When it comes to dealing with real estate in Northwest Tucson, it’s either the best of times or the worst of times, depending on whether you’re a buyer or a seller.
Closed transactions in the Northwest in February were up over the same month last year — 243 in 2011 over 191 in 2010 — but so are properties under contract — 278 new contracts in February of this year compared to 244 for February 2010. That means more houses have been added to an already-bloated inventory, yet such an increase could foretell of better days to come.
“With the 278 new contracts written in February, we see an increase in pending deals, which is a positive sign that there seems to be more activity in the market,” said Kevin Kaplan, vice president of marketing and technology for Long Realty Co.
Kaplan noted the area has seen a slight increase in inventory, with the MLS inventory showing 2,074 active residential property listings in the Northwest for February compared with 1,805 active listings last February.
“This is a nominal increase in inventory,” Kaplan said. “I expect it would take about 8-1/2 months to sell out the inventory on hand.”
For comparison, he said the “sweet spot for months in inventory for a balanced real estate market is between five and six months.”
Kaplan attributes the increased real estate activity to a couple of factors.
“When people saw the pickup in buyer activity last year, many of them decided to get into the market and try to sell their house now,” Kaplan said. “Also, some of the activity is driven by the banks with foreclosures and short sales. Last year was that gap in time of banks taking over properties and then getting them back on the market now that there’s been some overall improvements in the economy.”
Andy Gregory, certified real estate broker for Sunbird Real Estate, handles houses in Saddlebrooke and Northwest Tucson.
“The good news is that we are seeing some sales,” Gregory said. “February was the best month we’ve had in a year-and-a-half, but we’re still in a buyer’s market. Sellers are now getting realistic in their pricing.”
Gregory noted that older homes are the ones lingering on the market, mostly because buyers don’t want to go through the time, money and effort to remodel them when newer homes are available that offer the amenities buyers want.
Yet while February was a strong month for Sunbird, Gregory said its overall sales are down 32 percent in transaction volume since September 2010.
“I think it will take two to three years for the real estate market to recover,” Gregory said. “I think we’re at the bottom, but I don’t think we’ll come off it for awhile. We may be flat for that period, but I’m cautiously optimistic the market will come back up.”
Gregory had advice for both buyers and sellers.
“For sellers, look at comparable houses and what they sold for, and walk through houses that are for sale,” he said. “For buyers, trust their own instincts in terms of value and not on what a banker or appraiser is telling them.”
Jackie Malden, a Long Realty broker and manager of the Catalina office, believes buyers are comparison shopping more when it comes to homes.
“Buyers are more educated as to pricing than ever before,” Malden said. “They have access to all the information they need and if a home is not priced appropriately, it will never sell.”
Malden noted that buyers walk into an open house, ask the price and the square footage and then do the math to price out the cost per square foot.
“Buyers are comparison shopping, so pricing is critical,” she said. “So sellers are becoming more realistic in pricing their homes. If they don’t, it will only be a listing that sits on the market.”
Kaplan said there’s been an erosion in the selling prices of Northwest area homes over the past year.
“The Northwest is down about 14 percent in price, which some people think is why we’re seeing more buyer activity,” he said. “It means greater affordability, plus the mortgage rates are still low, around 5 percent now.”
Kaplan noted the median price for a house sold during February was $185,000, compared to last February when it was $210,000.
“We’re also starting to see investors look at the marketplace, especially those who want to buy and hold a property to rent for a few years,” he said. “There’s an opportunity for investors to use cheap money to buy at discounted prices. We’re seeing both local and outside money doing that.”
Kaplan noted that a lot of builders are sitting on land, but with the high inventory of existing homes and the foreclosure inventory, “It makes it a challenging environment to build new construction. It would take an increase in housing demand to make it really grow.”
Yet Gregory thinks that some builders consider this a good time to start building houses.
“New housing tracts have picked up sales,” he said. “The builders have sharpened their pencils and are competing with pre-owned homes. When you throw in more efficient homes and warranties, it’s tough to compete with new construction.”
Andy Warren, president of Maracay Homes, believes the time is right now to grow in Tucson. His firm started two new home projects in Marana last year — Sombrero Peak at the Pines, a golf course project west of I-10 and north of Cortaro Road, and Sunrise Ridge at Tangerine Crossing, on the corner of Tangerine and Thornydale roads.
Warren said the Sombrero Peak project offers single- and two-story homes from 1,600 to 2,700 square feet from the high $170,000 to the $230,000 range. Sixty home sites are available in Maracay’s section of the project.
“The big appeal is it’s a golf course community with a number of homes that back onto the course with great mountain views to the north and south,” he noted. “There’s a community pool, walking paths and barbeques. It’s a highly-amenitized community in a good location with easy access to shopping and the freeway.”
Maracay is offering incentives to buyers at Sombrero Peak at the Pines in the form of free photovoltaic solar systems to generate electricity to offset costs, more insulation in the walls and roofs, and a radiant barrier roof sheathing that reflects heat instead of allowing it to be absorbed into the attic.
The Sunrise Ridge at Tangerine Crossing is a different type of community, with larger homes and home sites. Single- and two-story homes will run 2,500 to 4,100 square feet and are offered in four single-story and two two-story floor plans. Prices range from $258,000 to $328,000.
“The sites back up to desert wilderness with a backdrop of the Catalina mountains on one side and the Tortolitas on the other,” Warren said.
Maracay has 83 home sites in the project. Richmond American Homes also is building there and at the Sombrero Peak at the Pines project.
Warren said he’s confident the freefall of the real estate market over the past few years has stopped.
“We’re bouncing around the bottom of the market, so now is the time to provide communities at great reset values,” he said.