Prospective homebuyers hoping for relief from soaring home prices in the Tucson area are likely in for a long wait.
In almost every area of town, home prices increased more than 15%, and nearly 30% in one area, from January 2021 to January 2022.
And the majority of sellers got 100% of the asking price for their home — often substantially more.
Days on the market for a home dropped in half since January 2021 from 42 to 21 in January 2022.
“This is not sustainable,” said Randy Rogers, president of the Tucson Association of Realtors. “We’re a major metro area of over 1 million people and we have about 1,000 homes for sale.”
According to data from the Home Mortgage Disclosure Act, 91.1% of Tucson homebuyers had a home loan approved for about $215,000 in 2020, the latest figures available.
HMDA is a federal act that requires financial institutions to maintain, report and publicly disclose loan-level information about mortgages.
But $215,000 in 2020, much less in today’s market, doesn’t go very far.
Average sales prices for all homes — new and existing — was $303,356 in January 2020 and rose to $422,407 in January 2022.
Rogers said homes in the $250,000 to $300,000 range are getting an average of 27 offers.
“It’s a little unusual to see that,” he said. “And, it’s not just institutional investors but some buyers who sold a home on the West Coast for $2.1 million.”
While increasing mortgage rates might cool some heels, initially the threat of a war between Russia and Ukraine, which is now reality, has Wall Street nervous and investors looking to pull out money for other investments.
“With everything going on in the world, my stock might be in question,” Rogers said. “Now I’m going to look at something more stable, maybe a second home or maybe a larger home.”
Alleviating the housing crunch
The west side of Tucson had the smallest percentage increase in average home prices from January 2021 to January 2022 — a 2.1% rise from $372,335 to $380,248. The boundaries are roughly Interstate 10, west to the Tucson Mountains, north to Avra Valley Road and South to Ajo Way.
The largest percent increase was in the south region, encompassing South Tucson, south of 22nd Street to Pima Mine Road and east of Interstate 19 to Wilmot Road. There, the average home price rose from $194,358 in January 2021 to $251,868 in January 2022 — a 29.6% increase.
In the Oro Valley area, the average home sale was $460,453, a nearly 12% hike in 12 months. And central Tucson, which includes downtown and the University of Arizona, saw average home prices of $351,956 in January 2022 versus $266,739 a year earlier — a 19.6% increase.
“We haven’t seen this kind of increase across the board before,” Rogers said. “But, it’s not just us. It’s across the country.”
He said the solution to the rising housing costs is to build more but pushback from some neighbors when an infill project is proposed creates a challenge for developers.
“We can’t put up a wall around us and say, ‘Don’t come here,’” Rogers said. “There’s a lot of frustration because those who want to help with the housing crunch get turned away or have to go back to the drawing board.
“Until we see a change in that ... we’re going to be in this for a while.”
