Special 2012 Report! Here is the information you are looking for about what was happening in Flagstaff housing in 2011. Inside Flagstaff, the average price paid for a "home" in 2011was $263167 and the median price was $231,000. This compares to the 2010 calendar year statistics of an average of $270,585 and the median price for a "home" was $252,250. This is for all types of homes. More accurately, a single family home has an average sales price of $311,785 this past year as opposed to a our all-time high, which was the 2006 average of $452,200. The median single family home price dropped to $284,950 from $289,900 at the end of 2010. The average townhouse is at $209,478 and a condo is at $147,416. It takes an average of 134 days to sell a home in the past year. Again, this is for the city of Flagstaff for the past 12 months. Rural markets near Flagstaff are slightly different, so please contact me for accurate information in rural areas.
When looked at on a monthly basis, we are still seeing a decline in values when averaged over a 1 year period, but only a slight decline. In single family homes, there was actually a slight increase in average sold values 2011! The median dropped slightly, but the average inched up by about $1400. BUT, this is the first time that I have seen an increase in yearly values of single family homes (when averaged over a 1 year period) in 5 years! This indicates, to me, that we are close to seeing "the bottom" of a declining market. 2011 should go down in history as being that bottom. The difficulty is in the rural areas around Flagstaff. We are still seeing declines in values there in all categories, but that will change slowly also.
Flagstaff and its surrounding communities are still under what many consider a "Buyers Market". By all indicators our market has declined over the last five to six years. We are seeing slight continual price decreases in most housing categories, but nothing like what the media is misrepresenting. The difficult properties to both buy and sell are condos, due to the fact that they are extremely difficult to get lending on. Fannie Mae does not like condos! Also, foreclosures have had an effect on several neighborhoods leading to a decline in the average price paid.
For buyers looking in the Flagstaff area for a home this all means that there are choices when searching for a home and every once in awhile a "good deal" to be had. That said, we are seeing some individual properties sell for less than market value. Mostly bank owned properties and short sales. So now is a good time to buy.
Having been involved with Realtor association and MLS leadership on a local, state and national level, I continuously have conversations with Realtors from various parts of the state and country. Realtors and real estate economists from across the nation and across Arizona all agreed that our markets have continued to decline nationally, regionally and statewide and will continue to do so for a few months yet. We have slowed and we will continue to experience a Buyer's market. However, there is a change brewing in the Metro Phoenix area. Demand is increasing and supply is decreasing. We know what that means, right? And typically, Flagstaff and the rest of Northern Arizona follows Phoenix by several months. Also, there are several factors that are leading to the market we see in the Flagstaff area, which is much STRONGER than most in the U.S.
First, we have experienced less inventory on the market for the greater Flagstaff area this past year. Buyers still have choices, especially in the Townhouse and Condominium markets, but fewer choices. Also, we continue to enjoy very low (the lowest ever!) interest rates. In my work with the National Association of Realtors, I have heard many real estate economists that feel that relatively low interest rates will continue for 5 to 6 more years, barring any unforeseen economic disaster which the U.S. Government has spent 2009 through 2011 staving off.
Secondly, Northern Arizona is greatly impacted by second home buyers from other areas. I heard an estimate that for 2006 (Flagstaff's all time high year for real estate), 57% of Buyers in the Flagstaff area were second or vacation home buyers! Buyers come mostly from the greater metro Phoenix area and especially the Scottsdale and Sun City areas. The greatest impact seems to be from the completion several years ago of the 101 freeway both east and west of Interstate 17. When the completion of the 303 occurs in the west Valley, it will have the same effect. This has made Flagstaff and its surrounding areas 20 minutes to a half hour closer to those trying to escape that blazing metro Phoenix weather!
Another impact, although a smaller one, is the buyer relocating to Flagstaff for its weather and lifestyle. This is a great place to live. Clean air, good schools, wonderful forests and tons to do. We are not seeing much of an increase in population, so relocating buyers may be replacing those that are moving out of the area.
In my opinion, California has a blown-out-of-proportion impact on home prices here. We do see buyers coming in from California, and many of them over-paying and in cash. However, as a percentage of our market they do not have that big of an impact on demand in Northern Arizona. Scottsdale has a much bigger impact on demand than the entire state of California!
So we seem to be in a more normalized market than what we have seen: A frenzied 2004 and 2005, a somewhat slow, but slightly increasing 2006 and a declining market in 2007\ through 2011. The tail end of 2008 and early 2009 had the biggest drop. The end of 2011 is shaping up to have good activity, less inventory, tentative buyers and deals to be had! The current market value of property in the Flagstaff area is roughly equivalent to what it was at this time 2005. But vastly different market conditions.
The Crystal Ball: So, what can we expect for 2012? The beginning of this past year saw more of what we saw in the end of 2010 - less inventory of housing product than the year before and better sales, extremely low interest rates and deals to be had. As 2012 progresses, our market will continue rebounding very slowly with both number of listings available for sale and in actual sales. Remember, 2008 was an election year and 2009 and 10 were different. 2011and 2012 will be recorded as different again. Many of us feel that such negative media attention over the last few years lead to a self-fulfilling prophecy. Now, the media is flat out saying we are past the bottom. By the second quarter of 2012, markets should begin to slowly stabilize and more "normal" market conditions should begin to slowly return. Along with that, Flagstaff's demand for housing product will begin to gradually rise driven primarily by the financial strength of the second home buyer and the availability of "cheap money"…the lowest interest rates EVER in our country.
ZIP Codes: 86001, 86002, 86003, 86004, 86011, 86017, 86018, 86046 Approximate Location Boundaries: Flagstaff, Pinewood (Munds Park), Willaims, Parks and all points in between!
Location Characteristics: 7000 feet closer to heaven! Tall pines, open meadows and cool breezes...
About Gary Nelson:
A life-long resident of Flagstaff, Gary Nelson is an Associate Broker at Realty Executivesof Flagstaff and has been in Real Estate since 1994. He has his CRS, GRI, E-Pro and ABR designations. He has served as chair of the Northern Arizona MLS and was President of the Northern Arizona Association of Realtors in 2001. Also, Gary has served on the Board of Directors of the National Association of Realtors, the Arizona Association of Realtors and the Northern Arizona Building Association. He currently serves on the Board of Directors of the Flagstaff Chamber of Commerce and is active with Toys For Tots of Northern Arizona.
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
