Things have changed.  Inventories continue to shrink in most Areas of Tucson. January 2012 is wrapping up and the January statics will be released in a week (or there about). So I’ll publish December for historical data.

Tucson Absorption Rates December 2011 is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

Here is a way for Banks to make more money on their inventory of Bank Owned Homes (REO) and Shadow Inventory.

Banks own homes that are not on the market.  “Shadow Inventory” has been said to be a HUGE issue.

Here is how Banks can make more money on REOs

Hire a data analyst, to compare available inventory in subdivisions against the Banks own Shadow Inventory.  If the analysis shows that a particular sub-division is low on available inventory that matches homes the Bank has in inventory, then put one or more of their homes in that area on the market.

Example

Subdivision A is located near the U of A.  There are no three bedroom homes on the market in that neighborhood.  The banks have three homes sitting in Shadow Inventory in that subdivision.  Put one or two of those homes on the market.

Since the bank has the only home available with 3 bedrooms in that subdivision they have an opportunity to get a better price.  (The law of supply and demand).  When they sell that property for a higher price they have just increased the Comp sale price for other homes they have for that subdivision.

It is pretty simple to do, doesn’t cost much once the model is setup for comparisons, and it can increase the banks bottom dollar while getting rid of some of their inventory.

This is how any agent who is about to take a listing finds the market price.

1. They find Sold comps for the neighborhood
2. They find out how many homes like the one they are listing are on the market and their list price
3. They now know where to competitively list the property.

That’s it.  Not an expensive process.  Quick to implement and increase the sale price.

However, I doubt the banks will do it.  Why?  It makes too much sense.

Tucson Bank Owned Real Estate – Hey Banks Are You Listening? is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

This goes against the conventional thinking that any real estate market is either a buyers or sellers market.  Maybe that was true at one time (but I doubt it).  Now we have a time in history where the interest rate on a 30 year mortgage is historically low.  Sale prices are as low has they have  been in over a decade which would tend toward a buyer’s advantage.  But one crucial piece of the puzzle is missing for a true buyer’s market; high inventory.

Tucson’s Low Residential Inventory

Have you even been in a store (Like Ross) the week after Christmas?  The shelves look like they are 80% empty.  Very little to choose from compared to the weeks leading up to Christmas.  Tucson’s available housing market looks a lot like one of those stores.

Not much to pick from

Currently in Tucson we have a very low inventory of available properties.  Even with the high number of foreclosures we don’t see that many properties on the market.  There are 5,587 active residential listings in the Tucson MLS system right now on Jan. 2, 2012.  Considering this includes properties in Vail, Oro Valley, Marana, Saharita, Green Valley and scatterings around Southwestern Arizona and a few in Mexico, that’s not a lot of inventory to choose from.

False Perceptions Can Lead to Poor Decisions

The general perception among many seems to be it is a buyer’s market in Tucson.  Make an offer that’s within 20 or 30 thousand of asking price then meet the seller somewhere in the middle and you can walk away with the property.  The reality: many are taking so much time deciding, they find their first, second, and third choices are going under contract while they “think about it”.

Think about it

Who’s swooping in and buying these properties while they “think about it”?  Buyer’s that have been in the market who have had their perception altered by the reality they have lost two or three homes which were their first choices.  Now realizing when they see something they like they better make an offer, not a low ball offer, a fair and reasonable offer.

Tucson Jan 2012 – NOT a Buyer’s Market is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

Looking Back Won't Help

Presents are being wrapped, gifts bought and 2011 is wrapping up as well.  It has been an “interesting” year for the Tucson real estate market.  We continue to see the trends set early this year still in effect.

• 50% or more of transactions this year in residential real estate are either bank owned or short sales.
• Approx. 30% of all transactions are CASH transactions.

The Average and Median sale prices are down over last year but that is to be expected with half of the homes sold financially distressed properties.

Some are expecting hoping 2012 will be a better year to make a real estate transaction in Tucson.

I know there are people that would like to sell their homes and move up to a bigger home, likewise there are some that want to downsize.  Both directions see financing a purchase at all time interest rate lows.  Both directions see purchase prices the best they have been (probably since 2000).

But they also realize the sale price of their existing home isn’t going to bring in as much as it would have  a few years ago.  If they want to stay in the Tucson area, then it is a balancing act involving doing the numbers to see where they come out financially.  If they made their purchase anywhere from 2003 to present it could be very close.  If they purchased before 2003 they could have enough equity in their property to make a good move with minimal financial pain.

