Tucson’s residential real-estate market improved by most measures in 2013, with gains in home sales and prices.

But the market is still far from its pre-recession boom, or even what’s considered a normal market, and industry experts see only gradual improvement in 2014 as foreclosures continue to weigh heavily on the market.

“We’re certainly not where we’d like to be, but as far as our volume and average prices increasing, that is good,” said Kimberly Clifton, owner of Tierra Antigua Realty and president of the Tucson Association of Realtors Multiple Listing Service.

Foreclosure sales are still tamping down prices in the resale home market, though the number of notices of trustee’s sales fell 40 percent last year.

“That’s huge, especially when Tucson has been ranked in the top 10 or top 15 of places (for foreclosures),” Clifton said.

Foreclosures and short sales — where the seller and lender accept less than the mortgage balance – drag down prices overall.

A local real-estate analyst said there won’t be a significant increase in resale home prices until foreclosures drop to a normal level.

“We have largely recovered in our volumes in the resale market and right now it’s kind of just a matter of absorbing those foreclosures,” said Ginger Kneup, owner of Bright Future Real Estate Research in Sahuarita.

“We look at the appreciation not being as much as we would like it to be, but the progress is kind of underlying that. There’s an undercurrent of weeding through these foreclosures, and we can’t really move things forward until that’s done.”

Some experts predicted a major wave of home foreclosure in 2012 and 2013 as lenders had held back amid expanded loan-workout programs and in some cases, mandates that lenders revamp their foreclosure practices.

But that surge never materialized. Instead, foreclosure rates have fallen but remain historically high.

Clifton and Kneup said that may be partly because many lenders have stepped up efforts to work with homeowners to avert foreclosure.

“Lenders learned over the last five years that working out the loans is far preferable to foreclosing on the loans,” Kneup said.

“I think there was some idea that there was this holdback (by lenders), and we’re not really seeing that,” Clifton said. “I think what has happened is that the process has really smoothed out, so to speak.”

Meanwhile, investors are finding it harder to fix-and-flip foreclosure homes, Clifton said.

“There have always been foreclosure and agents that specialized in foreclosures, but now instead of three or four guys down at the courthouse steps, now there’s 30,” she said. “Everyone wants to make a quick buck and the problem right now is, especially in the investor market, there are fewer and fewer homes that are selling with a high margin, which is a good thing for the consumer, quite honestly.”

While higher inventories usually create a buyer’s market, the market remains uneven, Clifton said.

“We’re not in a buyer’s or a seller’s market right now,” she said. “There is a good amount of inventory, but it depends on the price range you’re in, or the area you’re looking for. If you’re looking in the northwest, there’s a ton of homes for sale. Other areas, it’s much less.”

Clifton said she expects more of the same in 2014.

“I think we’re going to continue to see an improvement, but it’s not going to be drastic, and I hope for a steady improvement,” she said.

Kneup, who tracks new-home building permits and sale closings as well as the resale market, said she expects permit volume to rise 10 to 15 percent this year, as several new subdivisions open and others fill out.

The 2,250 new-home permits pulled in 2013 fell 200 short of Kneup’s forecast, but closings were only three less than she forecast.

Kneup attributed the lower permit volume to the absorption of the most desirable lots. Homebuilders pull a few permits for model and speculative homes, but most permits aren’t pulled until a lot is picked and a deal is signed, she said.

“As you get more subdivisions open, you create more excitement, and the more options that are available in the market, the more buyers take an interest in the new home market, and that’s going to help pull people out of the resale market,” she said.

With more lots coming on the market, Kneup said an increase of a few hundred permits this year doesn’t seem unreasonable, while a decline seems unlikely.

“I think we’re done going backwards,” she said.

For the overall housing market, much depends on the health of the economy overall, Kneup said.

“What we really need to see happen locally is job growth,” she said. “The bottom line is, there is a strong tie between housing growth and population growth, and population growth is driven by job growth. So without that underpinning of job growth, our housing growth is going to remain at kind of a slow and steady pace.”

“We’re about where we were at in 2003,” Clifton said. “We are digging out of a deep hole, but we’re moving in the right direction.”

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.