Friday, June 8, 2012

May Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for May. The average sale price was $173,987, which is 15% higher than in September 2011, when it seems to have bottomed out at $150,699.

The supply and demand ratio continues to favor sellers by far. Dividing the 3,544 listings (sellers = supply) by the 1,318 sales (buyers = demand), we have a 2.69 month supply of listings. Anything under a six month supply is a sellers' market.

Just for comparison, in June 2005, at the peak of the real estate buying bubble -- which, oddly enough, was two years before the price bubble burst and prices started to spiral -- we had 3,969 listings and 1,890 buyers, resulting in a 2.10 month inventory. Amazing, isn't it?

Also astonishing is that average days on market are now down to 67. In January 2011, it was 108.

I see this in my business every day. I have written about 10 offers in the past month, and every time, without exception, the house was sold before we submitted our offer, or we got into a bidding war.

This frenzy seems to have started with the National Association of Realtors' announcement that Tucson is the number one city in the country for real estate investment. See my posts on April 12 and 20 this year.

It's still not easy for a buyer to obtain financing, but it is easier than it was a year ago. Still, cash buyers are dominating the market in the lower price ranges. Of the 1,318 sales in May, 36% sold for cash, 32% of the buyers obtained conventional financing, and 29% of the sales involved VA or FHA loans.

The window of opportunity for investors is closing. The days of buying $50,000 house in a decent neighborhood, doing cosmetic repairs, and making a 50% return on investment are over. This is evident in the median sale price, which increased 10% from May 2011 when it was $127,000 to $140,000 last month. It's a relief to see all those battered houses becoming homes again.

Foreclosures were 29% of the sales, and short sales were 13% of the sales. Life is getting easier for buyers and sellers.

When I tell my buyers that the market seems to have bottomed out, a few have ruefully remarked, "Well, that's good for you, not me." Actually it is good for buyers too, who have equity instead of being underwater the month after they purchase their home. When prices stabilize, fewer sellers will be forced into a short sale or foreclosure when they need to sell due to job loss, job transfer, divorce, death, and so on. Fewer distressed sales will mean a healthy housing market. A healthy housing market can restore our economy.

An out-of-control housing market drove a blazing economy in the last decade. I don't want or expect anything that crazy again. Normal would be fine with me, and I think normal is where we are heading.

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