TheTucsonFoothills

the widening gap between buyer and seller expectations

John Schneider — Thu, 24 Jul 2008 12:57:26 -0700

Since 2003 the average sold price for a home in the Tucson Foothills has risen from $417,332 to a peak of $703,616 in 2006, a jump of 68.6%. Then in 2007 prices started to decline for the first time, and as of today the average sold price stands at $640,061, a drop of 9% from it's peak in 06.

Not too bad, given how things are going out there. Or maybe not too good depending on what side of the fence you're on, buyer or seller, bull or bear. In any case our price declines here in the Foothills have been modest compared to many other markets.

*Blue = List price, Red = Sold

But what the chart also illustrates is the widening gap between buyer and seller expectations. Things were going along nicely in 03, 04 and 05 with buyers and sellers pretty well aligned on home prices. But as the boom matured in late 2005 and early 2006, sellers continued to ask higher prices for their homes, while buyers were beginning to tire of the wild enthusiasm that caused multiple offers and over list price sales to become commonplace.

Since then the gap between buyer and seller expectations -
as seen in the ever widening gap between list prices and sold prices -has gotten wider each year. In 2005 homes were selling very quickly for 98.1% of list price. This year buyers and sellers are much farther apart, with homes selling at just 94.1% of list price.

But the real gap is even wider than that.
The MLS calculates the % of sale price/list price based on the most recent list price. Not on the original list price. And these days many homes are having price reductions, some of them multiple price reductions. So if a home is listed for $1,000,000, then reduced to $950,000, then reduced to $900,000, and reduced again to $850,000, and then sells for $820,000, the % of sale price/list price is calculated based on the $850,000 list price. So in this case that home would show up as having sold for 96.4% of list price.
If it were based on the original list price of $1,000,000 it would be 82% of list price.

So while sellers are adjusting their prices to try and better align them with buyer expectations, it seems that buyers have been moving more quickly to even lower price expectations.

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

is the list price scaring you away

John Schneider — Wed, 23 Jul 2008 13:22:34 -0700

When people go out to shop for a home the first thing they see is the list price of the home they'd like to buy. And usually the list price either causes them to think hard about making an offer or it scares them away. And it seems that many buyers are still being scared away by list prices here in the Tucson Foothills.

In yesterdays post, an outsiders perspective on the Tucson Foothills market I quoted an article by Daniel Jaffe who said, "Tucson seems to be a real estate market that is divided into two basic camps. Camp one includes the sellers and realtors who have come to terms with the reality of today's bad market and are asking realistic prices and therefore selling houses. Camp two includes the sellers and realtors who are using comps of yesteryear's boom, and expecting parity in today's buyer's market".

I liked what he had to say and thought there was some truth to it.
So I thought I'd do a little experiment and see if the data supported that point of view.
Because the list price is what a home buyer sees first and decides to either move forward or move on, I pulled up the average list price of those homes that have sold in the last 30 days, and the average list price of those homes that are still for sale, to see if there's a difference.
In both cases I only looked at homes priced up to $1,000,000. Because above $1,000,000 there are 142 homes for sale and that would skew the data badly.

Here's what I found,
In Camp one, with the agents and sellers who have come to terms with today's bad market and are therefore selling homes, the average list price was $534,027, for the homes that have sold.

In Camp two are those homes which are still for sale, and of which some are presumably overpriced.
In this Camp the average list price is $580,450.
That's 8.7% higher than those in Camp one.

At $900,000, a Camp two house jumps to $978,300.
Would that scare you away?

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

an outsiders perspective on the Tucson Foothills market

John Schneider — Tue, 22 Jul 2008 08:52:03 -0700

I came across an article in American Chronicle, an online magazine, written by Daniel Jaffe, an attorney who's planning to move to the Tucson Foothills. Mr. Jaffe writes of his experience searching for a home here and gives us his unvarnished take on the Tucson Foothills real estate market. It's a genuine and constructive perspective from a home buyer who's ready to buy.

"Tucson seems to be a real estate market that is divided into two basic camps. Camp one includes the sellers and realtors who have come to terms with the reality of today's bad market and are asking realistic prices and therefore selling houses. Camp two includes the sellers and realtors who are using comps of yesteryear's boom, and expecting parity in today's buyer's market".

Read the article here>
Tucson Real Estate Market - A Layman's Adventures

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

Why Now!

John Schneider — Mon, 21 Jul 2008 16:42:12 -0700

Today a very beautiful and very expensive home sold in the Tucson Foothills. A home that had been on the market for 2048 days, that is, since November of 2002.

It was listed for $2,775,000 and sold today for $2,600,000, or $489/sq. ft., after 2048 days. I showed this home almost three years ago, and it was gorgeous, gorgeous-gorgeous. And I couldn't understand why it hadn't sold, but felt certain that if my buyers didn't buy it, which they didn't, that it would sell very soon.
And I didn't think it was over-priced. On the contrary, I felt that it had it all, primo location, stunning yet low-key design, and beautiful, timeless materials. Expensive, and worth it. It was my top pick.

