Forty-one Flagstaff homes sold in January 2010, including 33 single-family homes, 3 townhomes, and 2 manufactured homes. Eight of those sales were REO, or bank-owned, properties and five were short sales. The median price of all the Flagstaff homes sold in January 2010 was $290,000.

The median price for a single-family Flagstaff home sold in January was $300,000. Short sales sold at a median price below the overall median and bank-owned properties at a median above the median. This reflects the fact that more high-end sales are of bank-owned properties.

The absorption rate of Flagstaff homes at the beginning of February was showed 13.06 months’ worth of single family homes on the market, which is down substantially from the over 20-months’ supply of homes for sale in January 2009.  Still, this level reflects a strong buyers’ market overall since a balanced buyer-seller market is considered to be 6-months’ supply of homes. There continues to be a lower supply of homes in the $300,000 range and in some neighborhoods.

Both Flagstaff townhomes and manufactured homes have a glut of homes for sale relative to January sales. Townhomes show over 20-months’ supply. Manufactured homes in Flagstaff had over 25-months’ supply at the beginning of February.

All numbers reported here are based on sales of homes with Flagstaff mailing addresses, whether in the city of Flagstaff or the surrounding rural-suburban areas. The reported data comes from information as reported to the Northern Arizona Association of Realtors^® and is deemed reliable for sales reported to the association, but is not guaranteed and does not include all sales in the market area.

________________________________________

To buy or sell any Flagstaff home, contact me:

Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

This week’s Primary Mortgage Market Survey^® had the average 30-year fixed-rate mortgage at 5.01 with 0.7 point typically paid to obtain that rate. This is up for the week ending February 4, 2010 from the week before when it averaged 4.98 percent. Last year at this time, the 30-year fixed rate averaged 5.25 percent. The survey is conducted weekly by Freddie Mac.

This week’s survey showed home loan rates to be lowest in the west and southwestern regions of the country, which, of course, includes Arizona.

Mortgage applications for home purchases jumped at the end of January, according to figures from the Mortgage Bankers Association released on February 3. Meanwhile,the Federal Reserve’s Senior Loan Officer Opinion Survey reported that banks generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception. However, banks have yet to unwind the tightening that occurred over the last two years.

Here are the numbers from this week’s Freddie Mac survey:

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

One of Your Views! Horses not included ;)

If your dream is for privacy, forest, mountains.... this is it! If horses are in your dream, that makes this Flagstaff home all the more perfect for you. This magnificant log-style home is next to Flagstaff’s very best forests with fabulous views of the San Francisco Peaks. Make your dream come true with this home on its own five acres adjacent to National Forest Service land which leads directly to the San Francisco Peaks and Mt. Elden forest trails.

This home is near the City of Flagstaff and has all the convenience of municipal utilities, including the Doney Park Water Company (a private, mutual company that serves over 3000 households in the northeast rural suburban area of Flagstaff). The owners are ready to sell, so this purchase presents you with a short sale opportunity.

The residence is really two homes in one, making it a perfect spot for extended family living or second home shared ownership. There are two full, beautiful, kitchens; two living rooms; two dining rooms; two master suites; a total of five bedrooms and 4.5 baths. The separate units are connected by a beautiful atrium and shared laundry room. You’ll find skylights and vaulted ceilings.

Interior: Nearly new heating and hot water units and (in south home) air-conditioning promise freedom from maintenance worry. In 2006, the south home received an entirely new kitchen with granite tops, appliances and cabinets. Pellet stoves, passive solar, and solid construction make heating the large space a bargain.

Outside: you’ll find a hot tub, deck and balconies with panoramic mountain and forest views. For horse-lovers, there is a large Barnmaster barn. The five acres are fenced and cross-fenced.

The property also features a heated, over-sized, three-car garage that includes a workshop area and cabinet storage.

You’ll find mature landscaping, including Ponderosa pines. The home offers a private location – away from major forest trails (but near enough for you to use easily) and set back from major roadways. The entrance has a circular, gated drive at end of private road.

Don’t dream so long that you miss the opportunity presented by this market! Get more photos and details on the property by clicking here and call me now to learn more:

It’s First Friday Artwalk in historic downtown Flagstaff this Friday, February 5. Yes, even in winter, downtown Flagstaff is a beautiful place to stroll, especially when 18 art galleries will be offering chocolate! There are a total of thirty-one stops on the Flagstaff art walk this week. Don’t miss one – download your personal map here.

