EDITION 1

 6 MONTHS ending June 2011

1.0 - SALES ACTIVITY

Oro Valley Sales totaled 391 homes for the first half of 2011, the identical count recorded in 2010. This display shows the very consistent pace of total sales over the last 3 year period and a notable reduction in Active inventory, now standing below the 500 mark. If these two conditions persist for a longer period of time, say the rest of the year, our local market could begin to establish a base from which a rebound could begin. As we have been reporting over the last few years, our  market has been dealing with a significant inventory of distressed homes; the product of investor greed and  poor lending practices, which spawned a financial market implosion that ushered in a bad recession  and  increases in  unemployment which haven’t been seen in many decades. Maybe, just maybe, time is healing many of these economic wounds. When we see some sustained reduction in new listing of distressed properties we could begin to contemplate a better housing environment.

The statistics for the first half of 2011 do not provide much in the way of optimism in this regard, as Bank-Owned (REO) or Short Sale transactions accounted for 28.6% of all  transactions (112 of 391 sales), up from 25.4% in 2010 and 21.7% in 2009. However, the fact that more homeowners are finding themselves in a financial bind, or have lost their home, does not trump the fact that these homes are selling; that is - being bought, rehabbed, and returned to a level of functionality in the community. The total number of homes on-market at the end of June is 16.8% lower than on January 1^st. Inventory levels in the $100,000 and $200,000 price ranges, where REO and Short activity is the highest, are both sitting near a healthy 6 month level. This indicates a general balance between supply and demand has formed, at the lower price levels, just where one would expect it would show first.

ORO VALLEY SALES  (2010 – 2011)

The chart below contains a breakdown of 2010 and 2011 Oro Valley sales for Single Family Residential, Town House, and Condo properties.

One of every three sales thus far in 2011 has occurred at a price below $200,000. In 2006, only 5 years ago, we did not include sales in the $100’s for this report; there just weren’t any to speak of!   This may mean we will see an increase in the local stock of rental properties, which is certainly preferable to a large quantity of vacant homes sitting idle and wasting away.

2.0 - SALES VOLUME - 6 MONTHS

In this section the sales count data is converted into sales dollars, providing a second perspective of market dynamics. The data below displays first half sales dollar volume during the last 3 years, in 4 price groups. The data reports that 6 month sales volume fell by $1 million between ’09 and ‘10, but this year’s total is down by a whopping $15.6 million from ’10 – that’s a 12.6% decline. Sales activity for homes priced above $500,000 continues to be anemic, with only 34 sales recorded this year, down from 43 in 2010. Interest in owning a larger home, in a “more exclusive” community, has obviously lost most of its shine. In an environment of declining market valuations the larger risk of equity loss owning a expensive home is much greater than with a more modest second home, or no second home at all.   

                             Price Range                     $ 2009                         $ 2010                        $ 2011                       11 vs.09

$100-200K                    46.9M                          53.1M                          59.0M                         + 25.7%

$300-400K                    51.4M                        39.6M                          25.0M                          -51.4%

                        $500-600K                      8.2M                          17.9M                         12.9M                         +57.3%

                        $700K+                         18.1M                          12.6M                         10.7M                          -40.9%

                                 6 Month Totals      124.6M         123.2M                        107.6M                          -13.6%

                           < 86.4% of 2011 Total..>       

The decline in sales volume has a second contributing factor, which has become a major problem in our community. As a greater number of homeowners have become financially strapped, or realize they are underwater with their mortgages, their interest and capability to keep up with general maintenance declines. Many of the homes in our best communities are suffering from maintenance neglect; i.e. lack of exterior stucco maintenance, routine exterior repainting, deferred roof maintenance, over grown landscape, mechanical equipment maintenance checks, etc. The large number of vacant, bank-owned properties that have been coming to market are ones that have typically suffered the most neglect,   deterioration, and pilferage. Many of these foreclosed properties are missing all appliances, lighting fixtures, and ceiling fans. We’ve even seen a few where the foreclosed owner removed the A/C equipment, Water Heater, and the Screened Security Doors! Now we’re dealing with more than general price decay, we have to also discount the price for the cost of repairs to return the property to a livable condition. Banks do not do these repairs, or even pursue the frequent criminal actions of the borrower. They just mark-to-market and get it off their inventory book!             

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The growing imbalance of activity in the various price ranges for the 4 year period is quite telling and descriptive.

The chart below provides a running monthly summary of Active Listings, separated into our standard price ranges.

Falling inventory levels are having a positive effect on the time on market until contract acceptance, which has now returned to the 90 – 100 day range.  

The data in the chart above is more relevant in the lower priced categories, where there is a meaningful quantity of data. As noted, sales at the upper end are sparse and just one sale can move the data one way or the other.

Due to the negative price effect of REO and Short Sale activity, we are now witnessing many listings and sales with $/SF values below the $100/SF mark. Many of these properties are selling at levels well below their replacement cost.

5.0 – DISTRESSED PROPERTY ACTIVITY

The charts below provide a view of Oro Valley short and foreclosure, sales in varied price ranges..

 Short and Foreclosed Transaction Summary – 2009

Short and Foreclosed Transaction Summary – 2009

Short and Foreclosed Transaction Summary – 2010

Short and Foreclosed Transaction Summary – 2011

Currently Active & Distressed Listings