Flagstaff Real Estate ~ Let’s Do the Numbers!

The Law of Supply and Demand was demonstrated in spades for the sale of Flagstaff single family homes last month. Prices dropped; sales went up. Inventory went down, portending future price stabilization, but we have a ways to go to clear out outstanding inventory. Here are the numbers based on sales reported in the multiple-listing-service of the Northern Arizona Association of Realtors^® (these numbers, of course, do not reflect all sales, but are a good representation of the overall market for homes with Flagstaff mailing addresses). Other segments of the market took different directions.

Let’s look at the change in the Flagstaff single-family home market from October to November: 

Flagstaff Single Family Homes	Median Sale Price	Average Sale Price	Homes Sold	Homes for Sale at beginning of following month	Number of Months’ Supply on Market
Oct-07	$382,750	$474,039	44	685	15.57
Nov-07	$340,000	$366,716	55	630	11.45

 Townhome sellers maintained and even improved their sale prices from October, but the number of sales was down. Buyers will have more to choose from if they want to buy a Flagstaff townhome before year end, and we may not see price increases when we look at numbers next month. Here are the numbers for Flagstaff townhome sales: 

Flagstaff Townhomes	Median Sale Price	Average Sale Price	Homes Sold	Homes for Sale at beginning of following month	Number of Months’ Supply on Market
Oct-07	$281,500	$288,912	12	107	8.9
Nov-07	$290,000	$303,978	9	113	12.56

Please note: My putting red and green arrows in these tables makes them very dramatic, but my opinion is that there were so few sales in the townhome sector that it is hard to tell what the numbers mean for the direction of the Flagstaff townhome market. All we can tell is that there were at least nine buyers willing to buy a Flagstaff townhome in November, and if a home is priced competitively and staged appealingly, it is likely to sell in December.

The overall prices for all Flagstaff homes (single-family residences, townhomes, condos, and manufactured homes) showed a significant increase in November from October. Indeed, the median price for Flagstaff homes sold in November 2007 was higher than at any time since February 2007. This is a statistical anomaly arising from the impact of Flagstaff condominium sales throughout this year. Sales of Flagstaff condos took off in early 2007 as three large apartment complexes were converted to condos. The effect has been to reduce the average and median prices in the overall Flagstaff home market even more than those prices would have fallen due to other factors because the statistics include smaller units than ever before available in our market. In November, however, the number of condo closings was 50% of what it had been in October, skewing the overall market in the other direction.

Skewed through they may be by the factor discussed in the last paragraph, here are the figures for all residences with Flagstaff mailing addresses: 

All Flagstaff Homes	Median Sale Price	Average Sale Price	Homes Sold	Homes for Sale at beginning of following month	Number of Months’ Supply on Market
Oct-07	$280,000	$340,841	88	959	10.90
Nov-07	$314,450	$321,850	82	905	11.04

 The manufactured home sales volume in Flagstaff has fallen through the floor in 2007. With townhomes and lower priced single family homes available in an abundance not seen in several years, and the credit markets’ shift away from allowing 100% financing on manufactured housing, sales have dropped considerably. (Though FHA loans at nearly 100% are still available.) At the beginning of December there were 176 manufactured homes for sale. In November there were 15 sales of manufactured homes with Flagstaff addresses. A product that was a very hot seller in past years is now just keeping up with the market in rate of sales (those sales numbers make an 11.7 months supply of manufactured homes for sale).

In summary, we can’t tell when the market will turn, but we do know that NOW prices are down and interest rates are low. If you need to buy in the next year, now may well be the time to do so. The one time we will know that the prices have hit bottom is when they start back up – then you will have missed it.  Call Team Heitland at RE/MAX Peak Properties to discuss when is the right time for YOU to buy based upon your personal financial and housing needs.

P.S. For those of you dying to know more about the Law of Supply and Demand and its application to all markets, not just real estate, check out Wikipedia's definition. Here's a small piece of the definition to keep in mind:

"The model [supply and demand] predicts that in a competitive market, price will function to equalize the quantity demanded by consumers and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity."

We're searching for "equilibrium" in Flagstaff real estate as 2007 begins to wind down....