Also, Friday night is the season premier for Flagstaff’s community theatre company – Theatrikos! The “Season of Laughter” opens Friday night with Shakespeare’s classic comedy Merry Wives of Windsor, which will run on weekends through February 28. Buy your tickets on line by clicking here.

It’s my birthday on Friday (when I’ll be working) but I’ll be taking Saturday off to enjoy another great feature of living in Flagstaff – popping two hours south to enjoy some of the seventy-degree winter they are having!

Have a great weekend living in Flagstaff!

______________________

P.S. Follow Theatrikos of Facebook -- click here.

Pending Home Sales –- an index maintained by the National Association of Realtors^® -- surprised forecasters by jumping up over 10% in December. The announcement this morning boosted the stock market.

On a more sobering note, the U.S. Commerce Department today said housing vacancies remained near record levels in the 4^th Quarter of 2009 with 2.1 million vacant homes for sale and 4.5 million for rent. The oversupply of housing should continue to depress prices and rents. Of all housing units built since 2000, 21% were vacant.  Seems like all of them are in Phoenix, doesn’t it? The Commerce Department stats actually show that the Western Region of the United States is in better shape than other parts of the country as far as housing vacancies go. Nonetheless, it is this overlay of unused homes, along with the pending array of mortgage defaults, that will keep home prices, including those in Flagstaff, down for at least the next two years.

Lawrence Yun, NAR chief economist, said tax credits are skewing market data. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. Yun believes “these swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.” Unsaid is that there is a long way to go for the housing market.

There are opportunities for both buyers and sellers in the Flagstaff homes market. To find out what may suit your needs, contact me: Ann Heitland at RE/MAX Peak Properties.

Results of Freddie Mac’s Primary Mortgage Market Survey^® for the week ending January 28 showed the 30-year fixed-rate mortgage averaging 4.98 percent with an average 0.6 point paid to obtain that rate. This is down so slightly from the prior week that Freddie Mac headlined its press release as Mortgage Rates Flat.  Last year at this time, the 30-year FRM averaged 5.10 percent.

The 15-year FRM this week averaged 4.39 percent with an average 0.6 point, down slightly from last week when it averaged 4.40 percent.  A year ago at this time, the 15-year FRM averaged 4.80 percent.

The day before Freddie’s survey ended, the Federal Reserve Open Market Committee notes from its December meeting were released. The Fed noted that economic activity has continued to strengthen, but there is continued “substantial resource slack” so that inflation is likely to be “subdued” for some time. Translated from Fed-speak, the economy is improving but is still in bad shape and we’re not raising rates anytime soon because we are more afraid of reversing the trend toward improvement than we are afraid of inflation.

Here are the numbers from Freddie Mac's January 28 press release:

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

The question of the week for Flagstaff real estate agents is: Which homes are accessible? I’m going to start carrying my snowshoes to show homes. Not kidding. The problem is that even if you can approach the door, you may not be able to open the door because the handle is buried in a drift.

Flagstaff homeowners and listing agents: please put your homes on “hold” if they can’t be show because the snow is blocking the way.

Here’s a great listing whose driveway was only wet this morning – you can walk right up to the door and enter safely and happily!

Once you are in, you'll want to stay. I love the snazzy granite countertops and the wood blinds, which you’ll find throughout the home. The access to Flagstaff’s Urban Trail System does not get better than this: FUTS is right behind the home and provides very quick access to the National Forest Service Trails at the base of Mt. Elden.

This Flagstaff home is part of one of the premier townhouse communities in Flagstaff: Mount Elden Villas is close to schools, shopping, downtown, Flagstaff Medical Center, and Continental Country Club. The home was Energy-Star^® rated when new in 2007, so your utility bills will be low.

This is a perfect place to bring friends from the Valley to play in the snow this winter and get out of the heat next summer! You'll find two master suites - one upstairs and one down. The home has a total of 3.5 baths and four bedrooms. Sound from your neighbors will not be an issue since the living space is separated by a garage on either side.

Views of Ponderosa pines and mountains. Don't let this one pass you by!

Hope We've Made Enough Space for the Next Snow!

When I turned on the Blackberry this a.m., there was the bright-red "Winter Storm Warning" from the Weather Channel. Flagstaff could see another 3 to 7 inches of snow from storm starting today and ending Thursday, according the the Arizona Daily Sun this a.m.

We've just barely finished digging out! (See the picture at dawn this a.m., with our neighbors' home in the background). I'm not complaining because we suffered no major damage and we have, in fact, been out. As the accompanying article in the Daily Sun explains, many of Flagstaff's neighbors on the Navajo and Hopi Reservations are trapped behind snow and mud-packed roads without food or potable water.

