Heritage Square

Bring your jackets and blankets for the opening show sponsored by Flagstaff's Downtown Business Association, Friday night at dusk at Heritage Square. The movie is Disney's Enchanted. The Flagstaff High School band will play beginning at 6 p.m. and the movie begins at sundown.

Saturday afternoon you can experience live traditional Mexican dance at Heritage Square beginning at 2:30. Or take in a whole day of Cinco de Mayo celebration activities in the Sunnyside neighborhood.

There will be dance performances by Canyon Movement Company Friday night and Saturday afternoon at NAU's Studio Theatre. Inspired by the beautiful, artistic quilts of Gee's Bend, Alabama, Canyon Movement Company has created dances reflecting the time and place represented by those quilts. Experience the story of the women who live there and how they survived the oppression, poverty and difficulties of the time. Click here for details on the performances.

Saturday is National Astronomy Day! You can celebrate at Flagstaff's historic Lowell Observatory, where telescope viewing, indoor presentations, historic exhibits, and prize giveaways will begin at 5:30 p.m.. At 7 p.m. Lowell docent Howard Israel presents, Myths & Legends of the Sky.

Of course, the streets and downtown will be filled this weekend with NAU graduates and their families -- this is Graduation Weekend at Northern Arizona University. Congratulations 2008 grads!

Initial Jobless Claims were reported at 365,000, slightly below expectations of 375,000.  The more closely watched four-week average of Claims edged higher to 367,500.  This not-so-good read on the labor market helped Bonds improve from their worst levels of the day. 

As expected, The Bank of England and the European Central Bank (ECB) have left their benchmark interest rates unchanged today as they also cope with inflation pressures and a slowing European economy.  

In the absence of market moving news this week, we have been seeing Mortgage Bonds respond to the action in the Stock market as well as technical factors.  Yesterday, the Dow closed below the psychological 13,000 level, and Mortgage Bonds responded by moving higher.  Should Stocks look to regain their footing after yesterday's losses, Mortgage Bonds may give back some of yesterday's gains.  From a technical standpoint, the Bond continues to ride sideways above a layer of support at the 50 and 100-day Moving Averages and at the moment, prices have popped above the 25-day MA.  For now, we will continue to float.

At the end of the month, Fannie Mae will adopt higher minimum down payments and credit scores for borrowers with a past foreclosure. The government-sponsored enterprise already has boosted the time period for these borrowers to re-establish their credit to five years from four years. While exceptions could be made for borrowers in hardship situations, Marianne Sullivan, senior vice president of single-family credit policy and risk management at Fannie Mae, says those who had the ability to pay but walked away from their homes should be treated differently than those who met their payment obligations. Additionally, Sullivan says Fannie Mae will make it more difficult for borrowers to transform their current residences into rentals and purchase new homes to discourage them from walking away from the existing home after the transaction closes. Fannie Mae is making these changes as Congress considers passing legislation that would allow struggling borrowers to refinance into FHA loans after their lenders write down a portion of their mortgages, and the mortgage industry is pushing for speculators to be barred from the program. Former Mortgage Bankers Association chair Regina Lowrie asks, "Why should a servicer take a haircut or have a cram-down for any borrower that truly has the ability to pay?" Source: American Banker

Two weeks ago we wrote...." But in this case the Fed may decide that lowering rates one more time could actually hurt. Yes, the Fed faces a tough decision---and no move or a smaller rate cut could be the result." Well, we could not have been more on-target with this theory. Obviously the Federal Reserve Board opted for a smaller rate cut and the notes released after the meeting this past week indicated that this may indeed be the last cut for some time. Why is the Fed about to end its rate-cutting campaign?

There are several possible explanations. For one, short term rates are so low there is not much room for more on the downside. If something bad happens, the Fed needs more ammunition in reserve. Secondly, higher oil and food prices make higher inflation as much a concern as a slower economy. Finally, the Fed may feel that the worst news is behind us. Though the economic news released in the past week was weak at best, the bottom line is that economic growth was positive. This is better than a recession. On the other hand, preliminary readings are subject to significant revisions.

It’s getting harder for renters to find an affordable place to live with rents rising and availability falling. The median asking rate for rentals has jumped 14 percent, from $591 a month during the fourth quarter of 2003 to $673 a month in 2007, according to the U.S. Census Bureau. Vacancy rates are down from last year, and average rent is projected to rise 5.3 percent in 2008, up from a 3.1 percent increase in 2007, according to the National Association of Realtors. "We've seen demand for rental housing go up," says Mark Obrinsky, chief economist at the National Multi Housing Council. "The ownership side is retrenching, and we're seeing the demand going to the rental side. There's a lot of hesitancy to buy. Others can't get (financing), so they're remaining renters longer." Source: Rentometer and USA Today

Ambicion -- Featured Band - Noon Saturday

The Sunnyside Neighborhood Association of Flagstaff will host its 10th annual Cinco de Mayo Cultural Celebration, beginning Friday evening and continuing through Sunday.   Enjoy a parade Saturday beginning at 10:00 a.m. Throughout the weekend, find Mariachi music, atisan craft booths, Folkloric dancers, food, car and bike shows, and carnival rides. Click here for a schedule of stage performances.

