Tucson Home Prices Up 7% in March
April 4, 2012
In the past 3 months housing sales in Tucson have picked up considerably. In the first quarter of 2012 there were 3,314 closed residential sales, up 11.5% from first quarter 2011. And the rate at which new contracts are being written is up too, a 36.2% increase from first quarter 2011.
What impact will this surge in buyer demand have on the market? Well first, we have to understand that the available inventory of homes for sale is shrinking. In fact, Tucson now only has 4.1 months of inventory. 5 to 6 months is considered a normal market, anything under that we actually start thinking about a seller’s market.
Second, we need to discuss pricing. Real estate pricing is, at its core, a function of supply and demand. Currently, demand is increasing and supply is decreasing, so we should think that at some point we will see price stabilization and even appreciation.
So what is happening to pricing
If we look at the trend of home pricing in Tucson (below), we see that prices bottomed out around September 2011, remained relatively flat in the months following, yet have been increasing in the last few months. Median price of residential home sales in Tucson in March was $133,500 – a 7% increase from February 2012 and March 2011.
How will higher prices impact the market?
Lower prices can lead to an increase in distressed situations, more homes underwater which can turn into short sales and foreclosures. We’ve already seen that happen. Rising prices may have the opposite effect, putting some homes back in a break even or possibly an equity position, reducing the volume of future distressed sales. We’ll be watching the data and trends closely over the coming months, however it is safe to say the market is changing quickly - which is why it is important to communicate with your local Long Realty sales associate.