Federal 1st Q Housing Numbers Show Broad Decline

Excerpt from OFHEO Report Issued Last Week

Arizona ranked 48th among the states in the rate of housing appreciation for the first quarter of 2008 compared to the first quarter of 2007, according to the Office of Federal Housing Enterprise Oversight. Flagstaff performed better than the state overall, with a decrease in price of less than 2% according to the OFHEO numbers. None of the worst Metropolitan Statistical Areas included in the report were in Arizona – those honors were reserved for California and Florida cities, and for Las Vegas. Nationwide, this is the first year over year change showing a loss in appreciation, as shown in the accompanying graph. Still, one-third of the MSAs showed year-over-year gains.

The Arizona Daily Sun reported this news via its Capitol Media Services wire report last Friday. One problem with reading too much into this report is that the numbers ended nearly two months ago -- March 31. Since then, we've seen significant price movement.

How much the median price report is cushioned by slow sales in higher price categories is hard to tell at this point. "If there are a lot more homes sold on the low end and fewer on the high end, the median price is bound to drop dramatically," NAR Chief Economist Lawrence Yun said. "In normal times, a median price would reflect typical homeowner equity changes, but these are not normal times. The jumbo (mortgage) market is frozen and the buying activity is more concentrated in lower-value homes."  At least some of the pressure on “jumbo mortgages” was relieved beginning April 1 when the limit on FHA loans for the Flagstaff area was increased to $450,000. We immediately saw more activity in that price range as home loans at lower interest rates became available. Meanwhile, the price stickiness that has held Flagstaff sales back for months began to give. 

If you are thinking of buying or selling Flagstaff real estate, it’s important to have a professional analysis of the market in your price range as well as in your neighborhood. That’s just part of the service we provide to our real estate clients. Contact, Team Heitland at RE/MAX Peak Properties for all your Flagstaff real estate needs!