The Housechick Blog

The Tucson MLS just released their statistics for May 2007. 

In short:

• Average sales price (all residential types) is $280,589.
• Median sales price (all residential types) is $223,500.
• Active listings are at 9721 listings
• Number of sales units is at 1313 units.
• Average days on market is 61 days.

The Average Sales price is still trending upwards, and the Median Sales price is inching up as well, though not consistently as the Avg Sales price. 

The number of listings has actually taken a small drop for the first time this year, which is a trend I’d like to see continue.  Inventory has been rising fairly steadily since 2006.  We’re still near record-setting levels of inventory, so it’s nice to see an adjustment downward for May.

The number of sales has been about the same for the past 3 months, which is a trend to keep an eye on.  The Tucson real estate market should be starting the summer sales season, when more houses trade hands than in any other time during the year.

Days on market isn’t my favorite measure, for reasons you can read in other places in this blog.  However, 61 days on market is a decrease in that figure.

Calculating Months of Inventory, using the global Tucson MLS figured provided, we’re at 7.5 months of inventory, a small decrease from last month.  It seems like we’re making a slow wiggle downwards in months of inventory, which is a nice trend as well.  Time will let us know if this will continue or not.

It’s been a long couple of days.  I’ll break out some of the per area and per residential type figures a little later on this weekend.  Questions?  Comments?  Anything in particular you’d like to see in market statistics for Tucson?

I’ve been thinking about using months of inventory (or the absorption rate) instead of days on market as a more reliable market status indicator.  Given that homes can be withdrawn and relisted to “reset” the days on market counter, we know that DOM isn’t the best figure for evaluating Tucson’s market. 

Months of Inventory makes sense to me: that’s the number of months it would take to sell off all the inventory.  There’s a myriad of ways add context to this figure, but let’s keep it simple for now.

Here’s what I’d like to learn from months of inventory:

• If all price brackets are “Buyer’s Markets” or if some price ranges are still balanced
• If certain areas of town have a higher glut of inventory
• How Months of Inventory has changed over time.  We’ll save this one for later.

If we wanted to take this a step further, we could break down price brackets per area of town.  For example, we could show numerically that the market for a $300,000 house in the North would probably be a Seller’s market, while the market for a $300,000 house in Central Tucson would favor the Buyer.  Wouldn’t that be a fantastic way to help a Buyer understand why they would have to compete for the $300k house in the North, instead of having a large selection of homes in the same price range in Central Tucson?

Let’s see what Months of Inventory tells us.

Note: I’m only considering Single Family Homes, and only in the Metro Tucson area.  I’ve excluded all of the outlying areas from these numbers, as those are markets unto themselves.  I’m using the last 30 days of sold data, and I’m not including Active Contingent or CAPA properties, as they are generally not shown nor considered when a Buyer looks for a house.

I calculated Months of Inventory per price bracket, in this chart.  The price point listed in the chart is the upper end of the bracket.

I expected to see slower sales (that is, a higher months of inventory figure) for the higher price brackets, but was really blown away by the months of inventory in the under $200k market.  The price bracket between $100k and $200k has 4.4 months of inventory, which is fairly balanced, and good news for Sellers in that price range.

In general, anything under 2 months is considered a Strong Seller’s Market, 2-4 months would be a Seller’s market, 4-6 months would be considered balanced, 6-8 months would be a Buyer’s Market, and anything over 8 months would be a strong Buyer’s Market.

I calculated a citywide figure as well: 6.7 months of inventory.

Let me restate that for emphasis.  Continue reading �

I’ve been playing with some numbers, trying to get a real (or at least an accurate) picture of our local market conditions.  Most notably, I’ve been looking at days on market and the sales price to list price ratio.

I’m hampered by the way our Tucson MLS system allows agents to access the information for Sold properties.  Exporting the information is crude, at best, so I’d say the results I’m getting are in the ballpark, but probably not to-the-decimal perfect.  I’ll keep futzing with it, to see if I can get real numbers for a broader area, and more accurate figures.

