Thursday’s story about the real estate market probably rankled some people in the industry.
After all, the story reported that the slowdown might not be ending until 2010—hardly the kind of news any real estate agent, homebuilder or seller wants to hear.
The story focused on information from two monthly sales reports: one from the Tucson Association of Realtors, and one from Tucson housing market consultant John Strobeck (whose company is called Bright Future Business Consultants).
Both reports showed sales were down in September compared to the same month last year. The Realtor’s report actually showed a much steeper drop—more than 36 percent—than Strobeck’s, which showed declines of about 21 percent in new homes closings and about 18 percent for resale closings.
Sales declines this year are nothing new. The market is slower than it was a year ago.
But Strobeck’s report contained one indicator that the market is actually getting worse: The number of new home permits pulled in September was the lowest monthly number since January 1993.
Just about eight months ago, Strobeck formally forecasted that the market could recover as soon as early next year. And now, in light of the past month’s statistics, he’s revised that projection to 2010.
That’s no slight revision. He jokingly said that he’s been wearing all-black.
Meanwhile, Judy Lowe, president of the Tucson Association of Realtors Multiple Listing Service, did not say anything different than what many Realtors have said before: Yes, the number of sales are down, but pending sales are up. That’s supposed to indicate that sales will go up in future months, she said.
But pending contracts have been up for four months, according to the Realtors’ statistics, and the number of sales has still been dropping.
The fact is both the Realtors and Strobeck have an interest in good news about the real estate market. Despite that, one offered a much gloomier outlook.
In short, when the owner of Bright Future Business Consultants starts wearing black, it’s worth paying attention to what he has to say.
The Star has been negative about real estate from the beginning of the boom and is now piling on negativity contributing to a bust. The editors and writers surely can’t be ignorant of the importance of psychology in sustaining a market. The only motive that remains for this negativity is the Star’s usual anti-capitalist bias.
— Jeff 10/20/2007 02:52 AM #
Jeff,
I don’t understand how you can fault the Star for bias when the information on the real estate market appears to be factual from reliable resources. If you want rosy predictions then maybe you should only read information that projects and underscores your personal wishes.
— rosenb4_98@yahoo.com 10/20/2007 08:16 AM #
The press controls much of what goes on in society and everyone knows it. “If you read it in print, it must be true…”. Yes, it will take a while to absorb the thousands of new builds that the overanxious developers have put up in the last few years. The fact remains, however, that this is the Sunbelt and people are moving here. How ‘bout a couple of articles about that? The decline in the real estate market and the reasons therefore are about as scary as the issue of global warming. Both reflect expectable fluctuations, one in the financal realm, the other in the natural realm. Both are to be expected and both are not as big a deal as the press would have us believe. Maybe people remember 30 years ago when the press wanted us to fear a new ice age! The real estate market will get back on track.
— Grut Less 10/20/2007 10:53 AM #
Okay…all predictions aside..I am doing open houses and people are coming out again! I am taking listings and getting them priced right. People are looking.
Why anyone would wait for things to turn around before buying a house is simply beyond me. Lots of inventory! Flexible Sellers! Nice Incentives! Lowered Pricing in a market that STILL has appreciation over last year!
But if you want to play the waiting game…fine…You might get a higher interest rate or even a higher price if that’s what you are looking for.
It’s a GREAT time to buy real estate in Tucson….Perhaps not in the rust belt, but certainly here.
Let the skeptics rant away…They probably don’t own real estate or do any serious investing, so how would they know anyway?
Paul
— Paul 10/20/2007 05:12 PM #
Pray tell…how is one to buy a house if one’s own house doesn’t sell??? There’s the glut on the market…too many offers contingent on the sale of the buyers’ home…it’s like a line-up of dominoes, just waiting for the first brave person to buy an existing home….
The middle class is getting squeezed on food and gas prices…impossible to also fund two mortgages! And what mortgage company (drowning in subprime foreclosures) will give someone a mortgage before the mortgage on their existing home is paid off??
— Lynne 10/20/2007 09:44 PM #
Paul,
I sold a home in Rita Ranch in 2005, thankfully before the slowdown hit. Thus, I have real estate experience and I’ll explain to you why people shouldn’t be buying in Tucson right now. Yes, people are moving to Tucson, but well-paying jobs are not. Tucson and Phoenix, over the 20 years, have built an economy based on military and service jobs. Not a good plan for long-term wealth. There were only 2 reasons why the housing market overheated in Tucson: 1) easy access to credit, 2) investor, and 3) relatively wealthy retirees. The first two factors have now been eliminated, and are not coming back for a long time. What remains in Tucson’s market are incoming retirees. They will help a little, but their money won’t be enough to clear the glut of homes out in this market. The local population, I’m sorry to say, is too poor to help out, because most of their jobs are military and service industry-related. Retirees are going to be looking for deals to conserve their savings, as well, which will also put downward pressure on prices.
So, Paul, that’s why it’s a terrible time to buy a house in Tucson. Most homes are stil heavily overpriced for the local population and for retirees. Think about it objectively – do you really think a house in Rita Ranch is worth a quarter of a million dollars? Especially when the average wage is $10/hr.
