FLAGSTAFF 2021 REAL ESTATE MARKET FORECAST
For many reasons, 2020 will be a year remembered for generations to come. As the year comes to a close, many of us look to the upcoming year and wonder what it will have in store. For the housing market, the picture for 2021 is looking very promising for the national real estate market and for our local, Flagstaff market.
While 2020 was filled with many challenges, the housing market proved to be an exceptionally bright spot in an otherwise difficult year. On a national level, the latest statistics from November 2020 show existing home sales up a whopping 25.8% over 2019, according to the National Association of Realtors®. In addition, Pending Home Sales in November 2020 showed a yearly increase of 16.4% from 2019 nationally.
Many factors contributed to this increase in housing market activity. According to the National Association of Realtors® 2020 Buyer and Seller Profile, the onset of the COVID-19 pandemic in the first quarter of 2020 lead many homeowners to reflect more closely on their current living situation. With many beginning to work from home, size and floorplan became much more important to the average homebuyer. Buyers found a need not only for more space, but specific space that could lend itself to home offices, home gyms, and other specialized spaces that shifted from public areas to the home. Additionally, buyers who purchased after March 2020 also placed greater importance on multi-generational housing in order to stay close to family. Over 15% of homebuyers were looking for this type of housing specifically after March. The actual physical location of a home seemed to increase in importance with buyers after March of 2020 as well. With an increase in the availability of remote work environments, many homebuyers relocated from more populous urban areas to suburbs and smaller towns, where more space and privacy were possible, and commute times held less importance. This, of course, adds to Flagstaff’s already sky-high desirability.
So what does this all mean for 2021? Essentially more of the same. The National Association of Realtors® currently forecasts the unemployment rate to continue to decline from March 2020 levels, as well as mortgage interest rates to continue to hover around the historically low 3.0% range for a 30 year mortgage. While the expected percentage of American workers working from home is expected to decrease from 21% to 18%, it is still much higher than the 2019 level of 6%. New home starts are forecasted to be 1.5 million units in 2021, which is still predicted to be less than buyer demand necessitates. All of these factors should lead to the continued increase in housing demand, with current forecasts of median home prices to continue to increase around 8% nationally. Other favorable indicators are increases in Mortgage Purchase Applications (up 27% in November) and Lockbox Openings (up 21% in October) which both indicate continued increases in buyer activity that will ultimately lead to home purchases and sales.
Locally, the Flagstaff market currently has 142 single-family homes that are under contract, and only 52 active single-family listings, in all price ranges. These figures are extraordinarily low and are further evidence of a lack of inventory necessary to meet increasing buyer demand. The National Association of Realtors® also lists the Phoenix Metro Market as the Top Prospective Market over the next two years. Historically, increases down south tend to lead to increases here in the Flagstaff market as well, with an increase in second homeowners attracted to Flagstaff’s four seasons and outdoor recreation. All in all, 2021 seems to be looking great for Flagstaff sellers!
While a continued, competitive market should be great for sellers, it can prove to be challenging for buyers! With market conditions expected to continue, buyers can expect to still be involved in a competitive situation, with multiple offers, in all price ranges. Right now it is imperative to have an expert from The Elite Team in your corner to determine the best strategy for structuring an offer to give you the best chance at securing that perfect property.
As always, if you ever have questions about the Flagstaff housing market, The Elite Team is here to help!
HISTORICAL SALES DATA FOR FLAGSTAFF HOMES 2005 – 2020
MEDIAN SALES PRICE
Comparing the median sales price since 2005 we can see 2012 was the bottom of the correction which began in 2007. In 2012 the median sales price for single-family homes was $260,000. Without exception, we have seen a steady increase every year since 2020 topping the mark at $505,500. That is over a 94% increase from the low in 2012 and a 16% increase off the 2019 median sales price of $435,000. Keep in mind that the data used for 2020 was for all homes sold in the year, beginning in January and going through the end of the year. For December 2020, our median sales price for single-family homes was $535,657. Arguably this is a more realistic median price of where our market is now when compared to the year as a whole and where we see the market going into 2021.
TOTAL NUMBER OF SALES
Sales volume is important in our market as it helps give us insight into the demand for homes in our area. It appears the pandemic and national stay-at-home orders, along with historically unbeatable mortgage rates, caused a lot of people to embrace the American dream of homeownership. Add into the mix second home buyers, vacation rentals, and investors and we closed out the year with a record-breaking 1289 single-family home sales in the Flagstaff area. That is almost a 30% increase off the former high of 1003 in 2019. It was a hot, hectic, and competitive market in 2020. Just over two weeks into 2021 we are experiencing a continuance of high demand with limited inventory in all price ranges.
AVERAGE SALES PRICE
Was 2020 the year of luxury? The average sales price for a single-family home was $644,044. Perhaps skewing the numbers a bit was the jump in sales of luxury homes. While there is debate as to what is considered “luxury” and at what price point, we looked at homes sold over the one million dollar mark. For 2020, there were 146 homes sold at or above $1,000,000. In 2019, there were 49 homes sold over the $1,000,000 mark. Looking at total sales from January 1, 2012, through December 31, 2019, there were a total of 198 homes sold over $1,000,000. Yes, one could say 2020 was an impressive year for higher-priced homes in the Flagstaff area.
AVG. PRICE/SQ. FT.
At $138.76 in 2011, we saw the lowest price per square foot since 2005 in the Flagstaff market. Our high per year to date was in 2020 at $260.07. While questions about price per square foot are some of the most common we get from buyers and sellers looking in our market, we do want to point out there are many factors you must consider when looking at the price per square foot of a property. Comparable sales, general condition, size, location, upgrades, lot price are just a sampling of the factors that go into determining the price per square foot when looking into buying or selling a home. This is where we highly recommend consulting a real estate professional, The Elite Team at RE/ MAX Peak Properties, to help you determine the market conditions and price to buy or sell your Flagstaff investment.
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).
HOMES CLOSED IN 2020
ELITE TEAM: Top 3 Personal Goals For 2021
1. Hike monthly and try to ski over 50 days this year
1. Commit to outdoor exercise 200 hours this year.
1. Complete 2 bike rides of 75 miles or more
1. Work out 4 days a week with home gym equipment to get to a healthy weight
1. Meditate more
1. Ski and hike on my new hip
1. Run my daily Fat Man’s Loop the opposite direction
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.