Cinco de Mayo is a traditional Mexican victory celebration. In the United States, Cinco de Mayo has taken on significance beyond that in Mexico. It has long been celebrated throughout the Southwestern U.S., but is also celebrated in Mexican-American communities throughout the country as a cultural event.

Have fun in Flagstaff this weekend!

Naysayers are nothing new when it comes to real estate. Now a Scottsdale, AZ RE/MAX agent has compiled some of the best of the worst real estate market predictions.  I offer them here for your mid-week entertainment.

These comments mirror the frequent "fear factor" news we hear almost daily in Flagstaff and elsewhere. The good news is that each and every short-term decline in real estate has been temporary and has been followed by long-term price appreciation. Here we go:

"The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline."
- Time magazine, 1947

"Houses cost too much for the mass market. Today's average price is around $8,000 - out of the reach for two-thirds of all buyers."
- Science Digest, 1948 (National real estate values have appreciated 2,650 percent since 1948.)

"The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000."
- Business Week, 1969 (National real estate values have appreciated 685 percent since 1969.)

"You might well be suspicious of 'common wisdom' that tells you, 'Don't wait, buy now - continuing inflation will force home prices and rents higher and higher.'"
- NEA Journal, 1970

"The median price of a home today is approaching $50,000. Housing experts predict price rises in the future won't be that great."
- Nations Business, 1977 (National real estate values have appreciated 340 percent since 1977)

"The era of easy profits in real estate may be drawing to a close."
- Money magazine, 1981

"The golden-age of risk-free run-ups in home prices is gone."
- Money magazine, 1985

"Most economists agree ... [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s."
- Money magazine, 1986

"Financial planners agree that houses will continue to be a poor investment."
- Kiplinger's Personal Financial magazine, 1993 (my Flagstaff land investment of 1993 has tripled in value)

"A home is where the bad investment is."
- San Francisco Examiner, 1996 (National real estate values have appreciated 88 percent since 1996)

"Home prices experience historic drop."
- CNNMoney.com, 2007 .....

Thanks to Terry Forsberg, RE/MAX Fine Properties, Scottsdale, AZ.
 
Source: RE/MAX Times Online 4/28/08 – available only to RE/MAX affiliates.

Bonds are moving higher this morning after bad news was released for Fannie Mae, the largest provider of US home financing.  The company said it lost $2.19 Billion in the first quarter due to the current housing and credit crisis, which equates to a loss of $2.57 a share compared with a profit of 85 cents a year ago.  And like Freddie Mac, the company plans to raise capital and cut its dividend.  Stocks traded lower on the news, pushing money into Bonds and helping Bond pricing improve.  

In other headlines, oil hit a new record high of $120.93 this morning.  Oil prices have doubled over the past twelve months, pushing the average price at the pump to $3.60 a gallon.  Goldman Sachs is forecasting that black gold could rise to $150-$200 a barrel in the next twelve months.  If this plays out as they suggest, the inflationary effects of high oil prices could pressure Mortgage Bonds lower, causing home loan rates to move higher...so this will be a story to watch. 

For now, Bonds continue to ride a dual floor of support at the 50 and 100-day Moving Averages.  We will continue to Float for now, and watch how the Bond behaves near this strong floor.

Living room of 1460 Fox Hill Road

There were 54 new home listings added to the Flagstaff real estate market in the week April 28 through May 4. These Flagstaff homes ranged in price from $143,900 for a one bedroom, one-bath, 600-square-foot condo to a nearly 7000 square foot home listed at $2,350,000.  All of this is according to data provided by the Northern Arizona Multiple Listing Service, which does not contain all homes for sale, but does contain most of the Flagstaff real estate market.

Our featured Flagstaff area listing of this past week is in Continental Country Club neighborhood. The deck and back yard of this home are exactly would you would dream of if your were imagining a Flagstaff home: tall pines, open space, natural landscaping, native rock formations. Inside, you’ll find real wood floors and vaulted ceilings and a malpais-rock fireplace that soars to the top of the living room. There are three bedrooms and a large laundry room. The home is filled with natural light. The home is at 1460 Fox Hill Road in the heart of the Country Club area where you will have access to the best of Flagstaff recreation. For details, visit the featured listing for this home on our website.

