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Douglas Trudeau , Assoc. Broker
Prudential Foothills Real Estate
64 N. Harrison Road, Suite 160
Tucson , AZ 85748
Mobile: 520-954-2209
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Where Are All These Homes For Sale Coming From

Tucson Real Estate Home For Sale While talking to a Realtor whom I trust, she identified some interesting considerations when it comes to the number of listings on the market today. Thanks Theresa.

Normally there are two types of homes on the market. Traditionally the majority of homeowners sell their home between five to seven years; the first type, normal market. Then there are those who have a life change (job relocation, got married and need a bigger house, have more family than home, have more home than family, moving up in life with a higher income and can afford more home, etc.) who sell their homes, normal market. Using the current numbers, these accounts for approximately two thirds of the homes on the market. Which, if they were the only ones on the market we would have a very healthy and balanced market.

Buyers Market So where is the other one third of the homes coming from? They come from buyers who took it to the edge, pushed the envelope, took a risk, and just got in over their heads. Now we have two more layers, so to speak, to add to the number of homes on the market. First are those trying to get out from under the unmanageable mortgage they agreed to two to three years ago. Many are ending up in short sales. The next level are those poor souls who gambled too high and lost their homes. Bank sales are an ever increasing number of homes on the market today. Both have created an unhealthy market.

Add to the mix the reduction in buyer confidence and you will see that homes are not moving as fast as they could, and I mean “could.” Slowing down the sale of homes on inventory.

Lets compare it to a dam. Designed to handle a certain amount of water flow to meet electrical power needs as well as control the water demand needs of communities down stream. A drought hits and reduces the amount of water flowing to the dam. Demand increases for more water downstream and for more power. More water flows through the dam.

Levels are low, and demand is high. Power company increases prices. Now we have a high demand low supply situation. The value of water is artificially driven to unbelievable levels.

New technology is introduced and water conservation is stressed down stream. Less need for water and power results. Demand decreases.

Winter comes and the mountains upstream have much higher than normal snow fall. At lower levels upstream there has been more rain than winters past. Water levels at the dam increase (buyers who took too high of a risk). Then comes spring, the snow melts, streams become rivers, rivers flow above flood levels (banks with repossessed homes). The level at the dam is increasing hourly. Demand downstream has not increased. Communities are decreasing dependency on power and maintaining water conservation. One flood gate is opened to relieve the pressure. Water flows freely downstream, but communities don’t want to increase demand for fear of another drought (buyer confidence remains low). Raging rivers upstream are adding more water than flood gates a relieving.

Another flood gate is opened (banks willing to work with sub prime loans and adjustable rate loans to help homeowners save them). Some pressure is relieved, but not enough. A warmer than usual spring is increasing snow melt. Another flood gate is opened (Feds reduce interest rate and the effect trickles to home loan rates). Another gate is opened, but not enough to reduce the rising water. More melt, more rain, more water rushing to the dam.

The power company reduces their fee for electrical power. It is now cheaper to use their power than pay for alternative power (cheaper to buy than remodel). Communities are tired of dry brown landscaping, water demand increases (buyer confidence returns). Another flood gate is opened to meet the demand. Water levels return to normal, everything returns to what it was before the drought.

When buyer confidence returns, and home inventory levels balance out, we will see a great market again. One ready for the next wave of buyers. Those babyboomers looking for a comfortable community with comfortable weather.

This entry was posted on Friday, February 8th, 2008 at 11:10 am and is filed under Tucson Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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