‘Sick’ report on Tucson housing market puts Realtors on defensive
With his company’s business up and inventory at a five-year low, Realtor Greg Hollman said the housing market in Arizona’s second-largest metropolitan area is thriving.
“The Tucson housing market is doing well in many areas, especially properties in the lower-priced end,” he said.
But that assessment runs counter to a recent national news report that branded Tucson the nation’s sickest housing market.
24/7 Wall St., a financial news and opinion website, based its analysis on vacancy rates, unemployment rates and historical median home prices. Indianapolis, Memphis, Atlanta and Baton Rouge followed Tucson on its list.
According to the report, 6.8 percent of listed homes were vacant in Tucson, a figure exceeding that of any other market ranked.
No one here is arguing that Tucson’s housing market is breaking sales records. One out of every 54 housing units received a foreclosure filing between January and June, RealtyTrac reported. Home prices have dipped 34 percent over the last five years, according to the Federal Housing Finance Agency.
But Hollman, who is president of the Tucson Association of Realtors Multiple Listing Service, said the vacancy rate is an unfair measure in a place where many snowbirds have second homes.
He said using median sale price also produced misleading results because many sales of late have been low-priced homes, which pushed the median price down.
“I think it’s completely unjustified,” he said. “It’s a fabrication of current market conditions in Tucson.”
Other recent reports have presented Tucson’s real estate market in a more positive light. Inman News placed Tucson fourth among America’s 10 best places for real estate investment. Among other factors, the report considered low prices and falling prices, an improving unemployment rate and high projected return on investment over the next decade.
Fiserv Case-Shiller listed Tucson as one of 20 metropolitan areas where housing prices are expected to rise in 2012.
So is Tucson’s housing market sick or healthy?
It’s a matter of perception, according to Marshall Vest, an economist with the University of Arizona’s Eller College of Management. One study sees the glass as half full, while the other sees it as half empty, he said.
“I think both of those statements make sense, and both are consistent with one another,” Vest said. “If you have a market with high inventory and prices are way down, yes it’s sick, but it’s also ripe for investment.”
Phoenix has it worse by many measures. Home prices there have dipped 49 percent over the last five years, yet the nation’s sixth-largest city dodged the sick list, to the surprise of Vest and dismay of Tucson Realtors.
“As I look around at housing data from around the country, I can tell you that we’re far from the sickest,” said Hollman, who is also regional vice president for Coldwell Banker Residential Brokerage, Arizona.
Jerimiah Taylor, a Realtor with Jerimiah Taylor Team, views Tucson as a market of opportunity.
“In as much as our market isn’t in a good state, we’ve also depleted our inventory,” he said.
Taylor said buyers are scrambling for low-priced homes. He recently listed a house for $147,000 and sold it within three days for more than $170,000.
“If you are a buyer that wants a great deal, there’s nothing sick about this market,” Taylor said.
The average property in Tucson had been on the market for about 162 days as of Aug. 28, according to real estate market data provider Altos Research, which called Tucson a buyer’s market with a high inventory and low prices.
Tucson’s total sales volume rose 27.9 percent from July 2010 to July of this year. Sales of 1,124 units were 41.9 percent higher than the previous July, according to monthly statistics from the Tucson Association of Realtors.
Barbara and Tom Dougherty sold their four-bedroom home of seven years within four days at $387,000, but at thousands of dollars less than they had listed.
“We sold it at a very good price for the buyer,” Barbara Dougherty said. “We didn’t make very much money on that house.”
Vest said the strength of the Tucson market is its affordability and that wise investments are made when prices are lowest.
“It’s a destination of choice and will continue to grow,” Vest said.