As the residential real estate market looks for a sign - any sign - the market might start to tick upward, comes the ominous word the Tucson market is being downgraded from a soft market to a distressed market.

"Because of that, Fannie Mae and Freddie Mac will be wanting to protect themselves more by wanting more from the borrowers," said Rosey Koberlein, CEO of Long Companies. "FHA loans may be our new hero."

For her part, Koberlein, speaking at the March 4 Pima County Real Estate Research Council’s 2008 Forecast at the Fox Tucson Theatre, said she believes the Tucson market is already at the bottom and will now run "sideways," as she put it, for a while and start heading back up toward the end of this year.

Koberlein said there were 12,840 units sold in the Multiple Listing Service last year, which was down 18 percent from 2006.

Multifamily real estate had a rough year in 2007. It marked the first time in six years there was a negative absorption - -1,300 units in 2007 - for multifamily housing. The last time there was negative absorption was 2001, when it was -200 units.

Mike Chapman, apartment/investment specialist with CB Richard Ellis, said he believed there were four factors leading to the negative absorption:

• A slowdown in population growth.

• A slowdown in the single-family home market (ironically tied to the downturn in the number of residential construction workers).

• Investors unable to sell homes are renting them and competing with apartments.

• The state’s new employer sanctions law.

"In some areas we have seen skips (leave before their lease agreement is finished) double and even quadruple in December and January as this law has become a reality," Chapman said.

There was no new construction of multi-family projects in 2007, but Chapman said there should be five new projects this year.

Land sales also plummeted 65 percent in 2007 to $179 million worth from $500 million in sales in 2006. This year did not get off to a promising start, with $8 million in sales in January.

Jim Marian, a land specialist with Chapman Lindsey Commercial Real Estate, said the rebound in land sales averaged 130 percent, from valley to peak, in the last four market cycles.

"With 2007 gone, we are one year closer to a turnaround in the Tucson market," Marian said.

In retail, Rick Volk, president of Volk Company, said 2008 will be the year the power centers hit the Tucson market in a big way.

He named six he expects to show the most progress this year:

• Oro Valley Marketplace, at Oracle Road and First Avenue in Oro Valley.

• Tucson Spectrum, at Interstate 19 and Irvington Road on the southeast side.

• The Bridges at South Kino Parkway and East 36^th Street in Tucson.

• Sahuarita Road at I-19 in Sahuarita.

• Houghton Town Center at Houghton and Old Vail roads on the southeast side.

• Barclay Project, at I-10 and the new interchange at Linda Vista Boulevard in Marana.

"The Barclay project will be the largest retail area in the region at 1.7 million square feet when it is done," Volk said.

Pima County Administrator Chuck Huckelberry gave the final overview of the afternoon.

"Things are not as bad as they look," Huckelberry said. "Pima County will continue to grow."

According to studies done for the county, the area needs to plan for another 600,000 residents by 2030, but Huckelberry said finding land won’t be as much of an issue as finding water.

"We are continuing efforts to develop a more sustainable water supply," Huckelberry said. "Some newer communities have efficiency down to 100 gallons per capita, which is great. We are working on infrastructure capacity now."

Pima County launches green building standards

Pima County this month launched Southern Arizona’s first Green Building Program.

The program free, voluntary program offers technical assistance in desert green building practices for participating builders working on new and remodeled homes. It also provides for expedited permit processing and certification for the homes meeting the county’s green building standards and requirements.

This is a result of sustainability goals adopted in May by the county Board of Supervisors.

The county says its program is unique in that it goes further than national green building standards to promote the use of techniques and materials appropriate for the desert southwest.

Information about the county’s program is online at http://www.PimaXpress.com or call Susan Buchan at (520) 740-6892.

Realtors retain more than state average

Despite the downturn in the residential real estate market, the Tucson Association of Realtors didn’t lose as many Realtors as they thought they would this year. In fact, the Tucson association retained more Realtors than associations throughout the rest of the state.

Statewide, the attrition rate for Realtors was about 16 percent. The Tucson association saw it lose 9.95 percent of its members, which is within the range of a typical year when the attrition runs between 7 percent and 10 percent.

The Tucson association’s membership this year stands at 5,907. In planning its budget, the group had anticipated 5,895 members.

Appraiser changes name to avoid ongoing confusion

KB Real Estate Appraisers changed its name to AXIA Real Estate Appraisers, in part to avoid confusion with KB Home.

The company was originally called Kleinman Briefer & Associates, but shortened its name to KB Real Estate Appraisers a few years ago.

AXIA, 5215 N. Sabino Canyon Road, appraises commercial real estate only and has never been affiliated with KB Home.

European-style community begins sales in Oro Valley

Electronic Communities Inc. has opened sales for Ponticello, a new master-planned luxury residential community in the foothills of Oro Valley.

The 250-acre community, that will resemble a European town, is a gated private mesa promising residents a sophisticated resort lifestyle. Accessed only by a private bridge, the community is located between the Santa Catalina Mountains, Catalina State Park, Coronado National Forest and the La Reserve community.

There are 85 estate lots ranging in size from one-third acre to four and three-quarter acres that are priced from $250,000 to $2 million. Early pre-paving discounts are available.

The website for Ponticello is http://www.ponticello.us/ .

Sunrise opens new senior living center

Sunrise Senior Living opened its newest community, Sunrise at River Road, last week.

Located at 4975 N. First Avenue, Sunrise at River Road offers 79 senior-living apartments in a three-story building.

Worth noting

• Dallas-based Voyager Expanded Learning Inc. leased two properties at the Cambric Corporate Center, 1840-1860 E. River Road from Cambric Partners of Tucson. Voyager signed a five-year lease for the 3,827 square feet in suite 100 and a three-year lease for the 9,001 square feet in suite 325 for a total of 12,828 square feet. Bruce A. Suppes represented the tenant.

• Thorourghbred Paint & Body leased 11,700 square-feet of industrial space at 5140 E. 22nd St. from Fletcher Auto & Tire Center. Ron Zimmerman and David Blanchette of Bourn Partners LLC represented both the landlord and tenant.

• Eegee’s leased 2,488 square feet for its 23rd location at the recently remodeled Oracle Gateway, 3872 N. Oracle Road. Craig Finfrock, Watson Chaiyasut and Linda Montani of Commercial Retail Advisors LLC represented the landlord, 3838 Oracle Plaza Joint Venture LLC.

• Los Betos leased the former eegee’s freestanding building at 3567 N Oracle Road for its 15th location in the Tucson region. Craig Finfrock and Watson Chaiyasut of Commercial Retail Advisors LLC represented the landlord, CEO Foods Inc.

• It’s A Grind Coffee leased 1,494 square feet of retail space at Plaza Antigua, 4205-4209 N. Campbell Ave., from Oakdale Farms Inc. Tim Bentley of Bourn Partners LLC represented the tenant. Linda Montani of Commercial Retail Advisors represented the landlord.

E-mail items for this feature to news@azbiz.com. Real Estate & Construction appears weekly.