Douglas Trudeau’s Blog

I predicted back in November 2008 that June sales for 2009 would be approximately 1,036. For most of the year my predictions were off by 20-30 home sales. Sales were in reality 20-30 below predicted sales from January through May. June was another story.

Traditionally June home sales in the Tucson real estate market are lower than May. Not in 2009. Remember, I predicted 1,036. Actual reported sales is 1,147. That is 111 more sales than anticipated. I didn’t see that one coming. The last time we saw a spike in June sales was in 2005 during the frenzy of sales that created today’s down market.

What does all this mean? Right now there are 2,395 homes under contract out of the 8,491 homes that were put on the market. That leaves 6,096 homes available without offers on them. With the current market and average monthly sales for 2009 that would mean there are roughly 6.9 months of inventory. As the number of home available (inventory) slowly continues to drop and sales continue the market is heading toward correcting itself. Not there yet, but we are headed in the right direction. The good news  is that we aren’t getting into deeper trouble in the market. How long it takes to return to normal depends on buyer confidence, which is still low. For each home sold there is a ripple effect; i.e., sales of refrigerators, washers, dryers, furniture, curtains, landscaping, etc. Each home sale leads to more sales in other related industries. So, home sales are key to our recovery. The sales are out there, buyers who qualify just need to buy. Hesitation is hurting the economy.

There is one danger lurking in the shadows, though. Barney Frank and company who failed to regulate the market in the first place is suggesting loosening the requirements for home loans. Not sticking to guidelines and too many sub-primes loans is what got us into this mess in the first place. If he gets his way, we could end up repeating what we just went through over the past two years, only worse. What in the world is he thinking? That one we can see coming. Proof that another village has been robbed (of their village idiot).

Being a business major its hard for me to stay away from statistics forever. The MLS finally has a President who understands how to report valuable information. Oddly enough the information is disseminated faster as well. Forget the fact that she is the designated broker for Tierra Antigua Realty, the company where I work. Was I kissing up or what. Enough of that.

First, lets look at the number of homes available on the market. The number is steadily declining. In fact this number has not seen an increase since January 2009. Wait, we always see an increase in January. So if we go back to the last real increase that would be September of 2008, peaked in November, dropped again in December. That’s nearly six months of declining inventory. The steepest months have been April through May. All in all its an approximate 40% decrease since the highest month of April 2007 when we had over 10,000 homes for sale. In and of istslf this is not enough information.

Second, the number of pending sales. Each month since January that number has increased. But wait, it always increases from January through May. Plus it is lower than the numbers we saw in 2008. So, not much there, right? We’re all in agreement.

Third numbers to consider are the absorption rate. What in the world is an absorption rate you might ask? The absorption rate is an indicator of how fast supply is being taken up by demand. Say you have an inventory of 1,000 baseballs to sell with 300 selling each month. If no other baseballs were added to the inventory the absorption rate would be roughly 30%. Which would mean that you would have just over 3 months of inventory. Now if you are at the beginning of baseball season, that could be a bad thing. If its post season, it could be a good thing. With me now?

In December the absorption rate was 8.9%, in May it went up to 20.0%. Do the math. So, how does that compare to 2008. Well in December 2007 the rate was 9.2%, slightly higher that December 2008. Not good you might think? The absorption rate in 2008 was 17.4% in May 2008, and 20.0% in 2009. Not a real significant increase, however heading in the right direction. The desired range is 25-30%. Below that, and homes not moving. Above, like the 35-62% we experienced in 2004 and 2005, and you have sky rocketing prices. Need I say more?

What does all this mean to me if I am a home-buyer? It means that there are indications that the bottom has been reached and we are heading back to recovery. If we follow seasonal trends, which we have been to varying degrees, we are months if not weeks away from seeing the end to a bleak housing market in the Tucson area. Does this mean the same is in effect around the US. I doubt it. Its most likely regional. Which for Tucson means we have a healthier market. For those who are sitting on the fence post looking to buy in Tucson, the old saying of woulda, shoulda, coulda is right around the corner.

One of my favorite golf courses in all of Greater Tucson is Randolf North Municipal Golf Course

Randolph North Municipal Golf Course was the former home of the PING/Welch’s Championship LPGA Golf Tournament and has been the site for PGA tournaments from 1979 through 1990.   In the past it was the site of the PGA Seiko Tucson Match Play Championship and the PGA Joe Garagiola Tucson Open. Randolph was once touted as one of the best municipal courses in the country. Located in central Tucson, Randolph is easily accessible from any part of Tucson.

The course setting is a scenic with several tall trees, lush fairways, and a beautiful view of the mountains surrounding Tucson.
The fairways are forgiving. You can break out those $4 golf balls here. You forget that you are in the heart of Tucson on the inner fairways and holes.