The city of Flagstaff and Coconino County are asking homeowners and business owners to report storm-related damage this week in order to apply for a federal emergency aid. They are requesting: the name of the owner, address, whether the property is residential or commercial, whether a home is primary or secondary, a description of the damage, whether it is insured, ballpark cost estimate on repairs, and any impact to business, such as closure or loss of income. In Flagstaff, the number to call is 928-213-2399. For nonurban areas of Coconino County, it's 928-679-7144, according to the Arizona Daily Sun.

_____________________________________________

The good news is that I don't have to open the gate to snow shoe into the forest:

Source: Standard & Poors and Fiserv

Home prices increased in Phoenix from October to November 2009, but Phoenix home prices were down over 14% from November 2008 according to a national housing survey released this morning. The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. This data is closely watched by financial markets. Flagstaff is too small to be included in the S&P survey. For all the data released today from S&P/Case Schiller, click here.

S&P/Case-Schiller data lags a month behind the multiple-listing-service reports gathered from all markets by the National Association of Realtors^® -- for yesterday’s report on NAR’s December home sales data, click here. For my report on Flagstaff home sales in December, click here.

To buy or sell any Flagstaff home, contact me!

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

Lawrence Yun, National Association of Realtors^® chief economist, said there were no surprises in the existing home sales data released Monday: “It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit.” Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent from November’s sales but remained 15.0 percent above the level in December 2008. For all of 2009 existing-home sales were 4.9 percent higher than in 2008 -- the first annual sales gain since 2005.

That news doesn’t sound too bad to me. The financial market headlines, however, screamed “Existing Home Sales Plummet,” focusing on the drop from November to December rather than the year-to-year gain.

Meanwhile, in Flagstaff, home inventory levels are the lowest they have been in a long time, with under 7-months’ supply of homes for sale based on single-family Flagstaff homes listed for sale vs. sales so far in January – that’s likely to drop to around six-months’ supply for the full month with end-of-the-month sales. It’s definitely not a buyers’ market in terms of selection right now, through prices are significantly below where they were a year ago. For details on December home sales in Flagstaff, see Monthly Flagstaff Real Estate Update.

Back to the NAR press release on national existing home sales: Yun forecast “another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.” That’s a pretty big caveat, Mr. Yun!

The national median existing-home price³ for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. “The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Yun said. It was the first year-over-year gain in median price since August 2007. NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said market conditions are challenging in some areas. “There’s a shortage of lower priced homes for sale in much of the country….,” she said. We have the same problem in the Flagstaff homes market. Inversely, there is a glut of higher priced homes – a lot of “shadow inventory” in those higher priced categories – homes that are being held off the market pending firmer, higher prices.

According to NAR, distressed homes, which accounted for 32 percent of sales last month, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area. Distressed homes accounted for 36 percent of total sales last year.

For more details and statistics on the national home sales market, visit the Realtor.org website and see the full press release. To buy or sell any Flagstaff home, contact me: www.BestFlagstaffHomes.com.

This coming week will be packed with economic news, including reports from the National Association of Realtors^® on existing home sales during December and from the U.S. Commerce Department of new home sales. Economists surveyed by MarketWatch are forecasting an 11% drop in existing home sales in December, but that wasn’t true with Flagstaff home, which, on a December-to-December basis actually increased from 2008 to 2009. See my Monthly Flagstaff Real Estate Update, reported last week.

Have a great week! And, let’s hope the economy does, too.

__________________________________________

To buy or sell any Flagstaff home, contact me: 928.714.0001

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

Don't plan to picnic in Flagstaff this weekend!

Update on Flagstaff's Winter Storm as of Friday, January 22, 2010: It's not very often that a city discourages visitors, but that's exactly what's happening in Flagstaff. City, County and Forest Service officials ask visitors to "play in their own backyards" this weekend instead of heading for Flagstaff's snowplay areas. There will be insufficient parking and safety personnel available this weekend to handle snowplay. Roads remain difficult and 5-9 more inches of snow are expected tonight. Flagstaff residents should not travel to a store without calling first to make sure it's open -- many commercial businesses, including groceries and pharmacies, are closed due to roof collapses or sagging. Here's the latest update from Flagstaff's Mayor and Coconino County Supervisors.

