Arizona Home Prices Drop, Tucson Sees Smallest Decrease

It's no longer surprising to see updates on the local real estate market as headlines in the daily paper. In fact, it's seems unusual if we don't see at least one real estate headline each morning with our cup of java. The front page of today's Arizona Daily Star reads "Arizona home prices drop for the first time in 16 years". The large black print used in the headline makes a definite impact on readers; in fact in can downright intimidate some. A drop in home prices sounds scary and can instill fear into consumers at first glance, but once you investigate and understand the nature of the real estate market you'll find it's not so bad.

First, as everyone knows, the real estate market is like everything else in life; it's cyclical. Real Estate has it's ups and downs and that's what makes the world go round. Sure prices are down right now, but that's why we call it a Buyers Market. It's the perfect time for serious buyers to jump in and get a piece of the action. According the Tucson Association of Realtors sales statistics for 2007, the average home price in Tucson for July was $268,953, down 1.73% from the 2006 sale's price of $273,717. If buyers have money for a down payment and have strong credit, they can jump in and take advantage of some great prices and available inventory. Unlike in previous years, now most Sellers do realize that they must be open to negotiation if they want to sell their home.

Not too long ago the real estate market in Tucson was quite different. We must remember that we saw huge increases in 2004 - 2005. The average sales price in August 2004 was $205,014; the average sales price in August 2005 was $265,947. Quite the sellers market! During this time period everyone was buying, including investors. New construction developments and home sellers alike saw an influx of investors snatching up properties, which in turn lowered inventory and raised prices. Now many of these investors are trying to sell, and the demand is just no longer there.

Luckily Tucson housing prices fare better then several other Arizona cities.

As this report by the Office of Federal Housing Enterprise Oversight shows, Tucson saw a smaller decrease in housing prices then the entire state of Arizona, and only Flagstaff saw an increase in home prices in the last quarter. Phoenix saw the biggest change in price, with -.46% decrease in the average home price. On a positive note, Tucson, with a -.07% price decrease in the last quarter, wasn't far behind the nation's .08% increase in price. In addition Arizona did see a 2.2% increase in the home sales prices over the same period a year earlier. Both Nevada and California, who rode the "real estate wave" with Arizona in 2004 and 2005, saw larger drops in home prices. California homes are down almost 1.4% from last year, and Nevada prices are down almost 1.5%.

It's expected that home prices will increase in upcoming months, but one can never be sure what the consumers response will be to the crash of numerous mortgage lenders. Tucson's Fall and Winter climate entices many consumers to buy in the cooler season when our city is at its best. The next few months will be very telling of what the consumer's thought process is. We'll anxiously await the release of November's third quarter real estate figures a get better idea of where the real estate market is headed.