Tucson Withstands Downward Curve in Domestic Housing Gross Revenue
Below is a MRR and PLR article in category Business -> subcategory Sales.
Tucson Resilient Amidst Decline in National Housing Market
Summary
Despite a significant drop in nationwide new home orders and sales, Tucson remains strong. The city issued 1,644 permits in the first two months of 2006, slightly surpassing the previous year's record. This resilience contrasts sharply with the Western U.S., which saw a 29% decline.
Tucson’s Robust Market
Despite a 10.5% slump in nationwide new home orders, Tucson's housing market showed remarkable resilience. The city issued 1,644 permits in the first two months of 2006, slightly higher than the 1,622 permits issued during the same period in 2005. This strength stands in contrast to the 29% decline in the Western U.S. market.
According to the Southern Arizona Housing Market Letter by analyst John Strobeck of Bright Future Business Consultants, new housing closings also improved, reaching 1,180 in early 2006. This surpassed the previous year's 1,149 closings. In contrast, resales dropped by 18%, from 3,334 to 2,744 in the same timeframe.
Price Increases and Affordability Challenges
While the national housing market slowed, Tucson defied the trend with rising average and median prices. By the end of February, the average home price increased to $283,487, up from $277,999 in January. Resale prices rose to $220,000 on average, with a median of $259,085, highlighting affordability concerns.
Nationwide, rising interest rates?"from 6.15% in January to 6.25% in February?"have discouraged some potential buyers. In Tucson, only 19.2% of new and 42% of resale homes are priced under $200,000. Meanwhile, 23.7% of new and 38% of resale homes exceed $300,000.
Speculative Construction and Market Risks
Strobeck anticipates a cooling in the new home market as resale inventory grows and demand wanes. By February's end, there were 745 spec homes under construction, equivalent to a one-month supply. This surge in speculative building may influence pricing and market dynamics.
While spec home construction offers quicker availability compared to the six to nine-month waits in 2005, caution is advised. Excess unsold spec homes could impact prices, making the market less profitable for builders. Quick possession is attractive but comes with risks.
Strobeck emphasized the need for caution, warning that being overstocked with spec homes could be costly. He noted that although rapid availability is appealing, it could lead to market saturation and reduced profitability.
You can find the original non-AI version of this article here: Tucson Withstands Downward Curve in Domestic Housing Gross Revenue.
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