The housing market in Tucson seems to remain strong with many buyers willing to pay some of the highest prices Tucson has seen in some time.
Average sale prices in are up 3.01% from a year ago in February of 2018. Currently the average Tucson area home is selling for $246,615 We at Oliver Realty contribute this directly due to low inventory levels and limited options for buyers to buy. Low interest rates are also fueling buyer’s ability to buy at higher prices.
Inventory as mentioned remains very constrained with only 3.26 months of inventory available. 4905 total homes currently for sale down 18.5% from last February! Oliver Realty expects this number to slowly rise as sellers realize prices are good for selling. On other item of note here is that this absorption rate seems to continue to decline as last month’s number “only” -13% range. This number is probably the most important number on what will happen to home prices in the immediate future.
One cause of concern with the market is sales are starting to decline from last year's numbers with the number of homes sold in February 2019 down 6.8% from 2018. As mentioned last month I think higher prices and higher interest rates are slowing the market down. If this continues sellers will see their pricing power that has been pushing the market up impacted significantly. Sellers are still able to pass on the price increases but for how long? That’s anyone’s best guess at this point.
Interest rates in October of 2018 where over 5% however in the last 6-8 weeks we have seen mortgage rates down appx ½ % back to an average 4.5% rate for a 30 year fixed. I think these rates are very favorable for buyers and one they should take advantage of.
Areas of concern in the market:
Brand new homes in Tucson; It seems like builders in many locations especially the higher priced areas like Oro Valley are starting to cool down. I have seen builders sitting on spec homes a little longer than used to be the case. They (not in all situation but some) are starting to discount their spec homes again the only reason for that (to me anyway) is they can’t sell them for the higher price points they initially thought. New homes are like the canary in the coal mine if you see them weaken the rest of the market could follow however I still think the market remains strong overall….
What’s hot in the market:
Smaller single story homes that snowbirds can buy and live in during winter remain red hot. Newer, up to date ones move fast and get high prices. If you have one of these and want to sell I think you can price on the high side of the market and usually get it.
Affordable homes; anything under $150k that’s at all decent is gone within hours of being listed. Homes priced under $250k on the NW side of town is much the same story. If you are looking to buy in these price ranges find a decent house and be prepared to pay up for it.
If you have questions about the Tucson area real estate market contact us and we will be happy to go over more of what we think is going on. -Michael