Is the Sky Really Falling?

For some reason, the media love to try to make the state of the housing market sound a lot worse than it is. For example, on Tuesday, the S & P/Case-Shiller Home Price Index reported a 12.7% decline in home prices from February 2007 to February 2008. This was the largest drop in the index since its creation in 2001. So what? That's only seven years of data, during what was mostly a boom market. And this index only follows 20 major cities, many of which--Los Angeles, San Francisco, San Diego, Las Vegas, Phoenix and Miami--saw the biggest run up in prices and now are experiencing the biggest declines. Despite that index's limited seven-year history and limited geographic coverage, the Associated Press reported that home prices "plunged by a record" percentage and "at their fastest rate ever."

The S & P/Shiller-Case Home Price Index only looks at single family house prices (not condos, townhouses, new construction or mobile homes), and it only considers houses that have sold more than once. I can't figure out from their methodology if they are looking at average or median price, and I don't know how far back they look for a previous sale.

Let's suppose they are looking at the average sale price. In Tucson, the average sale price of single family residences increased from $275,563 in February 2007 to $289,991 in Febuary 2008. This is a 5.2% increase in the period evaluated by S & P/Shiller Case Home Price Index. In Tucson, the average price of all properties, including townhouses, condos, etc., increased 1% during that 12 month period.

It should be clear to anyone that the average temperature across the country, or in 20 major cities, tells us nothing about the actual temperature in Tucson. Even within Tucson, the climate varies from one neighborhood to the next. Just as climate is local, so is real estate.

For an explanation of how the S & P/Shiller-Case Home Price Index distorts reality, see MarketWatch.

Real Estate Transfer Tax

A real estate transfer tax (RETT) is charged at the time a property is sold. While our city, county and state governments are not currently considering a RETT, it has been the topic of revenue enhancement proposals in the past. With our governments running deficit budgets these days, the RETT is likely to rear it ugly head again.

What's wrong with a RETT? Plenty. We already pay property tax, twice a year. This would be double taxation. It is only charged to property owners who sell, so it is discriminatory. It reduces a seller's equity, and is a further impediment to selling. As if sellers need any more challenges in this market!

The Arizona Assocation of Realtors is currently collecting signatures so a state wide ban on RETTs can be put on the November ballot. We need 230,000 signatures by early July. We won't know the proposition number until the signatures are validated.

Once we know the proposition number, we will be spreading the word to vote YES. A yes vote will prohibit state, county and city governments from ever imposing a real estate transfer tax.

Fro more information, go to No New Tax on Our Homes.

1422 N Painted Hills Road

When you decided to move to Tucson, this is how you imagined your home. Hacienda style on 0.66 acre with pool. Saguaro rib porch. Beehive fireplace. Saltillo and Talavera tile everywhere. Lots of mesquites and flowering cactus. Fabulous mountains views. The city lights twinkling only four miles away.










3 bedrooms, 2 baths, 2 car garage, workshop, living room plus family room.




For more photos and a floor plan, go to http://www.donnamoulton.com/

Sold June 10, 2008 for $270,000.

March Residential Sales Statistics

Overall, things seem slightly better in March than they did in February.

From February 2008 to March 2008, median sale price was up 0.05%, average sale price was down 1.2%, number of sales was up 27% and number of listings was down 1.59%. Let's hope the gradual progress continues.

For more detail, go to
March Residential Sales Statistics.

2753 W Begonia Place

This home's location on the wonderful west side of Tucson can't be beat. Near Greasewood and Speedway, it's close to shopping, downtown and U of A, but worlds away. An enormous tree-filled wash behind this lovely home will make every day a wildlife viewing delight.

The home has been beautifully remodeled by a devotee of the home remodeling television shows, and she has created a happy haven that you can now call your own.

High ceilings make this 3 bedroom 2 bath home feel airy and light. Tasteful colors and lots of upgrades.



Double pane windows. A sliding door to your private patio.

The upstairs master bedroom has a walk in closet and a luxurious bath room.


Sold April 25, 2008 for $172,000. We had three offers.

Interest Rates Going Up

Buyers usually assume that when the Federal Reserve cuts the short term interest rate, the mortgage interest rate will also drop. It's a lot more complicated than that. The Fed's most recent cut will probably cause fixed mortgage rates to go up. Adjustable rates may go down, which is a relief for people who currently have adjustable rate mortages (ARMs), but I think most people have heard enough horror stories about ARMs that few home buyers will choose that option anymore.

Suppose you can buy a $200,000 house with 20% down at 6% interest today. Your principal and interest payment would be $959.28 per month. Suddenly interest goes up to 7%. Your P&I payment will be $1,064.48. This might be enough that you now longer qualify for a loan.

Some buyers are waiting for the market to hit bottom before they buy. Experienced investors know that it is impossible to time their purchases perfectly. If, in the hypothetical situation I described, the interest rate went to 7%, the price of the house would have to drop to $180,233 in order for the P&I to be $959.28. This would be a 10% drop in price. I think the chances of interest rates going up more than 1% are greater than the chances of property values dropping more than 10% in the next few months, especially in the under $250,000 price range where most of the sales activity is occuring.

So it's a gamble. While waiting for prices to drop, buyers may see interest rates increase to the point where their buying power is severely reduced.

Hummingbirds!

A hummingbird zoomed by as I was watching the mourning dove on her nest on my back porch yesterday. I watched the hummer and saw her land on a branch about 4 feet off the ground. Then she thought better of it and flew away, but quickly came back. I could see a tiny bag of woven grass attached to the branch, so I went for my camera. I fired off this shot while the hummer mom bravely buzzed around my head. I left quickly so she wouldn't feel harassed any longer.

The inside of this nest is less than 1" in diameter! Another day, another reason to be grateful for a home in Tucson.