But it didn't sell, until now, which is perhaps the most unlikely and unexpected time for such a sale in the last five years. And it's been on the market for all of those 5 years. So why now, and not two or three years ago.

For months I've written about the very high inventory levels at the $1,000,000++ end of the market, 24 months of inventory and more. But more recently, in just the last two weeks, I've also written about the sudden and unexpected spike in activity at that same high-end. And I attributed it to the fact that there are some good deals to be made. Because of the high inventory and slower sales, some sellers were cutting to the bottom line in order to unload now.

But this house didn't fall into the make a killer deal category, no one made a killer deal here. I'm just not sure what to chalk this sale up to. After all this time there's got to be more to it than just 'the right buyer finally came along'. I just don't know what it is.

In any case, congratulations to those sellers, for the sale, and their patience and resolve. And to the buyers of one of the few houses that I've really and hopelessly lusted after. It's gone, so I can finally stop thinking that maybe, somehow...

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

Paloma Ridge, next to La Paloma

John Schneider — Mon, 21 Jul 2008 11:39:24 -0700

As I was scanning through the Tucson MLS this morning to check out the latest new listings, price reductions, etc. in the Foothills market,
I noticed that one home had a price increase.
And a pretty substantial one at that, $529,315 to $575,763.

The price increase is for one of the new AF Sterling homes at Paloma Ridge next to La Paloma. I thought that was interesting, given the current market conditions, and I vaguely recalled that the few Paloma Ridge homes that have turned up SOLD in the MLS recently, had SOLD for a rather steep discount from the list price.

So I checked it out, and sure enough the last two that sold, were listed for $638,445 & $632,750, and SOLD for, $560,480 & $561,200,
or $181/sq ft. & $187/sq. ft. Note, these two are much larger homes, at 3000 or more sq ft.

The one with the price increase is just 2277 sq ft., but the price increase would make it $252/sq ft.

AF Sterling has only listed a few of these homes in the MLS.
Relying instead, it seems, on walk-in traffic, that location is about as visible as you can get - or past clients - Sterling has a well-deserved sterling reputation, ha-ha, for the bulk of their business. So it's hard to tell how many have sold and how much they've sold for.
Maybe they're selling like hot-cakes all of a sudden. What else would justify increasing the price that much in the current environment?

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

two more bite the dust

John Schneider — Fri, 18 Jul 2008 16:23:33 -0700

Last week in is it deal time for high-end homes in the Tucson Foothills I wrote about the recent spike in activity at the high end of the market here in the Tucson Foothills. 12 homes just recently under contract and 4 sold at $1,000,000+. Unusual for this time of year I said, and attributed it to a feeling amongst buyers that there are good deals to be made at the high-end, and explained why that's so.

Since then two more $1,000,000+ homes have gone under contract in just the last two days. And both of these are new spec homes that have been on the market for quite a while, one priced at $1,195,000, the other at $1,645,000.

So the spike in activity at the high-end continues, and while I don't think it's the tipping point, I don't think it's just some odd fluke either. I think it's fairly simple. There are some good opportunities out there and some people recognize it and are ready to take advantage of it.

If you're ready to make a deal on a high-end home, check out
is it deal time for high-end homes in the Tucson Foothills
and call me and I'll help you identify where the deals are and make
it happen.

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

condo prices in the Tucson Foothills, then and now

John Schneider — Fri, 18 Jul 2008 13:27:09 -0700

There are a lot more condos in the Tucson Foothills these days than there were just a few years ago. And these days they're selling for just about what they were selling for a few years ago too.

That's because condos in the Tucson Foothills have been
over-developed and over-speculated. In a very short time we went from a real shortage of condos in the Foothills to a very hefty supply.
And while hundreds and hundreds of those new condos have been sold, and most of the over-supply has now been absorbed, prices for condos got hit pretty hard to make that happen.

I was showing condos this week to some out-of-town buyers and pulled up the sales data on a few different condo developments to give them an idea of what's been happening with sales and prices over the years. And with condos it's really easy to compare sales and prices because condos are so similar to each other - the ultimate cookie-cutter property - particularly within the same development.

I'm going to use Canyonview@Ventana condos as an example because it converted to condo back in 2003, well before the most recent conversion craze, and because of that it allows us to look at sales over a longer time period. So here's what's happened to sales and prices at Canyonview condos over the past five years.

Jan - June 2008, 8 sold for an average sale price of $169,000, or, $185/sq. ft.

Jan - June 2007, 11 sold for an average sale price of $210,227, or, $192/sq. ft.

Jan - June 2006, 14 sold for an average sale price of $250,786, or, $234/sq. ft.

