The Catalina Foothills

The Latest - Tucson Foothills Home Sales, 2/25

Here's a look at the sales activity for single family homes in the Tucson Foothills during the last two weeks - that's 2/12 - 2/25/07. For perspective, this activity took place against an average of 430 homes -priced from $235,000 to $22,000,000- listed for sale during this period. The snowbirds, our winter visitors, are here in full force by now, and we're at the height of our season for home sales in the Tucson Foothills. If we look at the one number that really counts- the number of homes SOLD- there's nothing to shout about so far this year. During the last two weeks 18 homes have SOLD. For the same two week period in 2006, 32 homes SOLD, and going back to 2005, 37 homes SOLD during this same two week period.
Here's more,
New Listings = 82 (priced from $235,000 - $2,950,000)
Homes gone under contract = 29 (priced from $275,000- $1,595,000)
Homes Sold = 18 (priced $240,000 - $1,074,000)
Price Reductions = 48
Price Increases = 10
Expired Listings = 8
Withdrawn Listings = 18
Sales got off to a good start at the beginning of this year, but seem to have hit a slump recently. I'm wondering if it has to do with our unusually cold, wet winter this year. Really! People come here to get away from cold wet winter weather, and look forward to blue skies, sunshine and lunch on the patio. More times than not, that was not the case in December and January, and February hasn't been all that wonderful either. If I'd come here looking to buy a second home or a retirement home and be in a place that had great winter weather, it would have made me hesitate.
We'll have to wait and see what happens, but for now, I'm blaming the recent slowdown in sales on the weather.
For sales during the previous two week periods see
The Latest - Tucson Foothills Home Sales, 2/11

Tucson Agents gauge the market

Each month I participate in a Real Estate Agent survey conducted by the securities department of Bank of America. They survey about 2600 agents in the top 39 markets.
In the introduction to the survey B of A says "We survey real estate agents, as we believe that agents will provide an accurate assessment of housing market trends in both the new and existing home markets. Even though homebuilders sell new homes, we believe that it is crucial to have an understanding of the existing home market as the existing home market is substantially larger than the new home market (approximately 85%/15%) and trends in the existing home market dictate trends in the new home market."
Following are the survey findings for all of Tucson, not just the Tucson Foothills,
Tucson, AZ
(11,006 single-family permits in 2005, 33rd largest market in the country)
Traffic still below expectations. Our traffic index was unchanged at 34.4 in January from 34.6 in December, indicating traffic was below agents’ expectations (a reading of 50 suggests traffic in-line with expectations). 44% of agents said traffic was below expectations, 44% said it met expectations and 12% said it exceeded expectations.
Pricing and incentives deteriorate. Our price index measured 30.0 in January,
unchanged from 32.4 in December, as 51% of agents said prices declined from last month, 38% said prices were flat, and 11% said prices increased. Our incentive index came in at 30.7 in January, indicating higher incentives as 52% of agents said incentives increased, 34% said they were unchanged, and 14% said incentives were decreased.
Time needed to sell lengthens again – a negative indicator of future pricing. Our time to sell index fell to 12.0 in January from 16.2 in December, as 78% of agents said it is taking longer to sell, 20% said it is taking the same length of time, and 2% said it is taking less time to sell a home.
Comments from real estate agents:
“Buyers feel the market has yet to reach its lowest point.”
  “Buyers remain cautious as prices continue to fall.”

