Tucson Real Estate Market Overview – Fun with Charts

September 2, 2009 | By Kelley Koehler | Filed Under Market Discussion

I don’t know if you’ve seen this chart that I’ve got over on the home page of Housechick.com:

This is one of my favorite market charts that I maintain. You get the whole story of what has happened to the Tucson housing market in one glance.

The black bars show months of inventory, or absorption rate. Basically, the months of inventory is the rate at which homes are selling, the speed of the market. You calculate months of inventory by dividing the number of homes available for sale by the number that sold. So if there are 5 months of inventory, it means that if no other homes come on the market, at the current rate of sales, it’d take 5 months to sell all those homes.

Generally, anything around 5-6 months is considered balanced – buyers and sellers have equal power. Anything under 4 months or so is considered a Seller’s market, and anything over about 7 months is a Buyer’s market. The higher the number, the slower the market, generally.

The yellow line is the citywide average sales price, as I calculate it. Which means it includes only the 9 major regions of Tucson, single family homes, town homes, and condos only.

See down there on the left hand side back in 2005? Back when the supply of homes was so low that we had 2 months of inventory some months? Look what that does to the average sales price – lack of inventory and high demand leads to higher sales prices. And you can see the whole market shift over the next few years. As inventory levels rise, average sales prices start leveling out, and then dropping as inventory shifts yet higher.

So where are we now? Well, inventory has been dropping. Over the last 3 months, the average sales price has been going up ever so slightly. But we were also seeing that happen over summer, which is our high selling season anyway. Will it all hold as we head into winter? Only time will tell for sure.

tags: housing market, market report, real estate, tucson

Comments

2 Responses to “Tucson Real Estate Market Overview – Fun with Charts”

Scott on September 3rd, 2009 7:52 am

The months of inventory stats remind me of unemployment – where there are large numbers of discouraged unemployed not reflected in the stats (10% is actually 17%). I wonder how many people like me are hidden out there – I’d list and sell my house today, except that I’m not quite yet willing to eat such a huge loss.

So is there 6 months of inventory out there, or is there actually 12 months of inventory when all the discouraged sellers on the sidelines suddenly decide it’s time to list? Of course, when they list, that means they become buyers so maybe it’s a wash?
Kelley Koehler on September 3rd, 2009 8:42 pm

Hi Scott – I’d be concerned about shadow inventory too – future foreclosures. I’m not sure it’d double inventory, between that and sideline sellers, but there are some interesting dynamics going on right now. There’s also some fun analysis from the Altos boys, http://www.altosresearch.com/research/AZ/tucson-real-estate-market

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