Jan - June 2005, 17 sold for an average sale price of $194,588, or, $188/sq. ft.

Jan - June 2004, 24 sold for an average sale price of $150,133, or, $154/sq. ft.

So right now prices at Canyonview are somewhere between where they were in 2004 and 2005, and sales are slower today than back then. Some of this may have to do with the overall fallout of real estate in general, but the real culprit is the hundreds of new condos that came on-line from mid 2005 through mid 2006 creating an absurd over-supply.

And in the most recent conversion, Skyline Villas, located right behind La Encantada, there's a big difference between just last years prices
(avg sale price $203,886 or $216/sq ft.) & this years
(avg sale price $165,455 or $179/sq. ft.) A big difference.
Skyline Villas has just now sold out, and it sold very quickly given the eroding market conditions, and competition from a slew of other condos for sale across the Foothills. But they did it by cutting prices until all the units sold, undercutting the competition.
Unfortunately, those who bought last year are likely in for a long wait before prices rebound.

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

A hedge against price declines

John Schneider — Thu, 17 Jul 2008 16:35:45 -0700

Without going into all the details of how it might work, just play make believe for a moment and consider this.

What if you could buy a home today, and know that if prices were down one year from now, that you'd be covered for a decline of up to 5%.

Let's say you buy a home for $500,000 today, July 17, 2008, and the AVERAGE SOLD PRICE INDEX as measured in your area is $550,000.
And one year from now when the SOLD PRICE INDEX is again computed, it's at $520,000. That's a 5.4% drop.
But instead of taking that entire loss, you now get 5% of your $500,000 purchase price or $25,000 back. And if prices fell just 2%, you'd get 2% back. And if prices went up rather than down, you wouldn't get anything.
Would getting up to 5% back if prices fell, make you more willing to go ahead and buy a home today?

Fear of declining prices is a major source of buyers reluctance to buy a home today. But if this could be worked out - and it's a big if with more than a few hurdles - do you think this type of price protection would get you and other home buyers off the fence.

I know it seems far-fetched, and maybe it is, but I'd like to hear your thoughts on this.

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

How do you search for a home

John Schneider — Thu, 17 Jul 2008 10:12:00 -0700

With lots of PR and advertising money behind them, and plenty of
gee-whiz media coverage, the big national real estate web sites (Trulia, Zillow, Cyberhomes, etc) have advanced the notion that they are the best places to search for a home, no matter where you're looking.

So as this wave of hoopla has been building over the last couple of years I've occasionally gone to one of these sites to do a home search and see what all the brouhaha is about. And I've always ended up walking away wondering, "what's all the brouhaha about".
And I've always concluded that a consumer would be much better off using a local MLS based internet search in the area where they're looking for a home.

My searches on these sites have always been for homes in the Tucson Foothills, the area where I work and am familiar with, so that there would be no guessing about the results. And though the results always seemed pretty wide of of the mark, I'd never actually compared the results of these searches, from one site to another, and to what's listed for sale in the MLS.
So today I thought I'd try it again, and be a little more, but not too scientific about it.

First I went into the Tucson MLS and set up a search for single family homes, both new constructions and re-sale, in the 85718 zip, priced between $750,000 to $850,000. That's it. I kept it simple so as to not risk confusing some secret algorithm or magic formula that fuels the big sites. Then I entered that same criteria on my web site, thefoothillstoday.com, and on Trulia, Zillow, & Cyberhomes.

From the MLS I got 41 homes for sale

From my web site I got 41 homes for sale

From Trulia I got 33 homes for sale

From Zillow I got 14 homes for sale

From Cyberhomes I got 67 homes for sale

Who's to know.
So again I'm wondering, what's all the brouhaha about.

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes

pulse of the market in the Tucson Foothills, 7/15/08

John Schneider — Tue, 15 Jul 2008 18:20:39 -0700

Here's a quick snapshot of what's happening right now in the Tucson Foothills real estate market.

The following data is for activity during the past 14 days for single family homes.

1. 566 homes for sale in the foothills today priced from
$205,000 to $6,000,000

2. 17 Sold, priced from $181,000 to $1,475,000

3. 23 have gone under contract priced from $285,000 to $1,549,000

4. 64 price reductions, from $205,000 to $2,779,000

5. 52 new listings, 39 of those are actually NEW listings,
the remaining 13 are homes that were previously listed,
then withdrawn or expired, and then re-listed.

6. For homes priced $0 to $999,999, there are 419 for sale, and at
    the current rate of sales there is 8.9 months of inventory.

    For homes priced $1,000,000 and UP there are 147 for sale, and
    24.5 months of inventory, based on current sales.
    6 months of inventory is considered normal.

It's a long, hot, and thankfully, wet summer. Enjoy it!

see my web site thefoothillsToday.com
to search for and learn more about Tucson Foothills Homes