Tucson Kent's World

HUD could be causing prices to tumble further as an unintended consequence of its attempts to be fair in assigning properties to listing agents in some communities. 

While a particular community may be geographically close to another city, that city may belong to an MLS system that doesn't really serve the market area that the community belongs to.  Case in point:  Red Rock, Arizona. 

Red Rock is a master-planned community north of Tucson by about 30 minutes.  It really is a bedroom community for the Tucson region.  Residents shop in Marana & Oro Valley in the NW sector of the Tucson Metro.  Nevertheless, there is about a 50/50 split with agents in Casa Grande (which belongs to ARMLS - really serving the greater Phoenix region for the most part), and agents belonging to the Tucson MLS (TARMLS).

From a geographic standpoint, it looks like a fair division of property allocations.  Casa Grande is about the same distance/drive time from Red Rock as Tucson is.  HOWEVER, by doing so, putting these properties into an MLS that really serves a different region causes these properties to languish on the market much longer.  People looking for properties in Red Rock generally see them through Tucson agents...so the homes listed in ARMLS usually go ignored or unnoticed.

We all know that longer time on market results in price reductions.  Appraisals use hard data to help determine value - a government agency directing properties to the wrong market isn't a mitigating factor...it just produces lower appraisals.  People don't see it (agents too), so they don't even know that a property is for sale!  Nothing wrong with the house, nor with the agent listing it - the languishment is simply because it isn't being seen!

I've noticed in the last several months that HUD listings of the same relative size are selling within 30-70 days (depending on condition) for a price in the $60-$75k range when listed by agents working in the Tucson MLS.  Properties listed by agents in Casa Grande have typically lasted 110 days or more before going under contract...and the prices are in the mid-$40's to mid-$50s & $60's.  All because they are handled in an MLS where Red Rock is on the extreme southern end...and not a viable commute for people working in the Phoenix region.  This is NOT because the Casa Grande agents are doing anything wrong - in fact, the ones that I have done business with are working harder to sell Red Rock homes at a lower price, and are relieved when someone finally shows one!

Luckily, TARMLS & ARMLS have a "data share" agreement that allows agents to see info on properties belonging to the other MLS (without agreement of compensation).  When looking on behalf of my clients, I use both systems in order to ensure that they can have all of the choices in Tucson real estate available to them.  When I can find price anomalies similar to the ones in Red Rock, my buyers are happy to save the money.

I know that HUD is trying to be as fair as possible - and applaud that desire.  Unfortunately, an unintended consequence is that they are driving down prices because the asset managers don't understand what region actually serves the market their properties may be in.

There's enough factors contributing to price declines in outlying regions...it is Unfair to have a simple policy accidentally cause more damage to the market.