If you follow the market statistics put out by the MLS system, it calculates a straight average days on market for sold listings, but doesn’t consider any previous times that house was listed.  For example:

If 123 Elm Street was for sale by Agent X for 70 days, and then by Agent Y for 90 days, and then by Agent Z for 45 days before it finally sold, our MLS system would consider that 45 days on market (DOM), instead of the cumulative figure of 205 days on market (CDOM).

I want to know what the cumulative days on market (CDOM) is for the various parts of town.

For starters, I considered every single family home sold in Central Tucson since January 1, 2006.  Ideally, I’ll break that into quarterly figures, but for now, we’ll just average everything since 2006.

Result: Average Cumulative Days on Market from 1/1/06 to now: 95 days.

Days on Market as calculated by MLS during the same period: 47 days.

I also calculated the sales price to list price ratio, using the original listing price of the original listing.  When MLS calculates this figure, they consider only the last list price, and not the original list price.  For example:

If Agent Q lists a house for $350,000, then reduces the price to $325,000, and again to $320,000, and the house sells for $300,000, then we calculate: $300,000 / $320,000 = 93.75%.  The house sold for about 94% of the List price.  If we look at the original list price, then the house sold for 85.7% of list price.

Result: Considering the original price from the first listing, houses go for 80% of Listed price.

Considering only the most recent list price, houses go for 97% of List price.

I need more analysis before I can draw any real conclusions.  I have a good idea of what is going on, but I like to see numbers to back up my ideas.  Here’s a couple thoughts:

• Agents have been withdrawing and relisting properties to “reset” the DOM for a very long time in Tucson, it’s an acceptable practice in the area.  If the percentage of listings withdrawn and relisted has stayed fairly constant over the years, does that make the MLS reported DOM a better index of the state of the market?
• If the proportion of listings being withdrawn and relisted has increased (and I believe that it has), then calculating CDOM per quarter back through several years should show a large increase in CDOM over the past 16 months or so.
• Are Sellers overpricing their homes more rampantly than in any other time, at least proportionately?  I’d need to calculate the sales to list price ratio for several years back and watch for trends.
• I’m curious if days on market or sale to list price ratio changes for different price brackets or areas of town.  I’m also curious how days on market varies per price bracket and area of town.
• If a property truly sells in 30, 60, or 90 days, what is the actual ratio of sales price to original listing price?  I’d assume that the faster it sells, the closer it goes to the list price.
• What’s the average price reduction, and when does it occur?

You can tell I’ve got more questions than answers, and am frustrated by the restrictive data available to me.  Hopefully, we’ll get some interesting answers in the weeks to come.  I’ll let you know what I learn.

New Stats are out from the Tucson MLS for April 2007.  So what’s the state of Real Estate in Tucson?

Just the facts:

• Active Listings: 10,387
• Number of Sales: 1280 units.
• Average Sales price, Single Family Home: $298,876
• Median Sales price, Single Family Home: $237,000
• Average Sales price, Townhouse/Condo: $184,869
• Median Sales price, Townhouse/Condo: $167,000
• Average Days on Market: 65 days

Adding meaning to the Numbers:

Active listings are at record numbers.  People - If you don’t NEED to sell, get your house off the market.  Typical inventory levels for Tucson are between 4000-5000 listings, at least they were before the 2005 boom and the 2006 run-up in inventory. 

A good figure to look at is months of inventory, which takes into account both the number of listings AND the number of sales: at the current rate of sales, how long would it take for all of the houses to sell, if no other homes were to come on the market.

General rule of thumb is that anything around 4-6 months is a balanced market, under 4 months is Seller’s Market, and over 6 months is a Buyer’s market. 

In this chart, you can see our Seasonality: inventory drops during Summer, our peak sales time.  It looks like Tucson has been fairly balanced, until 2005 when our sales went crazy and inventory dropped.  Now, since 2006, months of inventory has climbed.  There was a small drop in March 2007, and we went back up a bit in April 2007.  It will be interesting to see if we’re going to bounce our way slowly back down to normal levels.

 Another way to consider active listings and number of sales is simple division: of the 10387 listings on the market, only 1280 sold - which is roughly 1 in 9 homes. 

Let’s restate that: One in nine homes sold last month.  More typical levels?  One in five.

