Region’s Real Estate Demand Exceeds Supply

Randy Rogers has a word for the state of the local existing-home market for about the last year – “zooming.”

There’s no pun intended there, said Rogers, president of the Tucson Association of Realtors, recognizing how the COVID-19 pandemic gave the word a new meaning because of the popular Zoom virtual meeting software.

“Things ARE still zooming,” he said with emphasis. “Through this pandemic, the Southern Arizona region is benefiting from people’s desire to figure out where they want to live.”

As it is with new-home sales, the demand for existing homes is far ahead of the supply for many of the same reasons – people are moving to Tucson; new and existing residents are looking for more space and amenities because they’re spending so much time in their homes; interest rates have remained low, giving buyers more power.

Will White, whose company Land Advisors Organization brokers land deals for new-home builders, said 2021’s interest rates compared to 2018 allow a buyer to get $95,000 more home for the same mortgage payment.

There’s one more factor that was a long time in developing, Rogers said.

“There’s a 10-year lag of new construction,” he said. “We got hit so hard back in 2008, 2009, 2010, the builders really slowed down here. They went to places where the population was booming. They went to Austin, they went to Phoenix, they went to Dallas, they went to places like that. We lost several of our local builders because they couldn’t make it.”

That’s created today’s market where buyers compete with each other for an existing home or a new home, and that’s with the median price of an existing home jumping 23.5% from July 2020 to July 2021, according to TAR statistics. For a single-family home, the median price increased 22.2% to $330,000. For a townhouse or condo, the median price is up 31.4% to $209,000.

The average number of days a house has been on the market in 2021 has decreased from 36 days to 17 days compared to 2020. That number was 12 days during July.

“If you are a seller, you are in the driver’s seat,” Rogers said. “If you’ve got a good home and you are in a position where you’re ready to sell, you probably can come in at asking price or above asking price. The seller will probably receive five, 10, 25, 30, I’ve heard up to 70 offers on a property.”

That’s fine for a seller, but a seller who then needs to move into another home might have to think twice, he said.

“If you’re a seller, the problem is where do you go?” Rogers said. “If you’re going to sell hoping that you’ll find your next house, good luck. You might say you’ll move and downsize for a while and move into a condo. The condo market is as hot as can be. The rental market is crazy.

“If you’re a buyer, be prepared to pay above list price, be prepared to be patient. It’s not unusual for you to put in eight, 10 offers before you finally get one accepted.”

As long as interest rates continue to stay at the same general level, Rogers said he anticipates the market will continue to “zoom,” particularly in Arizona. “I don’t think this is going to end in Arizona for a while,” he said. “The Phoenix metro area is expected to be 5 million people by 2025.”

In addition, with home prices even higher in the Phoenix area, Tucson and Southern Arizona are getting significant spillover.

“People come to Arizona and say, ‘Let’s move to Scottsdale.’ And they go to Scottsdale and they’re like, ‘holy smokes. The prices of these homes are crazy.’ ” It doesn’t change their minds about moving to Arizona, so they tend to look at the Tucson metro area.

“I think we’re 24 to 36 months away from seeing it drop in different parts of the country,” Rogers said, referring to reports from economists. “We’re in good shape. We’re going to continue to see good things.”

By Jay Gonzales