Inside Tucson Business: Positive Sign for Home Sales

 

Positive Sign: Home Sales Inventories Fall To Under 6 Months’ Supply
Inside Tucson Business – August 4, 2009
By Joe Pangburn
 
 
In what may be one of the most positive signs yet that the Tucson residential real estate market is poised for recovery, Long Realty Research Center data shows inventories of homes priced under $250,000 have fallen below six months’ worth.
 
“Months of inventory is the best matrix to look at when you’re trying to see the temperature of a specific area or price point,” said Kevin Kaplan, vice president of marketing and technology. “Obviously it is the lower price points that are bringing in buyers from foreclosures and sellers lowering the asking price on their homes.”
 
Nevertheless, he said, a healthy and balanced market is considered to have around six months of inventory at a given time. The market as a whole has around 5.7 months of inventory on sale, down from the 8.4 months at this time a year ago, according to Long’s data.
 
The fastest movers are homes priced under $175,000 where there is 3.6 months of inventory based on June’s sales levels. Homes priced from $175,000 to $249,999 have 5.4 months of inventory.
 
Above the $300,000 price point, the inventory numbers climb. There’s a 7.5-month supply of homes in the $300,000 to $400,000 range, 11 months supply of homes priced $400,000 to $500,000, a 17.2-month inventory of homes in the $500,000 to $749,999 range; and two years’ supply of homes priced $750,000 to $999,999.
 
Kaplan said Tucson is experiencing a significant increase in buyer activity, with new properties under contract in June up 57 percent over June 2008.
“We’ve really gotten to a more balanced healthy level with active to sold,” Kaplan said. “Some markets even look a little overheated. It will take another few months to see if there gets to be an equilibrium and prices come up some to curb the high demand.”
 
The higher demand Kaplan is referring to is mostly centralized in the southwest, southeast and central/east area of the region. A data analysis of the first half of the year show homes listed in zip codes 85706, 85756, 85710, 85711, 85730, 85741, 85746, 85747 and 85757 have the highest percentage sales to total active listings, according to data from  Tucson Association of Realtors.
 
The top three zip codes with the highest percentage of listings sold are 85757 on the southwest side at 40.2 percent (31 sold of 77 active listings), 85711 in midtown generally between Alvernon Way and Wilmot Road at 36 percent (48 sold of 133 active), and 85746 on the southwest side at 31.2 percent (59 sold of 189 active).
 
Those same zip codes also have some of the lowest numbers for inventory — just 2.4 months supply in 85757, three months in 85711 and 3.3 months in 85746, according to Long’s data. Southeast side zip code 85706 also has a low inventory supply of 2.8 months, though percentage of homes (88 of 292 active listings) meant percentage of sales was just over 30 percent.
“That south side of town has had a bit more of a price decline and probably has a higher foreclosure mix,” Kaplan said. “We’ve seen huge increases in sales units there.” Louis Parrish, associate broker with Keller Williams Tucson Territory Realty, agrees.

“You would probably find that the higher percentage groups are also areas that have had the highest percentage of depreciation, highest rates of foreclosure and highest rates of short sale listings. When those neighborhoods are totally stabilized, the rest of our markets’ current stabilization trends should accelerate.” 

 

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