I’m a Flagstaff real estate agent (and expert) and I don’t purport to be an expert on the Phoenix market or anywhere else. Nonetheless, I follow the trends in the other real estate markets nationally, in the Phoenix area and other hot spots in real estate around the country that could have an impact on our local Flagstaff real estate market. One of the things that I do each month is participate in a survey of real estate agents conducted by Credit Suisse (formerly Bank of America).
Credit Suisse says that it surveys real estate agents because it “believes that real estate agents provide an accurate assessment of trends in both the new and existing home markets.” The Credit Suisse explanation of methodology notes that the existing home market accounts for 85% of home sales, will the new home market accounts for only 15%. Others survey home builders; Credit Suisse believes that real estate agents have a better hand on the pulse of both markets.
In May, 2500 real estate agents participated in the Credit Suisse survey. My answers about my perceptions of the Flagstaff market counted toward the overall assessment, but I was not part of the Phoenix survey results. I do follow those results because our Flagstaff market is significantly second homes of people living in Phoenix. When Phoenix homeowners' perception (not to mention the reality) of their primary homes’ values dropped, their willingness to pull equity from those homes to buy a weekend escape home in Flagstaff was erased – and that had a significant impact on our Flagstaff real estate market.
So, it is worthy of note that the May Credit Suisse survey of real estate agents shows that there has been some positive shift in the Phoenix market. Don’t pop the cork on the champagne yet because here’s what it says: “The hunt for deals has begun.” Traffic consisting of buyers looking for homes in the Phoenix area increased over the prior 30 days; however, it remains below expectations for this season. “Agents noted that buyers remained hesitant given the continued price declines and high inventory levels, but that prices seem to have reached a point where buyers are at least interested enough to look.”
Prices continued to decline in the Phoenix market in May, with new homes apparently selling close to the builders’ cost to build and forecloses being very aggressively priced. The bright spot is that this is having its intended effect – inventory levels are stable even with new listings coming on the market – that means sales are happening. Credit Suisse, however, is “hesitant to draw any conclusions from this [positive] reading” since “flat inventories are also typical for this time of year.”
All of this reinforces my view that insofar as the Flagstaff real estate market depends on the Phoenix market to press our prices higher and bring inventories down, we will not see an improvement in the market until at least 2010. Remember, however, that there are many other factors affecting the Flagstaff market, and that is why our real estate prices have not fallen to the degree they have fallen in Phoenix, and are not likely to fall that signficantly.
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