Update from Flagtaff's  Mayor as of Friday, January 22, 2010 6:45 a.m.: Overnight was probably the worst of the storm. Immediate impact included collapsing roofs on some Flagstaff businesses. Expectation that roads will be open by tomorrow. Stay home today and let the city do it's work. Read Flagstaff Mayor's Letters to Community here. List of other sources of info about Flagstaff's winter storm on Twitter below.

Here's the  original post from January 21:

If you've never seen a reason to set up a Twitter account, Flagstaff’s amazing winter storm is a good reason to do so now. Flagstaff Mayor Sara Presler has declared a State of Emergency and I hear that Coconino County has as well – but no one is available at the County to put it on the web. Presler was interviewed on The Weather Channel this afternoon, talking about how Flagstaff citizens can help each other get through the storm.

Flagstaff’s local paper, the Arizona Daily Sun, is providing some great, in-depth coverage, but its reporting is much slower than Twitter’s collection of news. By the way, Flagstaff’s winters don’t feature these storms regularly – this may one of the three worst in the last 100 years. Yesterday was a gorgeous day – sunny, warm and the mountains were decorated in snow. It’s likely to be that way Sunday, too. Meanwhile, there is flooding in Sedona and the Phoenix area.

Follow some local and state sources on Twitter – you don’t have to “tweet” yourself to follow others. Or, if your “principles” just won’t allow you to use Twitter, just click on the links below and follow each site separately. The advantage of Twitter is that you see news from all of these sites on one page. Set up your account at Twitter.com and then "follow" news sites about the storms. Here are some useful Flagstaff and Arizona “twitterers” to follow for storm updates:

http://twitter.com/azds

http://twitter.com/ArizonaDOT

http://twitter.com/joeferguson

http://twitter.com/naztoday

http://twitter.com/AZPubRadio

http://twitter.com/sarapresler

http://twitter.com/AzEIN

http://twitter.com/AZFireInfo

http://twitter.com/insideNAU

http://twitter.com/VisitFlagstaff

http://twitter.com/azcInsider

Once this storm is passed, and we’ve dug out, you must know someone who will want to buy a Flagstaff home! Send them my way! Meanwhile, if you have other Twitter sites with Flagstaff storm news to suggest, put them in a comment here and I'll add them to the list.

The weekly Freddie Mac Primary Mortgage Market Survey released yesterday shows home loan rates for the prior week dipped below 5% again. With the storm going on in Flagstaff, I received no updates from local mortgage lenders this week, but my guess is that if you could see a home in Flagstaff this week, you could get an interest rate below 5%. When the stock market is bad, as it was this week, it’s good for rates. Slow activity in the housing market and a bad report on housing starts also contribute to the lower rates. (On the other hand, building permits jumped according to the U.S. Commerce Department.)

According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 4.99 percent with an average 0.7 point for the week ending January 21, 2010, down from last week when it averaged 5.06 percent. Last year at this time, the 30-year FRM averaged 5.12 percent.

Here are the numbers:

______________________________

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

Flagstaff home buyers and sellers can both find reasons to be happy with the Flagstaff home sales numbers for December 2009. Many expected grim results for December home sales because “the market always slows in December” and because fear of expiration of the tax credit (unnecessary fear, as it turned out) pushed sales into November. Here are some surprising numbers showing December Flagstaff home sales results:

• The median sale price of a single-family-home dropped only $1000 from December to November ($305,000 vs. $306,000), while the price-per-square-foot actually rose by $3 (to $134 from $131).
• The median single-family-home sale price dropped 10% from December 2008, but volume of home sales increased by 74% compared with a year ago.
• The beginning of January 2010 found inventory of Flagstaff single-family homes for sale at 9.72 months’ worth compared with 19.81 months’ worth at the beginning of January 2009.
• Sales of Flagstaff townhomes and condos increased in December 2009 compared with December 2008, and median prices for both of those categories were actually up on a year-to-year basis. I say this with caution, however, since there are so few sales in each category that the medians are easily skewed.

Of the 47 single-family-homes sold in Flagstaff in December, 7 homes (14.8%) where REOs (bank-owned) and 4 (8.5%) were short sales. So, if someone tries to tell you that only distressed properties are selling, tell them to think again. What are selling are homes owned by realistic, well-advised sellers who make their homes competitive.

There were 60 pending home sales at the end of December and 25 more homes listed as “active-contingency removal.” Many of these are distressed properties, which take longer to close because folks who operate on bankers’ hours control the speed of the seller-side response. When these sales are closed and reported, prices are likely to come down again.

