Monthly Flagstaff Real Estate Report

February Flagstaff home sales were up in volume, up in median price and up in average price compared with February 2009 and with January 2010. February’s median home sales price for a Flagstaff single-family home was $335,000. That compares with $303,000 in February 2009 and $300,000 in January 2010. The price-per-square-foot of a Flagstaff single-family-home sold in February increased from $131 in January to $145 in February.

Inventory of single-family homes for sale dropped from over 13-months’ worth at the beginning of February to 10.98 months’ worth at the beginning of March. Forty-one single-family-homes sold in Flagstaff in February 2010 versus 33 in January and 27 in February a year ago.

Here is a breakdown of single-family Flagstaff homes by price range:

Flagstaff townhome prices bounced from a low median sales price of $179,000 in January 2010 to a median of $215,000 in February. But there were only six townhome sales and 57 were being actively offered for sale at the beginning of March. In February 2009 the median sale price was much higher ($243,500), but only three sales were produced at that price. More than one partially-built Flagstaff townhome development has gone into foreclosure.

Manufactured homes are in worse shape with 54 homes on the market and only one sale last month – a short-sale that set a record low price in recent years for the Railroad Springs subdivision.

Are the February Flagstaff home sales results a cause for optimism about the 2010 Flagstaff real estate market? Probably not. Eleven of the 41 single-family home sales (26.8%) were bank-owned homes (foreclosures). As readers of my blog and print newsletter know, foreclosures will not let up from now through the next 2-3 years without some major change in government policy. Banks price to sell and they are getting them sold, leaving other homeowners who will not meet the market price set by the banks in the dust.

Everything that I hear indicates that February’s uptick is not an indication of better things to come in the spring in the Flagstaff’s home market. Instead, buyers are rushing now to get a home under contract by April 30 in order to qualify for the tax credit set to expire then. Spring will bring more homes onto the market – both foreclosures and the traditional sellers. Increased inventory will mean more competition for Flagstaff home sellers. The tax credit incentive will be gone so that improvements in home sales will depend on job creation. Without improvements in the Arizona economy, there will be almost no second home market in Flagstaff, a factor that in the past has spurred Flagstaff home sales and prices.

Will there be a substantial drop in Flagstaff home prices? My guess is not. Rather, we are in for a long-trough of prices about where they are. For buyers, any additional drop in prices is likely to be offset by increases in mortgage interest rates that will inevitably happen as the economy improves. So now is a good time to buy, and so will be the next couple of years.

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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.