For some they will even come out ahead in the process depending on their circumstances.

Don’t Squander The Moment

Wish pricing has been around for a long time, and it bites a lot of sellers.  Every one wants to get the most out of their sale and pay the least for their next purchase.  It always depends on which side of the transaction we find ourselves.

Unfortunately, too many sellers start out Wish pricing their homes.  They waste that precious first two weeks on the market.  The best time to make an impression is the first impression with agents and buyers when your listing pops up in the MLS and is sent out to all the potential buyers looking for a home just like your home.

Wish Pricing Your Home

Too many sellers start the process unaware of “The Moment” dynamic.  They approach pricing with the “Let’s try it at . . . we can always come down”  Yes, you can always come down.  And if you squander the moment, you will have to come down.  The sad part is you will probably come down to a sale price less than you could have gotten in “The Moment”.

When you property pops up for the first time most agents know the market well enough to know if you are wish pricing your home.  And, most buyers who have been looking for any amount of time also have a pretty good idea of where a home matching their criteria should be priced.

If it is over priced for the market, both agents and potential buyers will “pass”.  You don’t want this bad taste in the mouth to be the first impression.

Realistically Market Price Your Home

Work with your agent to assess the true market value of  your home.  Find the sweet point in the process.

Sweet spot = where you can accept the price and it is not wish pricing.

Begin there and you have a much better chance of getting an offer during “The Moment”.

List Price NOT Wish Price Your Home is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

Feeling Naked and Exposed

All of us who are “home owners” cringe when we hear in the media every month how our homes have “lost value”.  Arizona in the statistics is reported as having lost 12% value since last year.

The reality is, the value of our home only matters in three instances.

1. When we buy it
2. When we sell it
3. When we pay taxes on it

The rest of the time, the “value” of our home is relative.

Disturbing Thoughts Affect Attitudes About our Homes

The focus on real estate in Tucson and most other communities in the country has been on the foreclosures and short sales that dominate the market.  The discussion permeates the media whether that be newspapers, or television.  We are bombarded with the news of:

• Lost Value
• Increased Foreclosures
• Bank Practices leading to the crisis
• People being thrown out of their homes
• When will we hit bottom
• Failed government programs to help homeowners
• etc.

But, as stated above, unless we who are homeowners have to sell the value of your home isn’t in what we can get for it if we put it on the market, the value is in the quality of life it affords and “a place to store our stuff”.

How About Your Car

Most of us are upside down and underwater on our cars the moment we take the keys and drive off.  But does it bother you?  Usually, NOT, why because we have a car, we drive it around town, we wash and wax it, we are proud of our car.  Does it matter it isn’t worth what we paid for it?

How we perceive our home and car is different.  But the reality is they are very similar, with a bigger price tag.

Here is the big difference.  Your home can easily appreciate in value over time.  It is very rare for a car to do the same.

Many homeowners who bought their homes before the huge run up in prices can still sell, even today, and not be loosing money in the process.  They won’t make as much as they could of a few years ago, but they couldn’t buy as much home in that market as they can today.

Feeling Upside Down and Underwater is for most of us just that, a feeling. 

We’ve watched the perceived value of our own home lose over $100,000 in “value” in the past three years.  How do we feel about it.  Same as anyone, we don’t like it, but we have a nice home.  We continue to make substantial improvements (we added tile to the last two carpeted rooms in the house and put in a back yard and garden).  Our home is now the nicest place we have ever lived. 

Take a fresh look at your home.  The worst thing we can do is get discouraged from the feeling and stop doing routine maintenance.  The best thing we can do is take advantage of the lower prices at places like Home Depot and Lowes (Not an endorsement just where I shop a lot) and add value to our homes at prices about half of what they were a few  years ago. 

Feeling Upside Down and Underwater is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

The bi-weekly event taking place on Friday and Saturday evenings in the Tucson Lifestyle Courtyard. Every 15-minute show will begins promptly at 6:00 pm with and encore show at 6:45 pm.

Shows will be held on:
November 25 & 26
December 2, 3, 9,10, 16, 17 and 23

There is no fee for this event.  Come early and grab your spot.  If you like to be in the thick of it and hear the music up close then find a spot in the courtyard.  If you like to take it all in and see everything at once then head up to the balcony that surrounds the courtyard.  From up there you can hear, see, smell (it’s a good smell) and feel the snow (soapy bubbles) hit your face and gather in your hair.

