Sonoita - Elgin - Patagonia Real Estate News

Sonoita, AZ real estate - Has the bubble burst?

Posted at 8:53 AM, Apr. 27, 2006

Is the Sonoita-Elgin-Patagonia real estate market immune to what is happening nationally? Is our market running in sync or marching to its own tune? Has our bubble burst?

Historically this market tends to lag what is happening on a national basis and even what is happening in Tucson. The reason is that our buyer profile is slightly different in that the majority of sales do not involve people relocating because of a job change or "moving up" in town. Our buyers are buying a second (third) home or retiring. Even though we have people moving into the area as a result of changing jobs, desiring to raise their children in a rural atmosphere or changing homes in our area, the driving force in terms of price are those folks who are part of the baby boomer generation. So, from this standpoint we are tracking the market nation wide that is dependant upon the spending pattern of the baby boomer. I believe this market is pausing, waiting to see if the bubble has burst so they can take advantage of possibly lower prices.

But our market is not in total synch with the nation, or even Tucson. We generally lag what is happening in those markets some of which has to do with the "tourist" component pool of potential buyers. I also want to mention that our sellers are somewhat different . They are not selling as a result of a job change or desire to move to another area for retirement. We have the best climate and a great lifestyle. Mostly people are selling due to an unexpected event in their life, perhaps medically related. This impacts the available homes we have on the market meaning that we do not always have enough choices for any given buyer. The combination of housing stock and the discretionary capability of our buyer often cuases our market to be out of synch with the nation and with Tucson.

In conclusion, has our bubble burst? This market has participated in an increase in home and land values that is greater than normal over the past 3 years. The past 6 months or so have seen a more rapid escalation in all prices du to sellers observing what has been happening across the country. For example, five acre lots were commonly available for $7,500 or so an acre a year or so ago. Today, we have very few parcels of that size and they are selling for $18,000 and more an acre depending on location, etc.! If history is our guide, we will probably not see much in terms of price reductions, but rather an increase in time on the market. From the buyer's standpoint, the bubble will not have burst and there will be few, if any, "bargains". From the seller's point of view, it may have, but then again, most sellers in this market are very patient. They are generally not motivated to move.

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