One last thing, if you are concerned buyers will have higher interest rates, don’t sweat it. Savy buyers will use this time to rent and save money like crazy so that they can put a huge downpayment on the home. Coupled with lower prices, they will be able to take out much lower loans. In the long run, this is what needs to happen to build a more secure economic foundation in Tucson.
— Chris 10/20/2007 10:30 PM #
John Strobecks report of a reduction in new housing starts is exactly why we can expect an upturn in residential resale; less competition. We can’t turn the market around by being positive but by the same token doom and gloom freezes people. Real estate is still one of many good investment. What has changed is how long we need to hold that investment. I sold my house in 7 days because I decided not to be greedy and priced it to compete in today’s market. Sure I might have gotten more. But I might have paid more for the one I bought. Objectivity doesn’t sell papers. Oh, for the person who asked why pendings are consistently up and closings are still down, that’s like asking why apples are red when there are so many oranges around. There are many factors at work here. One of them is the fact that it takes 6 months to build a house so it takes 6 months for a pending to turn into a closing. It also depends on what you’re comparing it to. Last year vs. this? trend reports? Right now buyers have more choices and better deals to choose from. Sell your house first if you need to and then go shopping! It’s a great time to buy!
— Laura 10/22/2007 02:08 PM #
Laura,
You miss the point. Without access to easy credit, people may want to buy, it may be a great time to buy (in your opinion), but without money to buy, they can’t buy.
When buyers can’t meet sellers’ prices, sellers are forced to drop their prices into a range where buyers CAN buy. We haven’t reached that point yet. We won’t for a long time. That’s why it’s a bad time to buy anyway – only buy now if you want to overpay.
— Chris 10/23/2007 11:18 AM #
'Clocking In' is the joint blog of the Star’s Business news staff. We're punching out news tips, outtakes and other morsels for people with an appetite for local business, consumer and workplace news. Have some news of your own to share? Be sure to drop us a line using one of the e-mail addresses below.
— Jeff 10/20/2007 02:52 AM #
I don’t understand how you can fault the Star for bias when the information on the real estate market appears to be factual from reliable resources. If you want rosy predictions then maybe you should only read information that projects and underscores your personal wishes.
— rosenb4_98@yahoo.com 10/20/2007 08:16 AM #
— Grut Less 10/20/2007 10:53 AM #
Why anyone would wait for things to turn around before buying a house is simply beyond me. Lots of inventory! Flexible Sellers! Nice Incentives! Lowered Pricing in a market that STILL has appreciation over last year!
But if you want to play the waiting game…fine…You might get a higher interest rate or even a higher price if that’s what you are looking for.
It’s a GREAT time to buy real estate in Tucson….Perhaps not in the rust belt, but certainly here.
Let the skeptics rant away…They probably don’t own real estate or do any serious investing, so how would they know anyway?
Paul
— Paul 10/20/2007 05:12 PM #
The middle class is getting squeezed on food and gas prices…impossible to also fund two mortgages! And what mortgage company (drowning in subprime foreclosures) will give someone a mortgage before the mortgage on their existing home is paid off??
— Lynne 10/20/2007 09:44 PM #
I sold a home in Rita Ranch in 2005, thankfully before the slowdown hit. Thus, I have real estate experience and I’ll explain to you why people shouldn’t be buying in Tucson right now. Yes, people are moving to Tucson, but well-paying jobs are not. Tucson and Phoenix, over the 20 years, have built an economy based on military and service jobs. Not a good plan for long-term wealth. There were only 2 reasons why the housing market overheated in Tucson: 1) easy access to credit, 2) investor, and 3) relatively wealthy retirees. The first two factors have now been eliminated, and are not coming back for a long time. What remains in Tucson’s market are incoming retirees. They will help a little, but their money won’t be enough to clear the glut of homes out in this market. The local population, I’m sorry to say, is too poor to help out, because most of their jobs are military and service industry-related. Retirees are going to be looking for deals to conserve their savings, as well, which will also put downward pressure on prices.
So, Paul, that’s why it’s a terrible time to buy a house in Tucson. Most homes are stil heavily overpriced for the local population and for retirees. Think about it objectively – do you really think a house in Rita Ranch is worth a quarter of a million dollars? Especially when the average wage is $10/hr.
One last thing, if you are concerned buyers will have higher interest rates, don’t sweat it. Savy buyers will use this time to rent and save money like crazy so that they can put a huge downpayment on the home. Coupled with lower prices, they will be able to take out much lower loans. In the long run, this is what needs to happen to build a more secure economic foundation in Tucson.
— Chris 10/20/2007 10:30 PM #
— Laura 10/22/2007 02:08 PM #
You miss the point. Without access to easy credit, people may want to buy, it may be a great time to buy (in your opinion), but without money to buy, they can’t buy.
When buyers can’t meet sellers’ prices, sellers are forced to drop their prices into a range where buyers CAN buy. We haven’t reached that point yet. We won’t for a long time. That’s why it’s a bad time to buy anyway – only buy now if you want to overpay.
— Chris 10/23/2007 11:18 AM #