In December 2009, the median price of Flagstaff single-family-homes was off 19.1% from the peak December price in 2005, but remains 7.4% above the median sale price for a Flagstaff home in December 2004.

Note: All numbers reported here are based on sales of homes with Flagstaff mailing addresses, whether in the city of Flagstaff or the surrounding rural-suburban areas. The reported data comes from information as reported to the Northern Arizona Association of Realtors^® and is deemed reliable for sales reported to the association, but is not guaranteed and does not include all sales in the market area. Remember that these are overall Flagstaff market numbers and any analysis of a particular home price requires neighborhood comparisons.

To buy or sell any Flagstaff home, contact me:

Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

Following an uptick in mortgage rates during December, home loan rates have started 2010 by going down two weeks in a row. On Thursday, Freddie Mac released the results of its Primary Mortgage Market Survey^® which showed the 30-year fixed-rate mortgage averaging 5.06 percent nationally with an average 0.7 point for the week ending January 14, 2010. Reports for some Flagstaff lenders on Friday showed rates below 5% with zero points.

The Freddie Mac survey average is down from last week when it averaged 5.09 percent.  Last year at this time, the 30-year FRM averaged 4.96 percent. With the stock market fall on Friday, rates may continue to fall a bit after the holiday weekend. Here are the numbers:

Many homeowners are taking advantage of these historically low rates to refinance. Freddie Mac reports that 75% of conventional mortgage applications over the last three months have been for refinancing rather than home-purchase loans. The Mortgage Bankers Association most recent survey reported similar results, with mortgage applications of all types up in the new year.

To buy or sell any Flagstaff home, contact me:

Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

Get Ready, Flagstaff!

Preliminary forecasts indicate that severe winter conditions will soon return to Flagstaff.  Storms that could bring large amounts of snow to the area will arrive starting as early as next Monday. The City of Flagstaff is encouraging all citizens to begin preparing now and be prepared for large accumulations of snow.

Among other things, be prepared in case you are snowed in or power goes out during these storms. (Power outages are not as common in Flagstaff as in the east because so many power lines here are underground, but, still, it can happen.) City officials are recommending that residents have bottled water, non-perishable food, prescription medication, flashlights, battery-powered radios, and extra batteries at home. Remember your pets!

So, spend this nice, sunny weekend in Flagstaff shopping and winterizing your vehicle with snow tires, chains, blankets or sleeping bags, water, a first aid kit, ice scraper, extra clothes, and keep the gas tank at least half full. Make sure you have enough extra gas for snow blowers!

Clearing snow off of roof tops should be considered for structures with ice buildup problems. (If you haven’t installed those heat tapes, this is the weekend to do it!) If there is a large amount of snowfall clearing vent pipes to gas fueled appliances is recommended to prevent carbon monoxide buildup. There are a variety of businesses offering this service, including painters who are otherwise in their off-season but have those really great ladders!

City snow plows will run continuously throughout the storm with Flagstaff’s main roadways plowed first. As we saw in the last storm, it could be quite some time before plows are able to work in residential areas. Coconino County and the Arizona Department of Transportation also have snow plows that will be working in the area. Please do not park on Flagstaff streets between midnight and 7:00 a.m.  Please help your neighbors clear snow and snow berms whenever possible. City Parks and Recreation has equipment that will help handicapped individuals clear berms left by the snowplows.

Don’t forget to have fun playing in the snow!

As you read this article about what economists call “housing elasticity,” picture Flagstaff as separate from Arizona. Flagstaff’s housing situation is more like the California coastal areas described here, where prices inflated during the boom but there was not excessive building, than it is like Phoenix where prices inflated and too many homes were built because there were no physical (topographical) barriers to building. Here is this interesting piece from today's New York Times based upon work by Edward L. Glaeser, Harvard economics professor:

“The Census Bureau recently released estimates of state-level population changes, which showed a decline in the growth of some Sun Belt areas. The growth of much of the Sun Belt has been achieved through vast amounts of construction providing low-cost, high-quality homes for ordinary Americans. New construction has declined by more than two-thirds during this recession, and this fall in new building has led to a fall in the population growth of the places that had been building most.

“This shift should remind us that America’s future is being determined, in no small part, by its housing industry, and that events that affect the supply of housing ripple throughout all of America.

“The chart [on the right] shows the relationship between housing units and metropolitan-area population growth from 1970 to 2000. It shows that the supply of new homes in an area is almost perfectly correlated with the growth of population in that area. This makes sense, since people need homes to live in.

