Tucson: real estate gem of the desert?

Despite 'emptiest city' label, locale posts impressive growth in jobs, home sales

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Despite 'emptiest city' label, locale posts impressive growth in jobs, home sales

Steve Bergsman
Inman News®

About six years ago, an economist with an unusually pithy sense of humor labeled the four states hit hardest by the recession -- California, Arizona, Nevada and Florida -- as the "sand states." And, if you think of it, the label makes sense, as California and Florida boast sandy beaches while Arizona and Nevada are sandy desert locales.

The trouble is, the label, while eye-catching, was misconstrued. While Florida was a total mess due to the mortgage blowup and subsequent foreclosure crisis, in California the deep problems were more localized to the Central Valley and Inland Empire. In Nevada, the crush really happened in Las Vegas, while the heart of the crisis in Arizona seemed to be in Phoenix metro area.

Living in Arizona and always on the lookout for what the national news has to say about us desert dwellers, I still can find almost a story a day about all the bad things that have happened to the Phoenix metro, which we locally call the Valley of the Sun.

The metro is home to Arizona's largest city, Phoenix; the third-largest city, Mesa; and probably the fourth, fifth, sixth -- all the way to 10. It's Tucson, the No. 2 city, that gets little notice, although with a population greater than 520,000 the city ranks as the 32nd-largest in the nation

The 118 miles between Tucson and Phoenix put it beyond the reach of economists looking for bad things to say about the formerly fast-growing Southwestern state. That was until recently, when I noticed Tucson popping up on different economic reports.

However, since the city is such a newbie to economic scrutiny, so far no consensus seems to have gelled, and readers are left with a push-pull effect. Has Tucson followed the other big desert cities -- Phoenix and Las Vegas -- into the economic maelstrom, or not?

It really depends on whom you believe.

According to a recent CNBC/Yahoo Real Estate story, Tucson ranks No. 1 as the country's "emptiest" city, with rental vacancies at 15.9 percent (No. 7 in the country) and homeowner vacancy at 6.8 percent (No. 1 in the country) as of the second quarter of 2011.

On the other hand, something called The Fiscal Times in November listed Tucson as the U.S. city with the sixth-best job-growth rate in the country, at 2.6 percent. At a time when the national jobless rate was close to 10 percent, Tucson stood at 8 percent.

Tucson shares the distinction of being on both lists with much bigger Houston, which has been the fastest-growing big city in the country over the past decade. That should tell you something about one of those lists.

In any case, I thought I would check in with a couple of local sources to see exactly what was going on in Tucson.

The "emptiest homes" article was flawed because Tucson has a high amount of homes that are owned by winter visitors, which show up as nonoccupied, said Greg Hollman, president of the Tucson Association of Realtors and an agent with Coldwell Banker Residential Brokerage.

"In general, the Tucson market is moving through our REOs ("real estate owned" properties -- mostly owned by lenders) and short sales. This has skewered our median and average sale price, but unit-wise we are really moving on."

In October 2010 the median sales price for a home in Tucson was $140,000, and for October 2011 it was $120,000.

"You have to put that in perspective," Hollman said. "We have a much larger volume of REO properties at the lower purchase prices than at the upper purchase prices, so it makes a difference."

Those Tucson REO properties have been flying out the door. "REO properties have been moving quickly, sometimes with multiple offers," Hollman said.

This has made an impact on total Tucson residential sales. "2011 unit sales through October showed a 12.8 percent increase over 2010, with 10,815 homes sold as compared to 9,588 homes sold through October (in 2010).

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