Seventeen homes went under contract for sale in the Flagstaff real estate market last week. Twenty-three Flagstaff homes closed sales last week.  

If you’re in the market to buy a Flagstaff home, contact us or visit our website – put Team Heitland at RE/MAX Peak Properties to work for you!

Search all Flagstaff MLS listings with our MLS Guide as your assistant!

The latest advance gross domestic product data indicated the US economy grew at a 0.6 percent rate in the first quarter.  Fed officials remain concerned that inflation is rising and the economy is heading towards recession.  Many analysts believe the economy is already in one.  This data was mixed with the GDP price index rising 2.6% in the first quarter compared to a 2.4% increase in the fourth quarter. 

Productivity is the rate at which goods or services are produced.  It is most commonly defined in terms of labor, which is the contribution of people to the process.  Labor costs represent about two thirds of the value of the output produced.  The Bureau of Labor Statistics of the US Department of Labor releases the most widely cited productivity statistics quarterly and annually.  Increased productivity is often credited for economic growth with little signs of inflation.

Productivity is significant because as it increases, businesses can produce more with the same or less input.  This wealth building effect is vital to the US economy.  As productivity increases, the US economy generally performs better.  As productivity decreases, the economy generally suffers.

While the bond market generally favors signs of weakness in the economy, bonds tolerate growth as long as the economic environment shows little or no inflationary pressures.  Unfortunately, inflation has escalated as of late.

Keep in mind that rates remain historically very favorable.  Now is a great time to avoid the uncertainty surrounding continued market volatility by locking your loan.  Capitalizing on current levels is prudent to protect against future volatility.

Flagstaff’s real estate market is making some moves!  For months, home prices were stuck with median home prices in the mid-three-hundred-thousand dollar range. All of that changed in April, with the median price dropping to $322,000 for a single family home and to $290,000 for all home types (including manufactured, townhomes and condos as well as single family homes). Like magic, sales jumped from 33 single family homes sold in March to 42 in April. More significantly, there are 77 single-family-residences under contract waiting to close as of May 4, 2008. The over-supply of homes dropped from 19-months’ supply at the end of March to 16-months’ supply at the end of April. It’s still a buyers’ market, but a shift has occurred.

How long the downward price trend will continue is anyone’s guess, but it’s not likely to go as far as it has in other parts of the country because of our land shortage and because new home construction has essentially shut down in Flagstaff since 2006. The drop in over-supply from 19-months in March to 16-months in April reflects this supply crunch.

Are Flagstaff homes affordable? As of May 4, 2008, there were 322 Flagstaff homes for sale on the Flagstaff MLS at a list price of $250,000 or less. Your first home does not need to be your dream home. In fact, it should not be. The idea of owning a home is to build equity and move up. I’m on my fourth home. Once I was established in the dream home, I could move to investment properties. The foundation for all of this is that first home. I bought mine in 1978. Interest rates were over 8% and the economy was in the doldrums with gas prices at all time highs and the President on TV in a sweater to encourage conservation. Now, with interest rates under 6%, it is a great time for people who want to live out their lives in this beautiful mountain town to get into the market and buy their first home.

All of these numbers are based upon statistics complied from reported listings and sales on the Northern Arizona Multiple-Listing-Service, which may not include all homes on the market, but includes a significant number of them. The homes included in this sample are all those with Flagstaff mailing addresses, whether they are within the Flagstaff city limits or not, and therefore represents what is generally thought of as the Flagstaff area of Northern Arizona.

For Flagstaff real estate market analysis keyed to your special financial situation and housing needs, contact Team Heitland at RE/MAX Peak Properties.

Another great weekend in Flagstaff, beginning with First Friday Artwalk. Here are four of the Flagstaff art walk hotspots tonight (click here for a map of all 46 art walk stops):

1. Debbie Leavitt comes out of hiding again as part of the infamous EAST SIDE TEN at an UNDERCOVER exhibition at FCRS (old Unity space in Knoles Village Square), 2708 N 4th St/Ste E-1. Also see art by Bess Bennett, Rebecca Borowski, Ivan Bronston, Denise Dee, Elaine Dillingham, Mike Frankel, Grace Iverson, Betty Smith & Rachel Wilson and SPECIAL GUESTS: Ballet Folklorico and The Electric Army from 6-9pm. (#41 on the Map)
2. Shonto Begay opens his art studio upstairs on Aspen Avenue, featuring his newest artworks that are smaller and more affordable! This is a great time to start or add to your collection! (#11 on the Map)
3. LEANCY RUPERT's BFA graduate show is this Friday at Harton's BEAVER STREET GALLERY on South Beaver. (#18 on the Map) See the culmination of years of growth and work - you might remember Leancy's year-long-stint as president of the Artists' Coalition of Flagstaff.
4. Northern Arizona University’s chapter of Engineers Without Borders will host Water is Life at 2 S. Beaver. This event includes art in several mediums, food, a silent auction, and folk music. Proceeds will benefit the chapter’s sustainability project in Ghana.