For the Kids from La Encantada

All kids make sure to get a Pandora balloon with a card to exchange it for a pair antler ears! Then stop at Bebe to pick up sugar cookies and hot tea from Aveda. In addition, United Colors of Benetton will be raffling off 5 prizes per night!

Contact (520) 615-2561 for more information.

Hope to see you there.

La Encantada Snowfall Evenings 2011 is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

Those words are tossed around as if this were the plague descending.

Like this title from an October 28 article:
Over 2,000 distressed homes lurking in Tucson’s shadow inventory

See how ominous it sounds to have these homes lurking.

“For the second consecutive month, lenders and banks owned more than 2,000 homes in the Tucson region that have not yet been listed for sale. These pre-market real estate owned (REO) homes, referred to as “shadow inventory,” are up 35 percent since January.”

This is a significant number of homes. But is it a tsunami that will suddenly overwhelm the Tucson real estate market? NO!

Shadow Inventory in Tucson Nothing to Fear

Here are a couple of reasons why we don’t need to fear the Shadow Inventory.

First, Our current number of active listings for October 2011 in Tucson was 5,290 properties. If we added 2,000 to that total we would have 7,290. Looking back at October of 2010 we had 7,412 active listings. Just last year we had 2,000 more than we have right now. Does it matter that these 2,000 would be all REO homes? Not at all. The Banks aren’t dumping, dumps on the market like they did a few years ago. They finally realized they needed to fix up these foreclosures. If they didn’t they would find getting comps for a future sale difficult because those “as is” sales are included in the appraisal for comparable properties.

So we don’t have dumps being dumped on the market and the Banks have learned that you drip properties onto the market, you don’t dump them.

Going back even further we find that in 2007 we had an active inventory of more than 10,000 properties. There is room for more active listings in the market.

Shadow Inventory Drip on the Market

Second, as already mentioned, the Banks aren’t putting homes on the market that have the wiring ripped out and the plumbing fixtures all broken and drains filled with concrete. (There are still a few, but they are now the exception) Around 50% of monthly contracts are either REO or Short Sales we know a significant part of the inventory is already Bank owned. Home prices have become more affordable, but is there anything to “dread” in the shadow inventory? Again, NO!

Two Thousand New Listings in a month

Would 2,000 new listings sink the Tucson real estate market? Looking back to 2010. January, February, March and April all had over 2,000 new listings EACH MONTH! Remember? Of course you don’t remember, was it cataclysmic. Nope, business as usual. Even in January of 2011 we almost had 2,000 new listings. This is not a big deal either.

Does the shadow inventory exist? Sure it does.

But is there a reason to be afraid of the shadow . . .

Shining Light on Tucson’s Shadow Inventory is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

See anybody you know?

Now for a little Video Tour

Tucson 2011 Firefighters Chili Cook-off Images is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

I opened the paper this morning to see there is a snow storm hitting the East today.  It could bring up to a foot of snow in some places.  A friend of mine in Denver was telling me about the snow they were getting there yesterday.

But, here in Tucson the weather is beautiful.  Shorts & Sandals are the attire around here for the rest of the month (with the exception of Halloween night).

There is a lot of room for winter visitors in Tucson this winter.  We have plenty of homes to choose from should you desire to make this your permanent winter home (as permanent as you can make a winter home that is).

Tuesday begins the month of November.  Let’s see that’s going to be 84 degrees for a high and 54 for the low. 

Do you know where you want to spend this winter?  I Do!

Tucson Weather For October 29 2011 is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.

Tucson a Beautiful City

This according to Yahoo Real Estate and I believe it.  I’d actually be shocked if it weren’t the emptiest city in the country.

Statistics are a mixed bag of information.

I’ll get right to it and not drag this out.  Here are a couple other little statistical tidbits which might weigh on this designation.

• Tucson probably has more second home buyers than any other city in the country.
• Tucson has a very high number of Snowbirds that come here only in the winter.
• Tucson has a lot of homes that sit empty for 6 months out of the year.

Think this is hint enough to why Tucson would be America’s Emptiest City.

The emptiest city in the U.S. is the second-largest city in Arizona: Tucson. With rental vacancies at 15.9 percent, the city is seventh most vacant among major cities, while the 6.8 percent homeowner vacancy rate is the highest in the country as of the second quarter of 2011

Oh, second quarter of 2011; the end of the snowbird season and the beginning of Tucson’s Long Hot Summer. (We had 69 days over 100 degrees this year)

We’ve Got Room – Come On Down

Tucson – Americas Emptiest City is a post Scrapped and Stolen from: Tucson Real Estate if you are not reading this in your Reader.