Realty signs on the 3600 block of North Country Club Road are just one indication of the competition in residences currently for sale.

james s. wood / arizona daily star

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Tempted by a generous price cut, Cynthia Saenz couldn't resist buying a new house in Vail about eight months ago.

But after reaping benefits on the buyers' side of the market, Saenz is languishing on the sellers' side.

She put her Southeast Side house up for sale five months ago and has reduced the 1,800-square-foot home's price from $230,000 to $200,000. Still, it hasn't sold.

Saenz's house is among a record number of properties on the market in the Tucson area.

An explosion of home-building and numerous condo conversions during the boom of a few years ago have led to an unprecedented glut of homes now that the market has cooled, according to real estate executives and industry analysts. Investors who helped propel the boom are dumping properties and going elsewhere, they said.

Many homes are being sold only with the help of price reductions and incentives.

Several industry observers predict the market will pick up within a year. But their hopes all hinge on whether the overabundance of homes can be reduced.

"Three months ago, we thought we would see some degradation in the number of units in inventory, but it's going up," said John Strobeck, a Tucson housing market consultant. "That's not a positive sign."

If inventory stays high or continues to rise, that "could lengthen the type of market that we're seeing currently," he said.

Residential listings averaged 9,925 at the end of January, February and March, according to the Tucson Association of Realtors Multiple Listing Service, nearly triple the average for the same quarter in 2005, the peak year for sales. In March alone, the number hit a record of 10,185.

Sales for the quarter were down about 18 percent from the same three months in 2005, according to the Realtor statistics. Meanwhile, the average number of days on the market for the quarter is 67, up 27 days from the same time in 2005.

To help get more sales moving, the Tucson Association of Realtors has started weekly sessions for Realtors to tour groups of homes and network together. During the first session, held Friday, Realtors toured a group of homes in central Tucson.

OnSite Realty owner Caroline Auza thinks she can trace the oversupply in the market to just one day in 2005. On March 16 that year, a 120-unit converted condominium project she was handling, Tierra Catalina near Skyline and Campbell, sold out in about three hours.

"After that, the supply (of condos) just quadrupled" as investors poured money into Tucson condo conversion projects, she said.

"It was the best thing and the worst thing that could have happened to Tucson," she said.

Analysts point to a similarly timed gush of investment in single-family homes on the outskirts of Tucson.

But as builders responded to boom-level demand, the market suddenly slowed, said Ben Sage, Arizona director for Houston-based research firm Metrostudy.

"At the same time, a lot of people who wanted to buy a home were putting their existing home on the market," he said. "We had supply growing on both the resale side and the new-home side."

Now that the market has slowed and shifted in favor of buyers, many sellers are making the situation worse by holding out for top dollar, analysts said.

"In this market, you have a number of sellers who have a greatly inflated perception of what their home is worth," said Marshall Vest, an economist at the University of Arizona's Eller College of Management. "Eventually, those sellers will either come to their senses and lower their asking price, or they're going to take the homes off the market."

A large number of inexperienced real estate agents who started during the boom years — and promise sellers unrealistic prices — aren't helping, real estate executives said.

"I'm not going to blame the market on that, but it has an impact," said Laura Mance, regional vice president of Coldwell Banker Residential Brokerage. "There may be certain things they didn't learn along the way."

Also potentially adding to the problem, said Tucson buyers' agent Jon Quist: Many of the buyers he represents are not interested in far-flung, so-called "cookie-cutter" developments, which sprung up in response to investor demand. Instead, those buyers — who are often second-home buyers or retirees from out of state — are looking for homes near amenities such as fine dining or shopping, he said.

"I don't sell these real cookie-cutter-type houses," said Quist. "There could be (for sale) signs like a forest in those neighborhoods."

But despite the slowdown in the market, real estate executives and analysts say there is at least one strong vital sign. Although price reductions abound in real estate ads, the median sale price here has yet to show a sustained retreat — unlike in markets such as the Northeast and parts of the Midwest.

The median price for the past quarter, about $220,000, remained unchanged from the same time in 2006, and is up about 20 percent from 2005, reports the Multiple Listing Service.

According to a monthly newsletter published by Strobeck, the median price for new homes dropped almost 5 percent in March compared to the same month in 2006, but the median price for homes on the resale market was up slightly.

"This is going on all over the country, and relatively speaking, Tucson is doing better," said Sage. "I think we can presume that's because of the strong economy" and population increases.

Analysts say the market could worsen if not enough buyers can be found for homes on the market, or if there is a rash of foreclosures from subprime mortgage holders adding to the supply. Also, as the entire nation grapples with slower sales and dipping prices, there is some risk that migration to the state could be affected, Vest said. But that risk isn't serious, he added.

As a possible worst-case scenario, Vest said prices could fall as much as 10 percent from their peak, although he emphasized that he doesn't expect that to happen.

Even so, that possibility would "not be a reason to panic" in light of the near doubling of home values over the past five years, he said.

Real estate executives say they're already seeing signs of a return to normalcy, including a drop off in new home building permits and a slowdown in new listings. However, the days of boom-level demand and skyrocketing price increases are over, they said.

"I think that we'll remain stable through the end of the year. And then I think appreciation will begin to set back in," said Judy Lowe, executive vice president of Realty Executives.

Saenz, 33, the seller on the Southeast Side, said she isn't too worried about the time it might take to find a buyer.

Her house in Vail is still under construction. And under her deal with the seller, she won't have to make mortgage payments until she moves in.

"I pretty much laid out the way I wanted it, and they said OK," she said.

The average number of homes for sale at the end of January, February and March declined as the real estate market heated up through 2005. Then, after a period of rapid price increases, the market suddenly cooled, and listings exploded.

Our homes sold database shows what houses in your area are selling for at azstarnet.com/homes