Saturday’s Arizona Daily Sun, the local Flagstaff newspaper, reported on October real estate sales within the City of Flagstaff. (When I report sales, I do the numbers for the greater Flagstaff area, which includes Doney Park and all of Northeast Rural Flagstaff, Kachina Village and Mountainaire, and Fort Valley.) The newspaper reporters’ statistics for Flagstaff city sales show the same trend as my larger slice of the local real estate market for October, namely homes in the lower-priced categories are selling better than those in the higher price ranges. The reporter also did an anecdotal survey of opinions from local Realtors®. Several opined that price is king now, but one wisely noted that cleanliness and good staging are also critical. We’re all having daily contact with buyers in all price ranges, but the ones looking in the upper price ranges are, by and large, sitting of the sidelines and watching for the right time to jump in. One agent speculated that next Spring and Summer, the heat in Phoenix would again drive buyers to the second home market in Flagstaff. As regular readers of this blog know, that’s not my opinion. The fact is that the Phoenix real estate market, not just the temperature, must change before our Flagstaff vacation home market improves. The frenzy of the Flagstaff second home market in past years was largely driven by the availability of home equity in primary residences in Phoenix. It’s not just that second-home buyers were pulling equity from their primary residences to buy second homes. What economists call “the wealth effect” was at work. When people feel that they have large amount of equity in their residences, or in their retirement accounts, they are more likely to spend money. The Phoenix real estate market must start having prices go up before people will start feeling wealthy again - wealthy enough to buy a second home in Flagstaff. That's not in the cards for 2009. That second home market accounts for 20-25% of the Flagstaff real estate market. As for the other 75%-80% of the Flagstaff real estate market, we need consumer confidence to rise, wages to rise, and the overall economy to improve. People who don’t have jobs, don’t have good paying jobs, or fear for their jobs, do not buy houses. Retirements being postponed also effect our real estate market since Flagstaff is consistently ranked as one of the best places in the country to retire. Then, of course, there is the “credit crunch” (not necessarily for home mortgages, but for the economy generally) and the impact of bank-owned, foreclosed properties. All of these problems are not going to be solved by Spring or Summer of 2009. Thus, the earliest we can expect an increase in volume of sales, a clearing out of inventory, and, perhaps, a tentative movement toward price increases is 2010. If you want to sell your Flagstaff home in the meantime, you need good advice from a Realtor® who is in tune with the realities of the Flagstaff real estate market. If you need a home, or want to “trade-up,” this is an excellent time to buy. If you are “sitting on the sidelines,” waiting for the market to bottom out, you should reconsider, for a number of sound reasons, and make that purchase now. To find out why, give me a call, or start by scrolling through some of the blog posts here from the last few months. Ann Heitland, Associate Broker |
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