Most noted for its mature vegetation including tall eucalyptus trees, pines, palms, and numerous plants. The layout is a typical country club design with tree lined fairways and parallel holes. The course features water hazards, long fairways, and greens that vary from relatively easy to severely sloped or tiered, and from small to large.

Clear the water off the tee on the 9th and 18th holes then lay up before the green.

The water hazards aren’t over yet. There’s more before the green. The bottom of the water hazard at the end of these fairways are lined with golf balls from those daring manly shots. The 9^th has 2 before the green.

If you use a SkyCaddie® like me, you’ll know how far to hit for your lay up. You just saved that $4 ball from Neptune’s depths. There is nothing better than taking the guesswork out of how far to hit your shots. On the 18th hole know that there are two water hazards near the green. You think you cleared one, only to fall prey to the second hazard. If you hit a slice off the tee on the 18th, good luck finding your ball in the chipping area. You may be hunting for your ball amongst several dozen.

Off the 10th tee across the water and running alongside the 18th fairway is one of the best the chipping areas in Tucson with 4 greens, a sand trap and room to work on your short game from 10 yards to 150 yards. The first green is over a sand trap, perfect for those finesse chip shots. Second is the a 75 yard chip and pitch green. Third is the 150 yard shot onto an over-sized green. Last, and where slices off the 18th come in is the 100 yard practice green for dropping those soft

Don’t let the raccoons, ducks and coyotes interrupt your early morning practice. The driving range on the south side of the complex near Dell Urich (next golf course blog) gives you a chance to find your game for the day. Four practice greens spread out from the driving range to the 10th tee box give you a chance to work on your putting. Randolph Golf Course is truly one of the two best municipal golf courses in Tucson.

While going through the MLS looking for properties along golf courses I was not impressed with what I saw. Now keep in mind, all of these properties are listed as being on or next to a golf course.

First home is in a low income part of town near a municipal golf course. The community has nothing to do with the golf course itself. There is a 12 foot high chain link fence separating homes from this municipal golf course. Yet, the Agent listed it as being on a golf course. Stretch of the imagination to say the least.

Second home, on a community not within 5 miles of a golf course, yet listed as such. Maybe with a big screen TV turned to the Golf Channel…a far stretch of the imagination.

Third home, listed as on the golf course…right? If you eliminate the two rows of homes between it and the golf course…perhaps.

Fourth home, two block away from a baseball park. Neasest golf course, 3 miles away.

Fifth one, busy street and 100 yards between the house and the golf course.

Sloppy, sloppy, sloppy. Buyer confidence is low as it is, then we have Realtors who are being sloppy about their business. Maybe I’m too picky, but I prefer meticulousness and accuracy to sloppiness. I like to double check listings to make sure my clients and the home is represented correctly. Its hard to send information to clients when the listing information isn’t accurate or is misleading.

On the positive side, I did find several homes that backed up to golf courses. Some were really nice. The kind you want to show to clients just to see it yourself.

This is one I showed last year. Too bad its not on the market now. I did see some that I liked though. Anybody want to go see them?

I hope you have a safe Memorial Day. Remember the good things about those whom we have lost. Honor their memory.

Share their names with those who did not know them. I share with you Robert V. Nogales, MIA, Korean War, March 5^th, 1953, Little Gibraltar Hill 355.

He was my wife’s uncle and god-father. His name is on the KoreanWar Memorial here in Tucson located at Ajo Way across from the TEP ball park.

We visited several memorials Sunday throughout Tucson; downtown Presidio where there is a wall honoring Viet Nam Veterans as well as a monument dedicated to the Battle of the Bulge.

There we saw the name of Mike Solano. My wife said Mike used to sell tamales for her mom.

We also visited South Lawn where we talked to some Viet Nam Vets and paid our respects to the parents of Joshua Lucero as they stood over his grave site.

I share one more thing with you, it hangs on my wall and reads,”The Nation Which Forgets Its Defenders Will Itself Be Forgotten…In Memory of Our Troops…Defenders of Our Freedom…Fallen Heroes.”

Please take time tomorrow to share the memories of those whom we have lost. Please remember those who gave all.

As we move into the Memorial Day weekend I wonder how many Americans remember why we have this holiday? I am reminded daily of why when I enter my office at home. On the wall is a large picture of four Marines raising the flag at Iwo Jima. Beneath is a patch with the symbols of all our Military branches with the saying, “The Nation Which Forgets Its Defenders Will Itself Be Forgotten…In Memory of Our Troops…Defenders of Our Freedom…Fallen Heroes.”

How many know the history of Memorial Day? How many know how to observe Memorial Day in a way that honors our fallen heroes? Its more than beer and barbecues. Its a time to refelect, a time to remember, at time to be humble to those who have paid the ultimate sacrifice for our freedom.

I am humbled and honored to know that we have such brave young men and women who put country and their fellow servicemen before themselves. I am humbled by their moments of courage.

Welcome to Douglas Trudeau’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Tucson.