Chuck Corriere, MBA
Growth will actually happen in Southern Arizona.
What’s driving growth? The numbers behind the coming Multi-Million Increase in one of the strongest housing markets in U.S. history. The Mortgage Bankers Association (MBA) Expects between 13.9 million and 15.9 million of additional households will be formed by 2024.
The Tucson Commercial Round Table was founded about 40 years ago and they meet twice monthly. They accepted me as a member in 2005. We discuss what’s going on in the market and properties which have sold or will be offered for sale or lease. The ladies and gents in the meeting are upbeat and positive. I don’t have a lot of statistics from the group but I do have a sense of the market even though there are only 40 of us who attend my take-away from the meetings is optimistic.
When I started this Newsletter I looked for market trends and that’s when I discovered Tucson doesn’t have a trend yet so I’m relying on my ‘gut’ when I describe what’s happening here.
A bright spot in this market is LAND. I’m seeing more land deals closing lately than there have been for several years. More calls inquiring about land, more offers, more escrows and more closings. Yeah, it’s anecdotal and not statistically relevant but that’s how it ‘feels’ to me.
The commercial market in Tucson is improving. Every month there are new deals discussed and the number of deals seems to be increasing. Albeit slowly. Tucson isn’t Phoenix nor is it Denver where the markets seem to be booming. Tucson is “The OLD Pueblo” and old is how the markets are. I’ll explain…
Here’s some actual data: Tucson’s housing market is a balanced market as of August of 2015. By ‘balanced’ I mean there are as many residential homes on the market as are being sold each month. It’s a common measure of any metropolitan market in the U.S. When there are more units on the market than are being absorbed (sold) in a given month the market is called a buyers’ market. More supply than demand. Makes sense, right? When there are more units purchased than the inventory on the market there’s more demand than supply. Hence, it’s a seller’s market.
Phoenix is a seller’s market and so is Denver and many-many markets in the U.S. Tucson’s commercial market follows the residential market. We’re not a sellers’ market. And in our market that’s OK. California, Texas, Colorado and many more markets view Tucson as a great place to buy. The CAP rates here are almost double the rates in California. I get calls every day from there about properties here. The buyers’ and brokers I talk to are excited about our market and they buy properties here.
Too often our properties look better on paper than in person. Tucson has an abundance of ‘older’ properties. They were built in the 1950’s, 60’s and 70’s. Owners haven’t kept up with maintenance as they should have. As a result some of the deals fall apart during the inspection period. “The OLD Pueblo” and we’re not getting any younger.
And that’s how I see it.
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