As we enter the prime homebuying season this year, I see a lot of small improvements in the market but no drastic changes.  This is probably a healthier way to recover than suddenly having tons of buyers snapping up properties right and left.  That would be exciting, but would actually add to market instability rather than cure it.

I will be comparing the numbers for April 2008 with those of April 2007, but I will also compare April 2008's numbers with those from March 2008 so that you can see how things are changing in the short term as well as the long term.

Home Sales Volume and Home Sales Units

Both of these categories have decreased since last year.  However, while volume decreased by 32.76% from April '07 to April '08, home sales units decreased only 26.17%.  Why?  Well, the numbers indicate that these days more lower priced homes are selling than the mid-range or high priced ones.  Even if we were selling the same number of units as we were last year, we would still see the volume number decreasing.  Not only that, but home prices have fallen some since last year, so it naturally would take more units to make up the same volume.

That's not all bad, though.  A lot of home sales are created by families "moving up" so after they sell their lower priced homes, they move into mid-range homes, etc.  If the trend continues the benefit will spread to all market segments and Tucson's real estate market will grow stronger and eventually become robust once again.

Average Sales Price

The average sales priced decreased by 8.91% from April of last year to this year.  That makes sense if lower priced homes are the ones selling.  Additionally, the market is not as strong price-wise this year because there are so many foreclosure and short sale homes being sold.  Until the short sales and foreclosures are not such a big part of the market, we can expect that this number will not be climbing.

Pending Contracts

The amount of pending contracts rose 27.11% year over year and 9.71% just from the month before.  This is a very good sign and is indicative that in Tucson at least there is returning consumer confidence when it comes to the housing market.  It is to be expected that more homes sell in late spring than earlier in the year, so in this category, I take more encouragement from the percentage increase from last year than I do in the percentage increase from last month.

As I have mentioned the past couple of months, as buyers come out and take advantage of the deals available in this current market, they will continue to buy up the inventory eventually taking us to a place where prices begin to increase once again.

Active Listings and New Listings

Both of these categories show significant decreases this year.  Active listings decreased by 15% and new listings decreased by 21% compared to April of 2007.  Month to month, active listings saw a decline of 2.37% while the decline in new listings was marginal (a mere 0.12%).  The fact that new listings stayed pretty much the same during a time of year when more and more homes usually appear on the market is very telling.  Sellers appear to be very aware of market conditions and only those needing to sell are doing so.  That in itself bodes well for the stability of home prices.

Other factors affecting the Tucson Market

There are certainly other economic factors which affect the Tucson Market and should be considered.  The economy in general has a huge impact on how much house people can afford.  While interest rates remain quite low, there is instability in other portions of the market; most glaringly we are seeing huge price hikes at the gas pump.  These changes affect both consumer buying power and consumer confidence and could sideline the improvements we are seeing if they go on for too long.

Additionally, the number of foreclosures and short sales can affect how long we remain in the current price trough.  It is hard to say for sure how long this will continue, although I have noticed a trend where banks are becoming more realistic about current market conditions and are beginning to work things out with many borrowers, thereby allowing more of them to stay in their homes.  However, we still have numerous short sales on the market and I personally am finding that I'm doing more short sales than I am normal transactions.

My Analysis

I am still cautiously optimistic.  The Tucson real estate market is showing signs of a slow and steady improvement.  Barring any catastrophic influences from the U.S. economy or elsewhere, I expect that we will see prices start to rise by next year at this time.  It is still a fantastic time to buy, especially if you plan to own the home for 5 years or more.  Even if we experience a temporary dip in prices due to economic factors, you will still come out ahead in five years by holding the property and either living there yourself and renting it out.  Happy house hunting - let me know if there is any information or assistance I can give you in your search.