"But this tight relationship doesn’t automatically imply that anything about housing determines population flows. After all, it could be that population growth is driven by only other desirable, demand-side factors — like wages, unemployment and sunshine — and that new construction just follows along. Perhaps people just move to attractive areas and homes are built for them. (Ann: Did we need economists to tell us this?)

"But if every place had an identical housing supply and housing demand was the only thing that mattered, then high-demand places should have high prices and high levels of construction. Low-demand places should have low prices and low levels of construction. *The chart below shows the connection between prices in 2005, and housing permits between 2000 and 2005 (as a fraction of housing stock in 2000). As you can see, price and permitting don’t move together:

Edward L. Glaeser

"Places that are really expensive don’t build a lot. (Ann: Think Flagstaff.) Places that build a lot aren’t really expensive. That fact is incompatible with the view that housing demand is the only thing that matters and that housing supply is more or less irrelevant.

"Indeed, there is a growing literature emphasizing the power of housing supply in explaining regional growth patterns.

"Joseph Gyourko and I have argued that the long, slow declines of cities like Detroit are best understood as the result of a particular feature of housing supply: Homes are durable and last for decades or centuries. As a result, places that are hit by economic shocks don’t disappear overnight. Their homes remain, and remain occupied, because they are still valuable assets.

"A recent paper by a star M.I.T. graduate student, Matt Notowigdo, comes to a similar conclusion. Kristina Tobio and I have found that much of the recent growth of the Sun Belt can be explained by that region’s elastic housing supply. Albert Saiz at Wharton has pushed the literature further by showing how natural barriers to building — like hills — can explain patterns of prices and local growth. (Ann: Flagstaff's barriers are the abundance of National Forest and National Parks land -- great barriers to have, but barriers nonetheless.)

"So what does the significance of housing supply mean for Sun Belt growth and the recession?

"America vastly overbuilt during the 2003-6 period, but that overbuilding wasn’t uniform across our country.  Booming Sun Belt cities — Atlanta, Phoenix, Miami, Las Vegas, Tampa — had the most extreme combinations of high prices and oversupply. Houston and Dallas also built plenty, but their prices stayed earthbound and as a result, they don’t seem to have overbuilt. Coastal America had booming prices, but regulatory and natural limits on building restricted construction. And now we see the sharpest declines in the rate of population growth in places that had the most overbuilding.

"The four states where population growth fell most in 2009, relative to statewide trends in 2000-8, are Arizona, Georgia, Nevada and — above all — Florida. These are not the states with the worst economic conditions today. (California and Michigan have that honor.) They are, however, places that had particularly extreme housing booms — measured by both quantities and prices. No one should be surprised that their population growth rates have fallen furthest.

"Last year, Professor Gyourko and I wrote a paper about the interaction of housing supply and bubbles. We argued that while bubbles should be rarer in places where housing supply is more elastic — that is, where builders are more sensitive to price changes — overbuilding will actually be more severe in places where housing supply is more elastic.

"The inevitable consequence of that overbuilding is a housing hangover that depresses future population growth. That’s what Arizona, Florida and Nevada are experiencing now.

"The housing bubble distorted the American economy—not just portfolios but the very contours of our country. (Ann: Think Anthem, Queen Creek, Surprise.) Boomtowns grew spectacularly as people overpaid and developers overbuilt. Right now a few Sun Belt places are growing less, as the market undoes some of that distortion. But no one should count these Arizonas, Floridas and Las Vegases out.

"For decades, growth has gone to places with sunshine and unfettered housing supply. A cyclical downturn is unlikely to undo that long-term trend."

Ann: Not to be too pessimistic, but in the “long-term,” we’re all dead. More seriously, the question is not whether Flagstaff’s homes market will recover its 2006-07 price peak, but when.

Average interest on long-term mortgages went down slightly last week, after rising in the four previous weeks. Freddie Mac reported that 30-year fixed mortgage rates averaged 5.09 percent, down from 5.14 percent a week ago. Local Flagstaff mortgage lender rate sheets that I received Friday showed rates a bit lower than the national average for the prior week – at an even 5% for a 30-year fixed rate mortgage with only .25 in points to obtain that rate. (The national rate report assumed a .7% point payment to obtain the average mortgage rate.)

Whether the down-tick in mortgage interest rates was related to a reduction in home sales in December, and pending home sales scheduled to close in the next few months, is unclear but is likely because otherwise the improved economic news for the week (stock market up slightly and improved unemployment numbers) should have continued to push home loan rates in the other direction.

