Real Estate News, Quarter 2, 2019 Market Recap

Real Estate News, Quarter 2, 2019 Market Recap

Elite Team at RE/MAX Tidbits

As I write this article, our mountain town is burning. The Museum Fire can be seen all over town and is nothing short of terrible. One of the most magical things about Flagstaff is that we are able to enjoy the forests around us and be one with nature. That is what draws so many of us here. If you live in or visit Flagstaff, you are hiking, biking, skiing, camping and much more. Our privilege also comes with a great amount of responsibility. Flagstaff is a high desert and is very dry. We are constantly at high risk for fire. So when you are out enjoying the wilderness please be sure to put out your campfires; don’t throw out cigarette butts; be aware of anything that can cause a spark. As Smokey the Bear says, “Only YOU can prevent forest fires.”

I am also beyond grateful to all first responders who are risking their lives to fight this fire. There are tons of aircraft battling the fire and hundreds of firefighters from across the country here helping. If there is anything you can do to provide support to a first responder please do so. They are all risking their lives to keep our homes safe.

I also recommend you go to www.coconino.az.gov/ready to sign up for emergency alerts. We never know when disaster will strike and it is important to always be ready. Certain members of the Elite Team are already in “pre-evacuation status,” and others are keeping posted. The rest of the team will join me in hoping you all are safe and for fast containment.

– Jessica


Market Forecasts with Dr. Lawrence Yun

On July 18th, the Northern Arizona Association of Realtors® was fortunate to host a live conference call with National Association of Realtors® Chief Economist, Dr. Lawrence Yun. Dr. Yun always provides us with great insights derived from extensive market data and research that the National Association of Realtors® collects on the housing market.

Overall, Dr. Yun had a very positive outlook on the national and local housing market over the next two years! Right now, the economy is very strong. We are currently experiencing the longest economic expansion in modern U.S. history of over 10 years. With such a long and successful economic period, many have been asking “is a recession coming?” According to Dr. Yun, the answer is no. In the past, many economists have looked, with relative success, at the “Yield Curve” to predict further economic expansion or retraction. Specifically, they look for what’s called a “Yield Curve Inversion.” What that means, is that short-term bond rates are higher than long-term bond rates. Traditionally, when this inversion occurs, it’s a solid indicator that recession is on the horizon. There have been several of these “inversions” over the past couple of years, which has led some economists to predict a recession is inevitable.

Dr. Yun disagrees for a few reasons. First, he cites rates being so low in general may make these rates invert artificially, and not really be an indicator. Also, Dr. Yun notes that Consumer Confidence remains very high, which leads to more consumers purchasing goods like cars, furniture, and homes, which maintains a strong economy. In fact, Consumer Confidence is the highest it’s been in nearly 20 years! Dr. Yun also notes that job creation is also very strong, another indicator of an expanding economy. Compared to the recession year of 2010, the U.S. has generated 21 million new jobs. Just in Arizona, nearly 500,000 new jobs have been created in that period, which is nearly double the U.S. average. In Flagstaff specifically, since the year 2000, Flagstaff has increased jobs by 16% which is slightly better than the national average of 13%. Dr. Yun also cites increasing wages in Flagstaff as being beneficial to the local housing market.

As far as housing specifically, Dr. Yun notes that home values in Flagstaff continue to increase. However, Dr. Yun notes that this increase in home values may end up eventually hindering the market moving forward, as it acts as a deterrent for homebuyers to enter the market. When looking at the complete picture of higher wages, lower interest rates, and higher home prices, home affordability continues to weaken. However, in 2018 it was still better than the year 2000, when wages were lower and mortgage rates averaged around 8%. Dr. Yun believes the decreasing home affordability is leading to pent up homebuyer demand, with more and more homebuyers wanting to enter the market, but being unable to. However, in Flagstaff and Arizona as a whole, we are seeing more and more buyers from California and the East Coast, as home affordability is comparatively much better here.

Dr. Yun also discussed how changes to the tax code has impacted the economy and housing. He notes that cuts to the corporate tax rate have lead to job creation, which has been an economic boost and built overall business confidence. He also notes that the removal of the deduction for state and local taxes has negatively affected those living in higher tax rate and higher property value states, like California, Illinois, and the East Coast. Which has also been a factor in many moving from those states to Arizona, which has comparatively lower property tax rates and property values.

Towards the end of 2018, National Association of Realtors® data showed more and more consumers becoming pessimistic about the housing market. Further investigation found the reason for this is a lack of affordable inventory, and buyers not wanting to be involved in bidding wars for the inventory that was available. Early 2019 has shown consumers are becoming more optimistic, as a result of even lower mortgage rates, and an increase in new home inventory beginning to hit the market. This trend should continue as mortgage applications are also on the rise, meaning more and more consumers are beginning the process of buying a home, and is a good leading indicator that the housing market will continue to be strong. New home sales continue to increase, however not in the higher-end markets, where there is a surplus of inventory. Dr. Yun also noted the stability of the current housing market. While there is pent-up demand from homebuyers, those that currently own a home or are shopping for one are very solid financially. He noted the housing market isn’t being “propped up” by sub-prime mortgages as it was during the bubble of the late 2000’s. For example, less than 1% of homeowners are currently in foreclosure, as compared to 7% of homeowners in Arizona in 2009.

