In a post the other day (we've had our ups and downs in the Tucson Foothills, but) I reported that average sale prices in the Tucson Foothills are down 6.9% this year vs. same period last year, and median sale prices are down 2.3%. And that's not too bad, considering.
But that's just the average for all 286 single family homes that have sold in the Foothills this year, priced from $195,000 all the way up to $3,100,000. And with such a wide range of prices, you can bet that different price ranges are feeling the pinch, or not, to different degrees.
So here's a look at the # of homes SOLD, plus Average & Median Sale prices, and the % increase or decrease, for single family homes SOLD in the Tucson Foothills, for the period of 1/1/08 - 6/25/08 vs same period last year, for different price ranges.
| Price Range | 2007 | 2008 | % +/- |
| 0 - $500k # SOLD Avg SOLD $$ Med SOLD $$ | 127 $393,602 $400,000 | 126 $374,630 $373,500 | - .7 -4.8 -6.6 |
| $500 - $1.0m # SOLD Avg SOLD $$ Med SOLD $$ | 154 $672,912 $652,500 | 127 $694,986 $660,000 | -17 +3.2 +1.1 |
| $1.0 - $1.5m # SOLD Avg SOLD $$ Med SOLD $$ | 29 $1,239,090 $1,235,000 | 19 $1,179,539 $1,100,000 | -34 -4.8 -11 |
| $1.5 - $2.0m #SOLD Avg SOLD $$ Med SOLD $$ | 14 $1,678,643 $1,617,500 | 7 $1,752,857 $1,700,000 | -50 +4.4 +5.1 |
| $2.0 - UP # SOLD Avg SOLD $$ Med SOLD $$ | 8 $2,409,375 $2,312,500 | 6 $2,591,667 $2,575,000 | -25 +7.5 +11.3 |
The only real pattern here is that the # of homes SOLD is down across the board. Prices on the other hand, are up and down in an almost hopscotch-like pattern. And only the high-high-end is solidly up.
And because of very high inventory,(150 homes for sale at $1.0 & up) and significantly slower sales, I keep expecting the high end of the market to show a substantial decline in prices. Yet it hasn't, yet.
There are a couple of things that occur to me as to why the high high-end is holding up here in the Foothills, despite high inventory, slower sales and all the other negative influences chipping away at real estate values.
First off, the obvious, many of these homes are bought for cash.
No mortgage.
So the dismal state of the mortgage markets is often not a direct factor. While at lower price points buyers are routinely having a harder time qualifying for a mortgage, and when they do, it's often a smaller mortgage than they would like, and they're required to put more money down. So in the end they have less to spend on a home.
But also, like never before, we now have two classes of high-end homes in the Foothills, based solely on where they're located and the lots they're built on. (if you're having a deja vu as you read this and the next paragraph, it's because I lifted them from an earlier post I did on the same subject)
Before 2005, homes that were priced at about $1.5m and up were built in gated communities or on well located lots in non-gated areas of the Foothills. Since then, good lots have become an endangered species in the Tucson Foothills, and builders have responded by putting up very expensive homes on less desirable in-fill lots, lots that would not have been considered for building 4 or 5 years ago.
And in doing so, they've crossed the line of buyers tolerance.
Buyers of high-end homes are opting to purchase only those homes that are on good lots in good locations, and bypassing the others. And for those, prices are holding up. Because unlike others who are less well off, many of the very wealthy just don't need to sell, so if you want what they have, you've got to pay the price, for now.
But I don't think that's how the story ends. Because by and large, the owners/builders of those $1,000,000+ vacant spec homes sprinkled throughout the Foothills, are not of that very wealthy class. And they can't hold out forever. And eventually, that will effect the market, negatively.
I believe that many of those $1,000,000+ spec homes can be gotten at a deep discount, right now.
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