Here are the numbers for the first seven days of 2010 per Freddie Mac’s weekly survey:

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

When my lawyer-daughter told me she wasn’t sure what a “short sale” was, I decided it was time to get back to basics in my blog!

Short Sale Defined:

A short sale occurs when the mortgage holders (the seller’s lender) agrees to discount the loan payoff for a seller who owes more on the home’s loans than the home is currently worth.  (Technically, the home could be valued at or slightly above the mortgage loan value, but expenses of sale would wipe that difference out, also requiring a short sale.)

Advantages of Short Sales for Buyers:

Short sellers are likely to still be living in the home and may be maintaining it, so short-sales listings may be in better shape than foreclosed properties. Yet, unlike traditional listings, you know the seller is motivated. The actual condition of the home depends on the level of distress of the homeowner. You’ll at least have a seller who has lived in the home and can tell you about its quirks and history.

Disadvantages of Short Sales for Buyers:

These transactions aren't short when it comes to time from contract to closing. The work involved in obtaining the seller’s lender’s approval for the sale can cause the process to drag on several months longer than a normal home sale. With a well-prepared, persistent agent, that time crunch can be relieved. And some lenders are better than others. The U.S. Treasury recently issued new guidelines for lenders that, starting in April, will provide incentives for them to move faster and close more short sales.

Advantages of Short Sales for Sellers:

The impact on your credit standing will be much less so it will be easier for you to buy a car and rent a home, and you’ll be eligible to buy another home in many fewer years than if you simply walk away from your current home and let the foreclosure process happen.

If you own a Flagstaff house that you need to sell and can’t pay off the entire mortgage balance, or if you want to buy a Flagstaff home that is listed as a short-sale, be prepared for what you're getting into. The paperwork for the seller is immense compared with a standard listing and sale – it’s more like buying a home with a loan than the typical seller-side contracts. Though banks are willing to take a loss on a mortgage in a short sale if it means avoiding an even bigger loss in a foreclosure, the bank’s negotiators are flooded with short-sale offers and are generally understaffed for the volume they are being hit with. If you're a buyer, don’t expect a smooth transition to a short-sale home – you won’t have a firm closing date for a long time after you agree to buy.

Find the right real estate agent to represent you. Make sure the agent will be up to the tough negotiating task ahead. Agents have now had plenty of opportunity to have training by the Certified Distressed Property Institute^® or with the new National Association of Realtors^® Short Sale and Foreclosure Resource courses. (I’ve done both.) If the agent you are talking with hasn’t done any training and hasn’t yet been involved in some actual short-sale transactions that have closed successfully, think about getting another agent.

Last year at this time, there had been very few short sales accomplished in Flagstaff. In the last half of 2009, there were many – and there are many more to come!

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.

You might have read about a new program called Deed-for-Lease™. Fannie Mae created this program as an option for homeowners who are in distress but who are not eligible for a mortgage modification. Given the recent reports on the lack of success of mortgage modification programs, the Deed-for-Lease™ program, along with short-sales, have to be considered as reasonable alternatives.  According to Fannie Mae’s announcement, Deed-for-Lease™ is specifically "designed to minimize family displacement, deterioration of neighborhoods caused by vandalism and theft to vacant homes, and the effect these have on families, communities and home price stabilization."

Homeowners who qualify for the Deed-for-Lease™ program have the option to remain in their homes as renters after voluntarily transferring the home’s deed back to the lender. The homeowners must prove they are able to afford market rent, and then sign a lease with the lender. Deed-for-Lease™ provides an option for borrowers who do not qualify for, or have not been able to sustain, other loan-workout solutions and want to continue living in the property as their primary residence.  If the homeowners need to move, they should consider a short sale.

While this program is unique to Fannie Mae loans, other lenders are sure to begin offering similar programs modeled on the Fannie Mae Deed-for-Lease™ program. The bottom-line is that lenders do not want to own vacant properties!

Following are a few of the homeowner qualifications for this program:

·         The property is to be used as the occupant’s primary residence

·         The occupant’s income is sufficient to cover rental payments

·         Inspection shows that the property has been kept in good condition

·         The occupant agrees to be responsible for regular maintenance

·         The number of occupants is appropriate for the home

·         The occupants signing the lease must agree to a credit review

To learn more about the Deed-for-Lease™ program and discover if your loan is a Fannie Mae loan, please visit www.efanniemae.com. If your loan is not a Fannie Mae loan, contact your lender's loss mitigation department.

