Housing Doom

Tucson: Five of last year’s Parade of Homes properties have gone back to the bank- and there were only seven of them: [Hat tip M.R.!]

Five custom homes featured in last year’s Parade of Homes have now gone back to the Bank of Oklahoma after several months of negotiations.

Their failure to sell reflects the sharp decline in the high-end housing market where there are soft prices, a limited number of buyers and plenty of properties to choose from.

Of the seven featured properties in the Sonoran Preserve on the Bajada, near Dove Mountain in Marana, only one home ever sold in the traditional sense. Another one sold earlier in the year, but as part of a trade.

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I guess when one gets used to the abnormal, it becomes the new "normal".  You gotta love this assessment of Tucson new home prices: [Hat tip MR!]

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The headline in yesterday’s Arizona Star was Home Price Median Here Below $200K:

The Tucson real estate market hit a milestone in February: The median price dipped below $200,000 for the first time in almost three years.

The median price dropped to $199,900, down about 9 percent from $219,500 in the same month last year, said a report issued Tuesday by the Tucson Association of Realtors Multiple Listing Service.

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Hat tip to L for the latest from Tucson.  It has me scratching my head and thinking, "ARE THEY OUT OF THEIR MIND?"

A huge swath of state trust land in southeast Tucson would become a master-planned community over the next 40 years under a development deal expected to be finalized between the state and a Phoenix developer next week.

The developer, Westcor, is expected to receive a permit from the state Land Department that will allow it to begin the planning process for 12,000 acres east and south of Davis-Monthan Air Force Base, Deputy State Land Commissioner Jamie Hogue said.

Tucson officials called the project one of the biggest in the city’s history that will create a "second city" with residential and commercial development and open space.

I believe the part about the open space anyway.  Tucson already has new developments filled with specs and unwanted open spaces in the lots between them.  The article continues:

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According to the Tucson Association of Realtors, the median home price in October was $210,000.  This was down 1% year-over-year, and down 8.3% off of the record price of $229,000 set in June 2007.  While prices have been up and down in recent months, prices are back to levels first reached in the spring of 2005:

According to Judy Lowe, President of the Tucson Association of Realtors:

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Judy Lowe, President of the Tucson Association of Realtors, had a strange assessment of this month’s home sales:

ONCE AGAIN, according to the Tucson Association of REALTORS® Multiple Listing Service September 2007 housing report, we see an increase in new contracts opening escrow (989 units) compared to the same month in 2006. This is the fourth month this has occurred - thus supporting the belief the local Tucson real estate market has stabilized.

Pendings are one thing however, and sales are another.  Tucson sales paint a different picture.  With only 683 homes selling in the month of September, this is the slowest month for Tucson’s sales since January 2000. This represents a 37% drop from last year’s 1077, and a 33% drop month-to-month:

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From today’s Arizona Daily Star:  [Hat tip to MR!]

A bankruptcy judge tried to auction off some of First Magnus Financial Corp.’s assets Tuesday, but only one bidder showed up, and the judge put the sale on hold.

The failed mortgage lender intended to either sell about $8.5 million in construction loans and 29 foreclosed properties to Colorado-based Summit Investment Management LLC for about $6.4 million, or sell the assets at auction.

Judge James Marlar expressed reservations about the price of the proposed sale to Summit, which he said might be too low for both the loans and the 29 properties taken by First Magnus through foreclosure.

John Clemency, an attorney representing First Magnus, told the judge that the company had shopped the assets around to numerous potential buyers, and Summit’s offer was the best it could find.

Marlar said he would take the matter under advisement.

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It’s been a rough day for First Magnus.  First this morning the Arizona Daily Star in Tucson reported payroll troubles at First Magnus:

First Magnus Financial Corp. still is not sending out paychecks to its former employees.

But the Tucson-based mortgage lender announced it is creating an assistance fund of more than $1 million to ease the burden.

In a news release, the company said paychecks have been delayed because its accounts were frozen by investors that provided capital to First Magnus to make loans.

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Last month Tucson Association of Realtor’s [TAR] President Judy Lowe was optimistic when reporting June sales activity. Not only was the median price up to $229,000, Lowe said. In addition:

Quite a month for real estate in Tucson! Our inventory is down, new listings are down and pending contracts are up, all good signs for our market. 

Despite the "good signs," July was quite a disappointment. While inventory did decline slightly from last month’s 8725 to 8692, the decline wasn’t due to increased sales. Lowe said of pendings for June:

Pending contacts are also newsworthy,they are up over 2,000 for the first time in 2007, rising to 2,053 last month. This is an increase of 18.92% over June 2006, and the highest number we have seen in over 12 months.

Pendings however, don’t always turn into closings- July home sales were down to 1098- down 10.4% from June 2007, and down 10.5% from July 2006. Given that this is the end of the peak selling season, it is unlikely that we will see sales above this figure for the rest of 2007, and with the tightening in the credit market and a more negative market psychology, steeper declines are possible. 

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Judy Lowe, President of the Tucson Association of Realtors (TAR) had a very cheery assessment of Tucson’s housing market in June:

Our inventory is down, new listings are down and pending contracts are up – all good signs for our market.

We’ll come back to Lowe’s comments in a moment, but first let’s consider what she didn’t mention- sales:

TAR reports that 1226 properties sold in June.  That is down 6.7% from last month’s 1313 sales figure and down 19.6% from last year’s 1524.  This is the slowest June for home sales in Tucson since June 2002.

June is typically the high point of the sales season in Tucson, so this does not bode well for sales for the rest of 2007.
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