Average and Median Sales prices have fluctuated fairly gently since the start of 2006.  They vary a little, month to month, but overall, no big movements are seen from January 2006 to today, in terms of Average and Median prices.  This indicates fairly flat prices.

Days on market has been dancing around in the 60s for six months now.  Since 2000, Tucson has averaged somewhere in the mid 50s for days on market.  Since we’re at 65 days for April, we’re still taking longer to sell than our traditional market would indicate.  Given that agents can restart the days on market clock by withdrawing and relisting the same house, this figure isn’t the best measure.  It’d be more interesting to see ACTUAL days on market, inclusive of past times a house has been listed and expired or been withdrawn.

Here’s my take: Inventory is still too high, but well-priced and well-marketed homes are still selling.  The number of sales took a small dip in April, but we’ve otherwise been following our yearly trend for number of sales this year.  It’s a good time to be a buyer, but understand that the best properties at the best prices will still move fast.  Sellers - either get serious about selling or get off the market.  Our market is still deciding where it will land.  If you don’t HAVE to sell, then don’t.  If you do have to sell, you’ve got to price aggressively and present the best home possible.  In this market, you can’t be lax about the housekeeping or the repairs if you want the best price.

That’s today’s headline in the Arizona Daily Star. The gist of the story is that there are record number of unsold homes flooding the market, and that the explosion of new houses and condo conversions have contributed to the glut of unsold homes on the market.

Let’s take the research a little further, and see if the paper’s results hold up to actual numbers.

The Star Says: Residential listings averaged 9925 at the end of January, February, and march, nearly triple the average for the same quarter in 2005, the peak year for sales.

It’s very true that our number of listings has increased dramatically.  However, looking at years 2002 through 2004, we see a pretty stable number of listings.  In 2005, the investors hit and our inventory dropped, which led to a massive decrease of supply for a large increase in demand.  Since 2006, we’ve seen number of listings rise pretty steadily.  Number of listings on the market right now is well over average.

The Star Says: Sales for the quarter (2007 Q1) were down 18 percent from same quarter 2005.

Here’s a chart of sold homes and townhomes/condos, show per quarter.  I’ve also plotted a smoothed version of the data.  You can see our seasonality in all the bumps in these lines!  From this chart, we see that sales were rising at a nice pace, started increasing around 2004-2005, and are now decreasing since 2006.  The question we’re all waiting to get the answer: will sales continue to decrease, or will we level out? 

The Star Says: Average number of days on market is 67, up 27 days from same time 2005.

Why do they keep comparing to 2005?  2005 was an exceptional year for Tucson, in every way.  Here’s what the days on market looks like when we consider a larger amount of time.

Average days on market was pretty steady, staying between 50 and 60 days for quite a bit.  In 2005, days on market took a nosedive, as the market sped up to a frenzy: low inventory + lots of buyers = low days on market.  Since then, we’ve been coming back up to more normal levels.  Have we peaked or will DOM keep rising?  Only time will tell.  It’s a shifting market right now.

The Star Says: The median price for the past quarter (2007 Q1), which is roughly $220k, remained unchanged from same time 2006 and is up 20% from 2005.

Median sales price has been steadily rising for the past 5 years.  We had one small dip at the end of 2006, but median prices are back on the way up.  In this graph, I’ve separated single family house prices from condo/townhome prices.  They follow the same pattern.

The Star Says: Condos are a glut on the market.

Here’s a chart showing the number of single family home listings and condo/townhome listings per quarter over the past 5 years.  While it is true that the number of condos for sale has doubled, so has the number of single family homes.  It’s hard to place the blame solely on a “condo glut” due to all of the condo conversions available in town.

Let’s look at how many of those listings are selling.  Here’s single family homes:

It seems there’s a glut of single family homes on the market in Tucson!  The number of sales doesn’t seem to be keeping pace with the number of listings. 

Here’s the condos and townhomes:

Well, this doesn’t look much different than the single family houses chart, does it?  I think it’s fair to say that condo conversions may contribute to the glut, but certainly aren’t the only cause.

There you have it.  The Star isn’t that far off in their conclusions.  Right now, the real estate market in Tucson is providing more questions, than answers.  Stay tuned for regular updates!