If you need to move out of your Flagstaff home because of job relocation, divorce, or because you cannot afford the market rent under the Deed-for-Lease™ program, contact me about listing your home for sale. Even if you are “underwater” with your mortgage, a short sale can be negotiated as a better alternative to foreclosure.

These are two separate issues related to Flagstaff public schools:

• Which Flagstaff schools should be closed and consolidated with others?
• Should the Flagstaff School Board be granted the authority to override its budget limit to obtain more operating funds?

There are lots of activities in the works related to both issues.

As to the first issue, there will be eight community forums to discuss the closure of some (probably some of the elementary schools) and the potential change of use of other schools (one of the three Flagstaff high schools could become a middle school). The first meeting is this Thursday, January 7, at 6 p.m. at Christensen Elementary, 4000 N. Cummings Street in east Flagstaff. Here’s a complete list of the scheduled forums, courtesy of the Arizona Daily Sun.

On the second issue, having lost the voters support on a mail-in ballot in November, where only 16% of registered voters voted, the Flagstaff Unified School District governing board gets a “do-over” with another vote where mail-in ballots are due by March 9. This time, there is a more organized effort to get out the favorable voters, including a Facebook page and yard signs. A meeting of supporters happens Tuesday night at the Main Flagstaff Public Library in downtown Flagstaff at 6:30 p.m.

Flagstaff Home With Energy Saving Features

Imagine how cozy this Flagstaff home is this time of year after a sunny morning’s collection of passive solar heat from the greenhouse/solarium. And there is a wood-stove for evenings and snowy days (which we’ve had several of in the last week!) Of course, you can also rely on the convenience of the natural gas forced air furnace, even though it’s not as romantic or ecologically useful.

This is a sweet home on 1.1 acre with trees, views, and a wonderful open floor plan at a price you will not believe. The home is just a few minutes northeast of the City of Flagstaff in the popular Timberline neighborhood.

The living area features spectacular hardwood floors, a vaulted ceiling, and a stone-tile fireplace back drop as well as decorative and practical shelving. You’ll find a modern kitchen with a pass-through and open counter areas that provide a feeling of openness throughout the home. The numerous oak cabinets in the kitchen and kitchen eating areas are supplemented by a walk-in pantry hallway. Ceiling fans in all bedrooms and the living room and operable skylights in the solarium provide cooling in summer and comfort all year round.

The low-maintenance-material deck is partly covered and partly open to the gorgeous Flagstaff sky. On the mountain-view side of the home you’ll find an open patio. Two gray water systems help with the watering of many trees and plant beds that are around the property. The property is fenced around the perimeter and cross-fenced to form a distinct backyard for this Flagstaff home.

Energy efficient and eco-friendly features of this Flagstaff home include: The insulating value of  the enclosed two-door pass through front and rear entry foyers, double pane windows, solarium, two grey-water drip systems, efficient, newer wood-burning stove (with a significant supply of wood included in the sale) and established garden beds.

This Flagstaff home would be a great start for a first-time homebuyer or a super place for those looking to comfortably downsize. Contact me this weekend – the price has just been reduced to encourage a sale! Details here.

--------------

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

Owner-occupied homes once used as rental property will have capital gains pro-rated between taxable investment income and the primary residence exclusion under tax law changes made when the first-time homebuyer tax credit was grabbing all the headlines back in 2008. This applies to all homes that became primary residences in 2009 and later. This change may have some detrimental impact on the Flagstaff real estate market where some in the past have purchased their retirement homes and rented them before retirement. This could still be a good strategy, just not quite as good. Local Flagstaff folks who moved from home-to-home to convert their rental property investments into primary residences are not too common (it's a lot of work!), but there were a few.

Before this law came into effect, homeowners could live in residential property for two years, then sell and exclude any capital gain up to $500,000 or married taxpayers filing jointly and $250,000 for single taxpayers. Under the new law, even if you live in the house for 10 or 20 years, the gain will be pro-rated between the time it was a rental and the time it was a primary residence. Depreciation taken on tax returns while the property was a rental will be recaptured and capital gains tax will be owed on any gain attributed to the rental years.

With home prices relatively low in Flagstaff now, anyone thinking of retiring to Flagstaff in the future may still be ahead to buy now rather than waiting until retirement. As one of my former accountants once told me, never do anything just for tax reasons!

___________________________

To buy or sell any Flagstaff home, contact me: Ann Heitland at RE/MAX Peak Properties.

To search the Flagstaff MLS, click here!

Click here to see my featured Flagstaff home listings.