Friday night, stop in and rest from your walk at 16 W. Cherry, where, beginning at 7:30 p.m., the NAU Shrine of the Ages Choir will be for its final performance of the season.

The Labor Department reported 20,000 jobs lost in April, which was better than market expectations of 75,000 jobs lost, with the unemployment rate falling to 5%.  On the news, Mortgage Bonds quickly fell a whopping 134bp in a matter of minutes.  Yes, 134bp...that's exactly the type of knee-jerk reaction we had anticipated.  But once the details of the report were unpacked, including downward revisions to the last two Jobs Reports, as well as some realization that the economy still lost 20,000 jobs, Mortgage Bonds have staged an enormous recovery.  So...while prices are still negative, they are much improved from the lows after the initial knee-jerk reaction to the Jobs Report headlines.    

The birth-death ratio is used to help figure the Jobs Report, and in a declining Job Market like the one we have now, the number is likely to be overly optimistic about the actual condition of today's job market.  Therefore we feel strongly that downward revisions are in the cards for the next two months. 

It appears that on short-term transactions, yesterday's advice  may have protected you, as prices have suffered a bit over the past 24 hours.  If you have more time and have the stomach for a turbulent period, float carefully as prices should come back".  This morning's sharp rebound higher from the lows leaves the Bond trading above support at the 50 and 100-day Moving Averages.  For now we will Float - but carefully in this volatile environment.

It's been a big week when it comes to economic news, especially yesterday's news that the Federal Reserve made another .25% cut to the Fed Funds Rate. Typically bonds and home loan rates react poorly to this news due to inflation concerns; however, the Fed's cut was not unanimous and the Fed also indicated their rate-cutting cycle may be over. As a result, Bonds reacted favorably to the Fed's action.

In other news, the Core Personal Consumption Expenditure Index, the Fed's favorite inflation gauge, was slightly higher in March and the important year-over-year Core PCE is now at 2.1%, just above the Fed's desired range of 1 to 2%. Also, Initial Jobless Claims were reported at 380,000, much worse than expectations of 360,000. This left the four week moving average of continuing claims at the worst level since early 2004.

Tomorrow morning, the monthly Non-Farm Payroll Report is due to be released. Expectations are for a loss of 75,000 jobs, which is pretty bad. This Report is determined by data provided by the Bureau of Labor Statistics, and it uses historical averages for the past several years. In other words, they don't actually count each person that was hired. They use a lot of averaging, historical data and a lot of assumptions. Which is why we typically see many revisions for prior months. So here's the deal - the Job market is bad. But the report will likely paint a better picture than actually exists...until the downward revisions come later. And we should see downward revisions tomorrow from the past two month's reports.

So here's my advice - If you are closing within the next week, I recommend locking. If you have more time, and can stomach the volatilty a bit more, I suggest to float.

The Road to a Jumbo Mortgage Was Supposed to Get Easier

665 Kwa Ovi in Kachina Village

There were 158 new home listings added to the Flagstaff real estate market in the week April 21-April 28, ranging in price from $120,000 for a one bedroom, one-bath, 528-square-foot condo to a 2200 acre ranch with 3600 sq. ft. home listed for $9,650,000 (a rare property, indeed).  Of those 158 new Flagstaff listings, eighty-four of them are single family residences (including that ranch). All of this is according to data provided by the Northern Arizona Multiple Listing Service, which does not contain all homes for sale, but does contain most of the Flagstaff real estate market.

Our featured Flagstaff area listing of this past week is in Kachina Village. As the temperatures heated up this week, it was a heavily trafficked new listing, but so far it’s still ready, willing and able to become your next home or vacation home. Decks on three sides of this home and off of its upstairs master bedroom provide views and outdoor living that you want and expect in Flagstaff and Kachina Village. The home boasts vaulted ceilings, clerestory windows, wood tongue and groove ceilings in the living room and master bedroom and a wood-beamed ceiling in the kitchen. The living room features an attractive, efficient natural gas stove. Master suite has skylights, wooden shutters and that private deck. You’ll find upgraded window coverings throughout. New roof this year and many other valuable features.  If you’re looking for an affordable Flagstaff home that has some great character, you’ve found it!

Fourteen homes went under contract for sale in the Flagstaff real estate market last week. Forty-four Flagstaff homes have closed sales so far in April, surpassing the March total already.

If you’re in the market to buy a Flagstaff home, contact us or visit our website – put Team Heitland at RE/MAX Peak Properties to work for you!

Search all Flagstaff MLS listings with our MLS Guide as your assistant!

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