Inventory shortage in Flagstaff homes is dramatic, stabilizing prices
In one respect, the 2012 move from August to September in the Flagstaff home sales market looks similar to 2011. In September 2011 there were 68 single-family closings on Flagstaff homes compared with 78 in August 2011 (-12.8% month-to-month). In September 2012 there were 62 Flagstaff single-family home sales compared with 77 in August (-19.4%). From there, the similarities end.
In September 2011, as in the three years before that, Flagstaff home sales exhibited a buyer’s market – that is there exceeded six months’ worth of inventory at the sales pace of single family homes. 2012 is different. Instead of 503 single family homes for sale at the moment I collected data for September 2011, there were 338 for sale in early October 2012. That’s a 32.8% drop in Flagstaff home listings.
It’s suddenly a sellers’ market in Flagstaff. The overall absorption rate is 5.45 months, but the pressure is dramatically greater in lower price ranges, as shown in the chart. A sellers’ market reality has even crept into the price range above $400,000. (Real estate economists define the breaking point between buyers’ markets and sellers’ markets at 6-months’ worth of inventory.)
The inevitable result of the Flagstaff housing inventory crunch is that prices are leveling out. The median price of a single family home sold in September 2012 was down only 1.8% compared with September 2011. The median price rose in September ($274,700) as compared with August ($265,000). Still, the median price per square foot was stable at $101 per square foot, showing that larger Flagstaff homes are moving in this market. The percentage of distressed properties compared with overall sales dipped to 22% – where it was in July, contributing to the month-to-month median price increase.
Stabilizing prices and low inventory foretell a likely price increase in the coming months. There are frustrated buyers right now and there are sellers’ holding their homes off the market because they are betting on price increases next Spring. My prediction is that the price increases will be tempered by a significant increase in homes for sale. This low inventory situation just can’t continue.
By the way, there are also happy buyers and sellers out there. A buyer we’ve been working with for two years found the house of her dreams this weekend and we’re under contract. Another buyer who contacted us last Friday was under contract by Sunday. So, if this is the right time for YOU to buy, don’t wait. Just understand the market and contact Ann Heitland at RE/MAX Peak Properties for help!
Note: The data reported here are based on home sales in the Flagstaff metro area (the City of Flagstaff and immediately surrounding county areas that have Flagstaff mailing addresses) as reported in the multiple-listing-service maintained by the Northern Arizona Association of Realtors.® The data may not reflect all sales (but it surely reflects most of them).