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April Ortiz's Blog

By April Ortiz | Agent in Marana, AZ

Inman Special Report: Tucson #4 for Real Estate Investors

10 BEST Markets for Real Estate Investors
Inman News Special Report http://www.inman.com/reports/10-markets-invest/tucson.html


#4 Tucson, Ariz.

Like Phoenix, its larger, more well-known neighbor to the north, Tucson has an abundance of distressed properties. The area had the highest share of foreclosure sales among the 10 markets in fourth-quarter 2010: 45.9 percent. That's a year-over-year increase of 25.5 percent.

"Our housing prices have become extremely reasonable due to the number of short sales and foreclosures that are available," said Jill Knox, president of the Tucson Association of Realtors.

"Right now, I'd say we do have a lot of local investors buying, but typically we get a lot from California and Canada. All price ranges are available, but mostly (investors buy in the) lower ranges due to making the figures work for a profit," Knox added.

The area's median sales price fell 15.3 percent year-over-year in fourth-quarter 2010, to $138,000. That's the second-highest price drop among the 10 markets. Foreclosures garner an average "discount" of 33.2 percent compared to nonforeclosure properties in the area, according to RealtyTrac.  

In order to come up with the discount, RealtyTrac takes a property’s sale price and divides it by the number of square feet in the home, to come up with the average price per square foot. Then it compares the average cost per square foot for properties not in foreclosure, those in foreclosure, and those which have already been repossessed by the banks to come up with the discount rates. The company doesn’t take into account the condition of the property or the type of property (i.e. a condo vs. a detached home).

Home values in Tucson are expected to rise 56.4 percent in the next 10 years, with a projected ROI of 225.2 percent, according to SmartZip data.

Properties in the market move relatively quickly. The median age of for-sale inventory in Tucson was 85 days in March, compared with 108 days nationally, according to Realtor.com.

Unlike Phoenix, Tucson's unemployment rate, 8.5 percent, is below the national average. SmartZip predicts job gains of 29.6 percent over the next 10 years. The area's major employers are Raytheon Missile Systems, the University of Arizona, the state of Arizona, and Davis-Monthan Air Force Base.

"We have a demand for student housing and winter visitor residences and military housing, all of which are appealing to investors," Knox said.

The area's population rose 16.2 percent in the last decade and is expected to grow at an even faster pace over the next 10 years: 29.6 percent, which is the highest rate among the 10 markets.

Tucson, Ariz. Metro U.S.
Population (2010) 980,263 308,745,538
% ch. population (2000-2010) 16.2% 9.7%
10-year projected population growth % 29.6%  
Unemployment rate (March 2011) 8.5% 9.2%
% pt. chg. in unemployment rate (March 2011 vs. March 2010) -0.7% -1%
10-year projected job growth % 29%  
Median sales price (Q4 '10) $138,000 $175,000
% ch. median sales price (Q4 '10 vs. Q4 '09) -15.3% -2.8%
Median list price (March 2011) $175,000 $189,900
% ch. median list price (March 2011 vs. March 2010) -12.1% -4.8%
Projected 10-year appreciation % 56.4%  
% homes affordable at median income (Q4 '10) 84.3% 73.9%
SmartZip Affordability Index 127  
Total cost of ownership/rent ratio 1.04  
Share of foreclosure sales (Q4 2010) 45.9% 26.5%
% ch. share of foreclosure sales (Q4 2010 vs. Q4 2009) 25.5% 4.1%
Average foreclosure discount (Q4 2010) 33.2% 28.2%
% active loans noncurrent (as of March 31, 2011) 9.6% 12%
% active investor loans (as of March 31, 2011) 7.6% 5.5%
SmartZip InvestorScore 57  
10-year return on investment (ROI) % 225.2%  
Median age of inventory on Realtor.com in days (March 2011) 85 108
Search ranking on Realtor.com (March 2011) 70  
Walk Score 50

Comments

By Voices Member,  Thu Jun 23 2011, 14:01
Great article! Tucson is becoming quite the desirable city!

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