How did Tucson real estate market changed over the last few years?

In the early 2003, as the market was recovering from the dot-com-bubble-burst, money was cheap and real estate looked like a safe haven. After all, people always need a roof over their heads. “Buying and renting” transactions with the mortgage being paid by the tenant became extremely popular, especially after property values began to meteorically rise. All over the States (with a few exceptions), especially on the Coasts, homes were being snapped-up by hungry investors.

Tucson got into this mad “real property fever” by the end of 2004. Some, who were challenged to pay their monthly rents in normal times, were acquiring primary residences with a 5%, 3% or even 0% down loans. The others, fortunate enough to own a home, were buying an extra one, two, or more…; getting as creative as their imagination and lender would allow.  They agreed to negative amortization mortgages, 1, 3 and 5 year ARMs (adjustable rate mortgages), multiple loans and lines of credit, etc. Sooner or later that had to have an end… and it did.

One day, investors began to unload their properties… It could be for multiple reasons:  ARMs were getting adjusted and the inventory increased, the price got too high, interest rates were rising. The fact is – one day the real estate market began its inevitable march south.

I still remember that meeting at Long Realty in September of 2005, after returning from vacation in Europe. Before I left, Tucson real estate was going berserk – the rare new properties hitting the market were priced higher and still were getting multiple offers on the first day. All agents had buyers; a lucky few had sellers. Then suddenly, the utterance, “Buyers’ needs” – and the room was quiet. I couldn’t believe it. Almost overnight agents were flush with sellers and not a buyer in sight.

As the chilling breeze of the fading Real Estate boom began reaching investors and sellers, more and more properties sported “For Sale” signs. The number of homes for sale in Tucson tripled within a year, which paled in comparison to the horror stories of Phoenix, Las Vegas, Miami and multiple Californian cities. The lucky ones got out first…

Over two years later it is still clearly Buyers’ market. The average number of days of inventory for Tucson has increased from just slightly over 50 days in 2005 to a record 404 days in September of 2007. The number of Active listings is fluctuating around 10,000, while the number of closed sales has gone down to under 1,000 a month.

Sellers of luxury homes are now inspired to include creative add ons like: a free cruise to Alaska, vacations in Rocky Point, a new Lexus, a $10,000 gift card to Home Depot.

If you’ve got your eye on that special home and need some lumber for your woodshop, now may be the time.