Real Estate News: Quarter 1, 2021 Market Recap

The Elite Team at RE/MAX Tidbits

On March 31st, The Elite Team hosted its first-ever Flagstaff’s Funniest Home Videos Contest live on Facebook. It was an absolute blast with tons of hilarious videos. Thank you to all who submitted, watched or both! Snoring dogs, falling ballerinas, upright dogs, and mean cats were just some of the great laughs we had. Thank you SO MUCH for your incredible submissions!

Congratulations to our three finalists that each won a $200 local shopping spree to Brightside Books, Flagstaff General Store, HomCo, and Brandy’s! Keep your cameras rolling for the next one!

SELLER TIP: JUST LIST!

If you’re ready to sell your home, now’s the time! Contact the Elite Team to learn more about selling your home.

BUILDING IN NORTHERN ARIZONA

When buyers are thinking about purchasing a home, the idea of building usually comes up as an option. Right now, our inventory in Flagstaff and most of Arizona is so low the option to build seems like a good choice for a lot of buyers. While this is a good fit for some buyers, oftentimes, building becomes more expensive than purchasing a resale and delays cause the build time to be extended. Of course being able to design a floor plan and make a house exactly what you want is a great benefit of building your own home, and a lot of people are able to go this route. This article will explain what we are seeing in Flagstaff when it comes to lot availability and the cost to build right now in our area.

When building in Flagstaff, one of the challenges is finding a lot to build on. Because we are surrounded by National Forest and State Land, the amount of vacant land is sparse. Unlike many metropolitan areas, we do not have the ability to sprawl. This leads to a lack of inventory which tends to increase the housing price and cost to build. At the time of writing this article, April 14, 2021, there are currently 59 lots available in Flagstaff that could be built upon with a stick built house
or a manufactured home. Of those 59, only 23 have water available to them. Of those 23, 12 are in gated golf course communities. Not everyone wants to be in a gated community because there are extra fees associated with that. So, long story short, there are not many lots that are easily buildable right now.

The cost of building has also gone up substantially over the past year. There are a lot of factors that go into the cost of building. One major factor is the price of lumber products, and with costs increasing drastically in recent months due to low supply. There are many reasons for our low supply. Many mills were shut down for months at a time due to the COVID-19 pandemic, but the building didn’t stop. So once these mills opened back up, they were completely backlogged. Also, shipping the lumber has been a struggle. According to our friends at HomCo Lumber and Hardware pricing of White Fir lumber has gone up around 40% since 2020. Market experts are predicting no softening of lumber pricing until Quarter 4 of this year when supply can catch up a bit. Builders are telling us that they are building between $400-$600 per square foot depending on the style of home. Remember, these prices do not include the price of the land.

This article is, by no means, a way to talk a person out of building a house. It is just an informational look at where things stand right now. While building can be tricky and expensive, it may be the right move for you and we are happy to help you find a lot. All of our agents have helped buyers buy vacant land and we have a lot of great contractors we can refer.

1st Quarter Sales Report For 2021

TOTAL SALES

The numbers for the first quarter are a bit misleading as total sales appear lower than what we would expect. There were 206 single family homes sold during the first quarter of 2021. This is right in line with the 208 sold in 2020 and well above the 137 in 2019. There is very little doubt the market could have easily sold 10-20% more homes if there was available inventory. Simply put, we do not have enough homes to sell to meet buyer demand.

Looking at the inventory on April 16th, in the city limits of Flagstaff, there were only 34 active (not under contract) single family homes on the MLS. Of those 34, only 17 were priced $600,000 or below. Adding the rural areas of the city and including Bellemont and Munds Park there were 28 single family homes under $600,000. Flagstaff area buyers are finding themselves putting in multiple offers on different properties, and getting very creative with their offers to a seller in hopes of getting an acceptance.

MEDIAN PRICE

As further evidence to the market challenges, comparing the market year over year for the first quarter of 2021 saw just shy of a $100,000 increase in the median price for single family homes in the Flagstaff area. The median for townhomes was over $100,000 and manufactured homes was just shy of a $75,000 increase.

We anticipate an increase in pricing heading into Q2 and continuing through the end of 2021. Interest rates have seen small fluctuations but remain historically low. There is no end in buyer demand and there seems to be no resolution to our available supply. While more local residents are still active in the housing market, Flagstaff is also seeing increased demand from those relocating from the coasts as well as other areas of the US that are attracted to our beauty, 4 seasons, and incredible outdoor activities. The supply-side of the market continues to struggle, with local builders having to create waiting lists for new construction, and many going to highest and best offers when they release inventory. To date, they are unable to keep up with the demand of the breakneck pace of our current market.

PRICE PER SQ. FT.

The average price per sq. foot was $289.04 for the quarter for single family homes. This is a 23% increase from the $234.84 we saw last March. As you saw in the Building section on the first page, lumber costs have increased dramatically. This definitely has an impact on the cost of new construction as well.

AVERAGE SALES PRICE

We saw an average sales price of $666,749 for single family homes in the Flagstaff area for the first quarter. Yes, that’s nearly 3/4 of a million dollars. This has been driven not only by the increased demand across all price ranges, but particularly resulting from the current popularity of the Flagstaff luxury home market.

The data reported here are based on home sales in the Flagstaff metro area (the city of Flagstaff and immediately surrounding county areas) 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).

GET TO KNOW THE ELITE TEAM

Our Favorite Hiking Spots

Get to know the Elite Team in the most Flagstaff possible way: our outdoor adventures! Here are some of the team’s favorite hiking spots around Flagstaff and Northern Arizona:

ERIC

• Game Trails off the north side of West Fork
• Forest Service Trails and roads off of Hart Prairie Road

DAVE

• Kachina Trail
• Bear Mountain (Sedona)

IAN

• Capitol Butte via Lizard Trail Head (Sedona)
• Weatherford Trail (San Francisco Peaks)

KELLY

• Humphreys Peak
• AB Young (Sedona)

SARA

• Mount Elden Lookout
• Paradise Springs

JESS

• Kendrick Peak
• Kelly Pocket Trail

TAD

• Boynton Canyon
• Veit Springs

If you or anyone you know needs assistance in buying or selling a property or with property management the Elite Team is here to help. Email or call us with any questions [email protected] or at (928) 714-0001.