While there were many challenges facing the Arizona housing market in 2011 (downward pricing pressures, tight lending requirements, appraisals and distressed properties), we still experienced a robust market with increases in sales. Here are statistics comparing January-November residential closed sales for 2010 and 2011.
Tucson – 17% Increase
Phoenix – 12% Increase
These statistics are based on information from TARMLS and ARMLS obtained using Brokermetrics software on 12/30/2011.
Buyers Seeing Value
Why the increase in residential sales? Lower Prices and Low Interest Rates equals Increased Affordability for Buyers
Tucson Pricing Trend
Remember, in 2010 we had the benefit of a housing stimulus in the form of a home buyer tax credit – which makes the sales increase in 2011 even more significant.
Surge in Buyer Activity
If we look at the trend of properties newly under contract in Tucson, we see a heightened level of buyer activity since March of 2011. In fact, in November 2011 we saw an increase in new contracts of 37% as compared to November 2010.
What can we expect in 2012?
While it is hard to predict exactly what will happen to the local housing market in 2012, here are some trends to watch.
Home Price Stabilization – as demand continues to show signs of strength and the supply of homes for sale shrinks, basic supply & demand theory tells us that pricing should stabilize.
Continued Slowing of Foreclosure Filings – as pricing stabilizes and the economy shows continued signs of improvement (consumer confidence is rising, employment is seeing some traction – albeit at a slow pace), that will help to slow the number of new foreclosure filings. Already Arizona has one of the shortest time periods to absorb shadow inventory (foreclosures not yet on the market and loans delinquent).
Favorable Interest Rates – with a slowly recovering economy we may experience another year of favorable rates, though rates may tick up somewhat from where they are today.
Smaller Selection of Homes to Choose From – we have seen a reduction in available inventory in the local Arizona housing markets in 2011, in fact Tucson active listings are down 29% from November 2010. With continued strong buyer demand, we may continue to experience more of a balance between supply and demand, with the potential for a shortage of inventory if foreclosed properties come on the market slower and buyer demand increases. New construction will most likely continue to be sluggish, with builders waiting until a stronger economic and housing recovery to start new construction in earnest.
These trends should continue to provide a window of opportunity for buyers.