Tucson housing market performance in 2016 fuels cautious optimism

2016 was a record year for the local housing market, both in terms of new home construction and falling foreclosure rates.

The number of foreclosures last year was a 10-year low, data from the Pima County Recorder’s Office shows, with a 2016 total of 1,820 foreclosures — the lowest since 2007, when the housing market crashed and distressed sales began to climb, peaking at 6,793 in 2010, when a slow descent began.

The local trend was part of a national one that saw foreclosures at 10-year lows across the country in most major metropolitan areas, data from ATTOM Data Solutions show.

But, while analysts say the downward trend is good news, the market is still not completely healthy as investors bought distressed properties before they sold in a traditional foreclosure.

“It appears that investors are becoming more savvy at identifying distressed properties before they go into foreclosure and that banks (and) government institutions are letting more properties go to investors instead of taking them back to sell for themselves,” said housing analyst Ginger Kneup, owner of Bright Future Real Estate Research. “The combination of both traditional foreclosure and investor sales — what I call ‘distressed sales’ — still accounts for over 10 percent of existing homes sales instead of the 2 to 4 percent of a more healthy Tucson housing market.”

Still, the lower number of foreclosures gave homebuilders a bump in confidence.

The year closed out with 2,697 single-family residential permits — a 24 percent increase over 2015.

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“Homebuilders opened 40 new communities that offered buyers many new choices all over town and across all price points,” Kneup noted. “The existing home market improved as fewer foreclosures came to the market, giving more homeowners the mobility to see their existing homes and move up to a home better suited for their current needs.”

She said the Southern Arizona Home Builders Association’s “buy new” initiative, which kicked off last year, also had an impact

“That really gave homebuyers the resources they needed to better understand the value of buying a new home,” Kneup said.

The program — Buynewtucson.com — highlights the energy efficiency of new homes and offers Realtors information on pending developments to promote new-home sales.

Land brokers predict even more housing activity in 2017 and 2018.

“Not only was 2016 a very strong year in residential permits and local economic news, but we have actually been improving steadily for the past five years,” said Will White, with Land Advisors Organization. “We are seeing very strong demand from homebuilders for land and lots in the southeast, Vail and north Marana areas as they have become increasingly optimistic about Tucson’s current state and future potential.

“It is no longer a discussion of ‘if’; it is now ‘how quickly can the land be prepared?’”