The headline read,
"Homes are now cheaper in Phoenix than Tucson"
but what is the real interprotation?
That Tucson Homes have held thier value better than those in Phoenix.
Read the rest of the article below....
Talk about upside down.
The median price of a home is now higher in the Tucson metro area than in Maricopa County, which has been rocked by foreclosures.
Median home prices in the Tucson market have traditionally been slightly lower than in the greater Phoenix market. But as speculative development and out-of-state investment fueled the housing bubble in Maricopa County, the disparity between home prices in the two markets grew.
Now the bubble has burst, and the foreclosure mess has flipped the housing market upside down. The median price of a resale home in Phoenix for January plunged to about $135,000 as foreclosures made up nearly half of all transactions, Arizona State University's Realty Studies Polytechnic Campus recently reported.
Meanwhile, in Tucson, the median price of a resale home in January was $160,000, said John L. Strobeck, who tracks real estate data for Southern Arizona.
"I sort of look at Phoenix as being like Tucson, but on steroids," Strobeck said. "They have higher and lower swings."
Most in the housing and real estate business described the pricing flip as an anomaly that eventually will adjust back to normal as the market stabilizes. But at least one analyst wondered if the recent steep decline in prices for the Phoenix market spells trouble for home prices in Tucson.
Both markets have seen sharp declines in prices, but Maricopa County's market has plunged much further because there was far more speculative development and there have been far more foreclosures.
"The market was hot in the Phoenix, Maricopa County, Pinal County area much sooner and longer than it was in Tucson," said Jay Butler, director of realty studies at ASU. "Tucson was just beginning to get into the hypermarket when this whole thing started to collapse."
But Butler noted that the Tucson market has traditionally followed the Phoenix market, which raises the question of whether we, too, are in for a dramatic fall in prices because of foreclosures.
For example, for the fourth quarter of 2008, the median home price for resales in Maricopa County was $158,000, ASU reported. For January, that number was about $135,000.
"We have taken a big fall just in the last couple months because the foreclosure activity has come on stronger," Butler said. "If you are lagging us in foreclosure activity, which you may well be, then you will see a decline in home values significantly in the coming months."
Butler tracks the Maricopa County market, not Pima County, so he was raising the question as a point of discussion, not as a prediction.
But Marshall Vest, an economist with the University of Arizona Eller College of Management, said he could see Butler's line of thinking.
"I could follow his reasoning in that this whole cycle, Phoenix has been ahead of Tucson, and Phoenix has been a leading indicator for the Tucson market," Vest said.
Still, Vest said he didn't see Tucson's housing market falling much further because prices here didn't become as inflated as they did up north, and he stands by his forecast that it will have stabilized by year's end.
"I think the Tucson and Phoenix markets are very different," he said. "The Phoenix market was a top-tier market. It attracted a lot of attention on the part of investors, and there was an awful lot of money that flowed into that market. Tucson is a third-tier market."
The danger of rising foreclosures is that they drive down overall home-sale prices, forcing some sellers to take losses on their homes.
Foreclosures accounted for about 41 percent of all transactions in the Phoenix-Mesa-Scottsdale market, Seattle-based Zillow.com said in its 2008 year-end report. In Tucson, that figure was 22.8 percent.
Rosey Koberlein, chief executive officer of Long Realty Realty Cos., said prices may come down a little more, but she didn't foresee a Phoenixlike plunge happening in Tucson.
The two markets are simply too different to compare in that way, she said. Phoenix's market is much bigger and more diverse — ranging from Scottsdale to Sun City to Goodyear — than Tucson's.
Strobeck, who compiles and analyzes Southern Arizona housing data as owner of Bright Future Business Consultants, also sees no connection between what is happening in Phoenix and in Tucson.
"I don't think Tucson follows Phoenix in much of any way at all. They are two different markets," he said. "I think once we get through all this, we will go back to 'normality.' And I think probably just because of the fact that Phoenix's population is greater — they have more churn of companies and better job creation than we do in Tucson — we will eventually go back to where (pricing) was."
reprinted from Arizona Daily Star