure on prices all year.
New Listings Report
There is continued interest in buying and selling in Tucson. Rates are creeping up, but are still historically low. Listings continue to come on the market at a heady pace, and this very high inventory level will put a lid on price increases. This is a buyer’s market.
Days of Inventory Report
Inventories are not being taken down, even by good sales and price reduction activity. Motivated parties are completing transactions. Buyers are passing over unmotivated sellers and ignoring properties in poor condition. In coming months, inventories may drop as some unsuitable properties leave the market. However, there are some early indicators that foreclosures will increase as rates rise and adjustable rate mortgages are re-set.

slower sales in the Tucson Foothills?

Last week I posted what were very disappointing sales numbers for homes in the Tucson Foothills during January and February -Tucson Foothills Homes Sales. Every price range from $500,00 and Up, was down 35% or more from the same period last year. Then this past Sunday I did an Open House for another agent who's a friend of mine and needed someone to fill in for her because she was going out of town for a few days. The house is her personal residence in Pima Canyon. It's priced at $2,875,000 and it's lavish and spectacular, a real WOW! house that I knew was sure to evoke lots of oohs and ahhs and questions and comments from the many Open House visitors that I expected. In a house like this, even the most reticent and reserved people can't help but open up. So I was looking forward to it, it would be an interesting, fun day for me, I thought. In the past I've done many Open Houses in Pima Canyon, but I hadn't done any in quite a while, and none this year. On a Sunday afternoon at this time of year, a Pima Canyon Open House usually gets a good crowd - 35 to 40 people or more. That's not the way it was this past Sunday, I think eight people showed up at my Open House, it was very disappointing, and boring. It felt more like an Open House in the dead of summer than at the height of the season in early March, and other agents have related similiar experiences. Maybe it's the cold and dreary winter weather that's kept people away- it has been very cold and dreary this winter - maybe it's that many would-be home buyers can't sell their homes in California, Chicago or Connecticut, so they can't buy a home here, or maybe buyers are waiting for the bottom to drop out so they can scoop up homes at bargain prices. And maybe it's all those things. But looking at the sales numbers and attendence at Open Houses, the evidence seems clear cut, sales activity is down. On the other hand, and to add a some conflicting evidence to the sales picture, currently there are 98 single family homes in escrow in the Tucson Foothills, 63 of them priced from $500,000 and Up. So while the numbers for closed sales are down, and attendance at Open Houses is down, if we count the properties that are currently in escrow and scheduled to close, things look pretty rosy. So let's not count this season out just yet.

Open House

I've always been a strong proponent of doing Open Houses for my listings, but I enjoy Open Houses, for me they're fun. I get to talk with a lot of different people who are out shopping or maybe just browsing for a home, and I listen to what they say about the house that I'm holding Open, other houses that they've seen, what they think about the neighborhood, the state of the market here in the Tucson Foothills and anything else that comes up. It's the best way that I know of to see how people feel about that house I just listed for sale and get a handle on what buyers are thinking about the real estate market. Do the people linger and talk amongst themselves and pause and go back to the kitchen or family room, do they go through the house two or three times and ask a lot of questions. Or are they in and out in a flash with a muttered 'thank you'. You can learn a lot at an Open House, and it's a great way to get your listing exposed to people who are just beginning to look and don't yet have an agent. And occasionally you get lucky, and sell your listing from that Open House.
But here in Tucson it's fairly easy and generally very pleasant to do an Open House on a Sunday afternoon. Neighbors drop by and introduce themselves and I've never heard any complaints from neighbors or been discouraged in any way from doing an Open House. Apparently the Open House thing is a different ball game in New York City, as the New York Times describes the travails of Open Houses in Closing the Door on Open Houses  '...to many other residents in buildings with open houses, a Sunday afternoon with a mob of potential buyers clogging their lobbies and monopolizing their elevators is tantamount to having strangers walk in off the street and invite themselves up for dinner'.
I assumed that agents didn't do Open Houses in New York City, it just seems too ripe for problems, I couldn't imagine it. The New York Times article talks about some those problems, and some of it's pretty funny, "Mr. Miller had vivid memories of a 2002 open house that drew about 90 people in an hour and a half in a Greenwich Village building that had an escort rule. “When I went down and saw the first horde of people, I didn’t know whether to laugh, cry or call the police,” he said. “I was alone. I felt helpless. I felt like Pauline having a peril.” - And the article also makes some good points about why Open Houses are a very valuable marketing tool. Read it here - Closing the Door on Open Houses

Tucson Foothills Home Sales

It's not a pretty picture, but here's a look at the sales numbers for Tucson Foothills homes for this January-February 2007, compared with January-February of 2006.

Price range	Jan-Feb 2006 # Homes Sold	Jan-Feb 2007 # Homes Sold	+/- %
$500,000 - $750,000	32	20	-37%
$750,000 - $1,000,000	14	9	-35%
$1,000,000 - $1,500,000	16	5	-68%
$1,500,000 - $2,000,000	3	3	+/_0%
$2,000,000 & UP	1	1	+/-0%
Total Homes SOLD	66	38	-42%
Average List Price	$699,820	$678,201	-3%
Average Sale Price	672,555	$649,543	-3%

This is a big drop in sales for Tucson Foothills homes, a huge drop. And sales of homes priced at $1mil to $1.5 mil and UP, which had been selling better than ever thru 06, are suddenly flat or down significantly in these first two months of the new year. Average list and average sale prices are also down, for the first time since the 18 months following 9/11.
The slowdown in sales in the Foothills didn't start until May of 06, later than in most cities, but that's usually the case. When the east coast, midwest and west coast real estate markets change, either up or down, we usually don't feel the full effects until 4 to six months later. But now it's 10 months since our market slowdown started and suddenly we seem to be slipping another rung or two, right at the height of our season for home sales.
Though I'd like to attribute this slip in sales to the unusually cold and prolonged winter weather that we've had this year, and I'm sure the weathers' had something to do with it, blaming this big a drop in sales on the weather, somehow doesn't quite cut it. However, currently there are 61 homes under contract priced from $500K and UP in the Foothills, and if most of those transactions close escrow as scheduled, we'll be back on track for a good, maybe even a very good 07. By April Fools day we'll know.