Forecasting the next two years, Dr. Yun believes that home prices in Flagstaff will continue to rise as a result of a lack of inventory. Although he believes the increase should begin to slow compared to the last few years. The overall economy should continue to grow as well. However, Dr. Yun did note that the current trade tension with China is a very large unknown variable. At current tariff levels, he believes the U.S. economy should continue to perform well, but an all-out trade war could quickly boomerang back to the U.S. and cause an economic recession. If trade talks are successful and a new trade deal is agreed upon, Dr. Yun believes that economic expansion could even accelerate further.


2nd Quarter Sales Report For 2019

For weather, the end of the 2nd quarter in Flagstaff brings us much closer to our beloved monsoon season. For homes sales, it brings us smack dab in the middle of our busy season. While the 268 single family homes sold in the Flagstaff demonstrated a strong quarter, we were still off about 11% from Q2 in 2018.

Affordability remains a challenge for many buyers in our current market. Rumor on the street is we may see a slight drop in interest rates in the coming months that might help buyers on the fence. While historically low, even a small drop in rates can make a big difference for buyers struggling with the monthly payments.

Townhome sales experienced a more dramatic drop with 55 sold this quarter, compared to 80 in 2018 and 99 in 2017. As of July 19th, there were 65 townhomes active on the market in the Flagstaff area. Only 6 of those are priced under $300,000. Many buyers choose to purchase a townhome because of the lower sales price and the ease of maintenance, as many townhomes are maintained by the Home Owners Association (HOA).

The median price for single family homes in the Flagstaff area is $437,250 in Q2. This was just about $30,000 above the median in Q2 of 2018. There are no indications this will change as we head into the second half of the year. Below are the sales numbers broken down by home type. As always we would be happy to discuss the market trends and how they affect you as a buyer or seller.

Average Home price per square foot in Flagstaff in Q2 2019
Average Price per Sq. Ft. Q2
Average home sale prices in Flagstaff in Q2 2019
Average Sale Price Q2
Median home sales in Flagstaff in Q2 2019
Median Sales Price Q2
total home sales in Flagstaff Q2 2019
Total Sales Q2
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(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).


Featured Listings

3440 N. Monte Vista Dr. | $525,000 | MLS#176955
Vaulted ceilings in a cabin home
Luxury house in the flagstaff pines
Modern kitchen with granite countertops and dark cabinets
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Here is a rare opportunity to own a spacious home in Shadow Mountain, one of Flagstaff’s most desirable neighborhoods! This home offers over 3100 square feet of living space, plenty of room for all your family and friends. You will enter directly into a large great room with beautiful wood beams, vaulted ceilings and plenty of natural light. You will love the gourmet kitchen complete with stainless steel appliances, gorgeous granite countertops and tons of storage. Nicely sized composite deck directly off the kitchen for grilling & entertaining. On the main level is your oversized master bedroom with an additional seating area and opens to an expansive deck for enjoying our beautiful summer evenings. A second bedroom and additional bathroom are also found on the main level. 2 additional bedrooms, a second living room and bathroom make for a great use of space in the basement. Let’s not leave out the forest trails are a stone’s throw away!

 

5855 W. Vista Montana Rd. | $600,000 | MLS#177840

San francisco peak view from a patio in flagstaff
Luxury cabin home with vaulted ceilings and stone fireplace
Cabin house in the pines
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Dreaming of your very own Mountain Chalet? This is it! This home is nestled on just over 3 acres, backs National Forest land on two sides and boasts the most amazing views of the San Francisco Peaks. Outdoor living at its finest here with multiple decks designed for entertaining, relaxing and just simply enjoying the Flagstaff life. You will enjoy the multiple living spaces. Beautiful vaulted ceilings, floor to ceiling windows and ¾ inch solid red oak flooring adorn the main living area. On the top level there are 2 bedrooms both with private decks and a shared jack & jill bathroom. A large family room with endless possibilities and an additional bedroom or den complete the bottom floor. Just a short drive to both Arizona Snowbowl or downtown Flagstaff, you will enjoy the privacy and the ability to be in the center of it all.


Thank you for attending our client appreciation party!

The Elite Team at REMAX Flagstaff in front of tres amigos food truck
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Another great Client Appreciation Party in the books! The weather was perfect, the food was incredible and once again the people were the BEST part. We are so grateful for each and everyone of you for your continued support, love and referrals!


Save the Date: Elite Team Blood Drive

Tuesday, September 17th from 8am-1pm | 123 W. Birch Ave, Suite 105

During the summer months, the Arizona Blood supply is at critical levels and this year is no different. DONATE AND HELP SAVE A LIFE.