The foreclosure freeze & how it affects Tucson home buyers & sellers

It may not surprise anyone to know that Wall Street is blaming the consumer in reaction to the “foreclosure freeze.” The foreclosure freeze is still largely a mystery, and it’s anyone’s guess how it will play out in the larger Tucson, AZ real estate market, in both the short and long term. This article summarizes Wall Street’s reaction to the foreclosure freeze, and it won’t surprise anyone. Wall Street commonly deflects blame from itself, and why not blame the average homeowner. What they don’t take into consideration is that many of the people affected by a foreclosure didn’t want to lose their home. They simply had no means to support their mortgage, whether by a job loss, or a resetting adjustable rate mortgage.

This isn’t the first time in the last three years that foreclosures have been frozen. In February 2008, Henry Paulson froze foreclosures for 30 days to try and figure out one of the worst housing debacles in history. Unfortunately for everyone, the housing debacle seems to have no immediate end in sight.

So what’s a Tucson home buyer or seller to do? Keep on buying, and/or selling!  We can’t allow fear of what may happen stand in the way of our housing needs. As FDR said in his Inaugural speech, “We have nothing to fear, but fear itself.”  Look at the big picture: interest rates are at 50 year lows. Home affordability has increased dramatically in the past five years. The median sales price of a home in Tucson now stands at $150,000. In 2006, it was $225,000. This is a dramatic shift in affordability, without even taking the lower interest rates into consideration.

Buyers need to evaluate their housing needs based on the big picture, and decide if it makes sense for them financially to buy a home. In many cases, owning is now less expensive than renting. If you are planning to hold onto the house for at least five years, it makes sense to buy now because you will ride out the ups and downs of market values. When you buy a home you will get to write off the interest on your mortgage, and best of all- it will be YOUR home- not your landlord’s.

Sellers need to be realistic and see the market for what it is- an opportunity for buyers, but not for sellers. Price and condition are the only two factors that a seller can control, and both need to be in line with buyer’s expectations in order to facilitate a timely sale. In many parts of Tucson, there are over 12 months of inventory on the market. There is in essence, a high level of competition among sellers. The Long Realty Tucson October housing report has just been released, and it is recommended that Tucson home sellers review these market reports before putting their house on the market.