Summer Doldrums

Posted at 4:48 PM, Jun. 8, 2007

Reflecting back over the past couple of weeks, I am now conviced that the summer real estate season is upon us. There will be buyers, but they will be fewer and farther apart. This is the norm and in actuality, it was late in arriving. There have been a number of new residential listings lately albeit in the higher price range of our market. One house is now on its third or forth agent. Go figure! The temperature has been rising and the prospect for grass fires before the summer monsoon looms large. We have been very lucky so far, but we have not had rain for some time. Instead, we have had wind - the norm, the necessity, for a good monsoon season. A month from now it should become green. It is the time to visit if you want to know why so many are choosing the Mountain Empire for their home. The best climate; the best views; and the best people for friends. Our market is holding fairly steady although there has been some softening in land prices. The best values would appear to be in the 10 to 20 acre parcels. The best home prices would be those under $350,000 of which there are both listed and FSBO offerings.

1st Quarter 2007 summary of activity

Posted at 9:00 AM, Apr. 10, 2007

I think I would have to begin by saying that the market is more or less "normal". There seems to be more activity in the housing sector than in land, but the activity shifts back and forth during the year. And, even though the total sales were down versus the previous year, it is down less than the greater Tucson market. People are still looking for that idyllic community to raise their children or to retire. Here are the numbers: Total sales - $6,224,000 down 20% from $7,768,000 in 2006; Homes (6) valued at $2,969,000 versus (7) valued at $2,504,000 in 2006; The median home sale increased to $352,000 from $310,000 and days on market decreased to 87 from 102. --- Land sales (24) were just one less (25) than in 2006, but the total value was down to $3,255,000 from $5,264,000; The average price per acre is now up to $18,850 from $15,500 and the median lot price is $156,750 up from $125,000 the previous year. Finally, time on market remained virtually unchanged at 89 days versus 83 days in 2006. So, what does all this mean: People still want to live here, but not in great numbers and those that do are paying a bit more. If you are a REALTOR(R), life is good. You are selling property and meeting lots of nice new neighbors. If you are a potential buyer, please use a REALTOR(R) to represent you in your purchase. All of us with that designation, subscribe to the National Association of Realtors(R) code of ethics and many of us have one or more continuing eduction designations. That makes us professionals in our field. That should be important to you.

Buyer's Market?

Posted at 9:55 AM, Feb. 10, 2007

Here it is almost the middle of February and winter is behind us. Do you believe that? Do you believe it is a buyer's market in Sonoita, Elgin and Patagonia. Well, winter is not over and it is not really a buyer's market. Is our market different that the rest of the country? Yes, and no. Read on.

Our underlying values are based upon the land values. Since land is generally in short supply due to the large number of ranches and BLM and NFS holdings, the value has a general and steady uptrend. What happens in response to the general economy is the number of buyers actually doing something. So in a hot market like a year or two ago, we have more buyers and more activity. Prices still move in response to supply and demand economics associated with the availability of land. In a slow, or buyer's market, we experience fewer actual buyers.

Currently, we seem to have the normal number of lookers for this season, but contracts are fewer. Prices are steady to up. There is a good selection of land of all sizes and locations, but mostly in Elgin or the two new developments in Patagonia. There is an overabundance of higher priced homes, but there are a number of very nice houses in the under $600,000 price range and even a few under $300,000.

The most significant real estate events recently are: The Short's 580 acres in the crossroads area has sold to a national company. No word on what it will become. And, secondly, the Babocomari ranch announced it will sell off 2,000 acres. Exactly where is not known.

I believe this is the time to buy in our community. Prices are fair and should continue steadily upward. The climate is the best! Come visit us.

Is the Sonoita, Elgin Patagonia Real Estate Market Different?

Posted at 11:00 AM, Oct. 28, 2006

Directly or indirectly we are offten asked the above question. The answer is really "yes". The Mountain Empire as this is often called, is still predominently ranch land. It is perceived as being rural, but it is not remote. Sierra Vista, Nogales and Tucson are all within an easy 35 to 60 minute drive. This fact, and because there is a top rated elementary school in Elgin, is bringing younger families into the communities. But how does this relate to the real estate market. Purchasing property here is definitely affected by the desire for buyers to spend or invest. When there is a nationwide feeling, as there is now, that real estate prices are high, buyers tend to retreat from this market as well as any other market. However, our prices do not respond accordingly, particularly vacant land. At the present time there isn't an oversupply of either land or homes in this market. Thus supply and demand forces are fairly well in balance. This is not necessarily good news for potential buyers as prices are not dropping. Conversely, prices are either stable or increasing, with only minor exceptions. The exceptions are those properties which entered the marketplace much too high and now the owners have come to the realization that the only way to attract any buyers in a slow market is to price realistically. Presently, our market seems to be "normal". New listings, predominantly land, appear on the MLS in ones and twos almost daily. Contracts seem to be written several times a week and walk-in traffic is not bad for the non-tourist time of the year. I would imagine that the agents who have been here for a number of years, will end up participating in their usual number of transactions and with their usual income when 2006 concludes. Stay tuned!