...in the eyes of the beholder

Recently I got a call from some clients that I had represented a few years ago in the purchase of a vacation or second home here in the Tucson Foothills. They were in town for a few days and told me that they were toying with the idea of selling this home and looking for another one. They thought that they might like to get something that was a little bit larger and in a slightly different location. But they weren't really sure and just wanted to see what was available, if I had the time.
They'd seen a few homes on my website and wondered if we could take a look at them and anything else that I might recommend.
My pleasure. As I mentioned, I represented these people a few years ago when they bought this home and they are wonderful, delightful people, the kind of people that make you want to bend over backwards every which way you can.
So we got together the next day and first we looked at the homes on their list and then I showed them a few on mine. When we walked into the 2nd home on my list, that was it, they IMMEDIATELY fell in love with it. Within moments of walking in the front door they were decorating and imagining themselves living in this house. In a flash we went from what was a morning of casual window shopping to suddenly strategizing on making an offer on this home and putting their home on the market, and how do we go about it and which comes first and what should we list their home for and so on.
But we were in a bit of a double bind here, because they didn't want to make an offer to buy this new home until they had a strong offer on theirs, AND, they didn't want to sell theirs until they had an accepted offer on this new one.
They didn't want to be stuck with two second homes in Tucson, but they also didn't want to be without one.
So both the sale of their home and the purchase of the new home were to be 'subject to' their ability to buy or sell the other property.
We put their current home up for sale with the offer requirement that - ... the sale of this property is subject to he sellers being able to reach contract agreement on another property of their choice within 5 days of contract acceptance on this property. If sellers are unable to reach contract agreement on another property within the 5 days, then the contract to sell this home is canceled upon notification to buyers... blah blah blah
That scared off a few buyers for sure, but within 2 months or so we had an accepted offer on their house, with the 'subject to' clause in place. Now we had five days to make a deal on the house they wanted to buy, which was still available. So we went ahead and put together an offer on this other house. I showed them the comps, I talked about the other homes that had sold in the area and I let them know that in my opinion this house was overpriced and that they shouldn't pay more than X for it.
We had talked about this before, so they understood, and they agreed with me.
We made a low offer. The house had now been on the market and vacant for 8 1/2 months. You'd think that by now the seller would be ready to deal.
Not so. They countered our offer at $10K under their list price. 8 1/2 months on the market, vacant, overpriced by about $50K -in my opinion- and they come down all of $10K, that's it. AND get this, the listing agent tells me that they don't want a counteroffer, they'll sell it at this price but not a penny less. Huh.
Again I advise my clients that at this price they'd be overpaying for this house, now by about $40K, and I didn't want them to overpay.
I suggested that we politely walk away from the negotiations, assuming that if anything is going to loosen up the sellers, this will, and if not, we'll find another house for them to buy. So I call the listing agent and let him know that we're going to take a pass, because we're so far apart and the sellers seem so inflexible, etc,etc.
OK he says, thanks, goodbye.
And now I have to call the agent representing the buyers of my clients house and notify him that the deal is off, because my clients can't reach contract agreement on this other house. So both deals fall thru. Meanwhile, we go out and look at some other homes for sale. Nothing strikes their fancy. Nothing. And it's plain as day that all they're thinking about is the one that got away.
Five days go by and still I don't hear another word, not a peep, from the listing agent for the house they want to buy. But my clients still want it. So I call the agent representing the buyers who made the offer on my clients house and ask if his clients are still interested. Yes they are, and ready to move at a moments notice he says, and since it's a cash deal, they can close in seven days. I tell him to put it in writing, again.
So now we go back to the table and try again to negotiate a reasonable price for this other house - my clients are willing to pay a reasonable price . But we can't do it, these sellers are not going to budge. They let us know that they'll sell the house at $10K under their list price, but that's it.
We talk, commiserate, my clients rationalize, and rationalize some more. And I realize that my clients are trying to convince me that it's OK to go ahead and write another offer for the house, and to write it at the price that the sellers are demanding. They want to get this house, they're willing to pay the price for it, albeit reluctantly, and at this point they're looking for me to support that decision. It's time for me to back off and help them make it happen, maybe even a little past that time. It's their decision, they're savvy, smart people who've bought and sold many homes over the years and they know what they're doing. So I shut up about the 40K and we re-write the offer, and they get the house. And despite paying more than they wanted to, and more than I thought they should, they got what they wanted and they're thrilled.
Getting the house was the important thing, not getting it and saving $40K would have been a huge letdown for them.  And if I'd have mentioned that $40K one more time, well, I'd come very close to overstepping my bounds. 

The Latest - Tucson Foothills Home Sales, 2/11

As we are about to enter the peak of the season for home sales in the Tucson Foothills let's look at the latest sales numbers since my last report of two weeks ago. This activity, for single family homes in the Tucson Foothills for the period of 1/29 - 2/11/07, took place against an average of 410 homes listed for sale, priced from $235,000 to $22,000,000.
New Listings = 89 (priced from $245,000 - $3,250,000)
Homes gone under contract = 21 (priced from $299,900- $1,850,000)
Homes Sold = 20 (priced $285,000 - $1,875,000)
Price Reductions = 33
Price Increases = 3
Expired Listings = 14
Withdrawn Listings = 30
Once again we're seeing more activity, but the activity's gotten lopsided, with more New Listings and fewer homes going under contract. Since the beginning of the year the inventory of homes For Sale has slowly crept up, as more sellers list their homes in anticipation of this new selling season. It's still very early in the season, too early really to see any pattern, so check back often to see where this market is headed.
For Sales #'s for previous 2 week periods, see-
The Latest - Tucson Foothills Home Sales, 1/28
As always, I've collected this data from the Tucson Association of Realtors Multiple Listing Service

Tucson-Fewer new homes, higher prices

Talking about the Tucson housing market at his annual home-building forecast held Friday at the Westin La Paloma Resort & Spa, Tucson housing analyst John Strobeck said " Fewer new homes will be built and sold this year although home prices will continue to climb..." and he predicted that the median price of a new home, which reached $258,000 in 2006, will climb to $348,000 by 2010. As reported in the Arizona Daily Star, read the full article Analyst: Fewer new homes in '07   In the online comments to this story, I think one reader hit the nail on the head. "Things slowed down recenty as some investors pulled out last year, but growth will really speed up over the next 20 years as the boomers retire. Most won't want to stay in the midwest, northeast, and northwest as the winters are too darn cold there when you are old. It is going to all about AZ growth from now on as California is way too high priced for retirement, Florida and Gulf Coast huricanes don't make for relaxing retirement, Nevada is pretty bleak if you don't enjoy Vegas, and New Mexico is too far from anywhere.

Tucson now in big leagues

In a story in today's Inside Tucson Business, Phillip S. Moore reports that "REITs now consider the Tucson region to be ready for the big leagues when it comes to investment".
And Marshall Vest of the University of Arizona says "The trend toward more attention on the national stage is part of a growth process that’s merging the economies of Tucson and Phoenix, and absorbing other communities along Interstate 10 into a single megalopolis"
Read it here Growth brings Phoenix retail market to Tucson