Has the greater Sonoita market slowed?

Posted at 3:22 PM, Jun. 12, 2006

I have recently analyzed the local market through June 9th. There is no question that there are fewer customer contacts than a year ago, but how much different is this activity than what might be considered "normal"?

Looking back to 2003, it appears from the number of contracts that have been written that the market is still pretty good! In addition, time on the market is much shorter. And, on average, properties are selling very close to the asking price.

However, looking at this year versus last, tells a slightly different story: Total sales for land and homes dropped to 59 from 79. The total value of sales has fallen to $12,848,000 from $14,847,000 a year ago.
Putting it all together, I conclude that the market has slowed, but it is still better than in 2003. And, maybe it is like it has been in the past. Those were not bad markets for either buyers or sellers.

Sonoita-Elgin-Patagonia is still a good value. If you are looking for a second home or retirement home, don't pass up this beautiful high grassland. However, be prepared NOT to find exactly what you are looking for as our inventory is low in all catagories. You may have to be either "creative" or patient, if you decide this is to be your destination.

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.

January Newsletter

Posted at 3:41 PM, Jan. 5, 2006

Charlie Kentnor's January 2006 NewsletterCopyright 2006 Realty TimesAll Rights Reserved. Rates, Not Home Prices, Worst Enemy In AffordabilityBy M. Anthony Carr With all the talk of softening markets, many buyers have moved to the sidelines hoping to wait out high prices, believing that lower prices will help them along the path to homeownership or to move up into the house they really want. Instead of prices, buyers should really keep their eyes on interest rates -- the most powerful component of the home-buying process.In a nut shell, if you wait for prices to level and drop while interest rates increase -- your ability to purchase that now-affordable home may have just vanished with interest rates running up along side the price drops. An information sheet came to my desk from a national mortgage company comparing buying power on a household annual income of $100,000 to demonstrate this point and it was quite telling. Now, I know the national median household income is about half that amount, however, the principles are the same of how powerful interest rates affect purchase power. For instance, in this example, if you're waiting for prices to drop $50,000 before you buy, hoping to get a better deal -- well, quit waiting. If interest rates increase as the Mortgage Bankers Association of America forecasts, your payment won't come down with the lower prices. In fact, you may still sit on the sidelines. MBAA is predicting 6.7 percent rates into next year. Even with that level of increase, historically, that rate is some of the lowest rates you'll ever see. However, at that amount, the above buyer will only be able to buy about $399,411 worth of house. Last June (just 5 months ago) that same borrower could have borrowed $450,000 at 5.63 percent on a 30-year fixed mortgage. Neither the buyer's income nor the home price decreased the buyer's buying power -- just the interest rate. Here are the nitty gritty details: The 30-year fixed rate mortgage for $450,000 at 5.63 percent would cost a borrower $2,591.87 per month. For that same borrower waiting for prices to drop, but watching interest rates jump to 6.7 percent, that same $2591.87 will only fund a mortgage of $401,667.91.If you want to see what that would do in a lower financial stratosphere: let's say it's a loan for a $60,000 household budget, instead of $100,000. The purchasing power for this buyer would be roughly $1,550 per month -- that's a loan for $217,024 at 5.63 percent (including $300 for taxes and insurance). That same money at 6.7 percent will only purchase $193,715 -- a difference of roughly $24,000. Two words of advice. To those who are thinking about buying -- look at all your options and run your personal numbers. How long can you wait for prices to reduce while interest rates are on the march upward before you're priced out of your favorite home again. If housing inventory is on the rise in your market area -- then move sooner than later. Smart sellers are willing to negotiate again -- you may be able to get that lower price just by asking for it. Case in point: Just a couple weeks ago in the D.C. market, a Realtor told me of how he saved his buyers nearly $75,000 from sellers who realized they needed to get going instead of hanging on to their price. In essence, make an offer -- the worst that can happen is the seller will counter your offer or reject it. What is it they say? Nothing ventured ... Secondly, if you know you're going to buy -- lock in early and move in on the contract. By locking in you save money by having a lower rate for your mortgage. Some mortgage programs let you lock in for up to 120 days. Average interest rates have risen by more than half a percentage point in just the last 6 months from 5.62 percent to 6.28 percent, according to Mortgage-x.com's rate calendar. Depending where rates go, even one month delay in locking in your rate could make a difference of several hundred dollars on your monthly payment.