Flagstaff’s March real estate market was exciting to live through – the statistics aren’t quite as exciting, but they are certainly interesting. Total closed Flagstaff residential transactions increased from 55 in February to 91 in March – a whopping 65%. Pending contracts also rose, while listings were static. No wonder Flagstaff home shopping felt like a whirlwind for buyers and agents alike.
Comparing year-to-year statistics for March, single-family-home sales volume increased 10% while the median price of Flagstaff single-family homes sold fell 9.2%. We’re seeing larger homes sell at lower prices, bringing the price-per-square-foot to new lows – below $100 per square foot last month for the first time since prices began to fall.
Forty-three percent of the single-family homes sold in March were distressed properties – bank-owned or short sales. The supply of REO properties is very low right now in all of Flagstaff’s housing categories, including townhomes and manufactured. National commentators say we should expect an influx of bank-owned homes this summer as banks finally try to clear out their inventory. Since I haven’t seen many trustee sales putting Flagstaff homes into banks’ inventory, we’ll have to see if there is much for them to put out here. They could have more than shows up in the trustee sales because they also accept deeds-in-lieu of foreclosure. We’ll just need to wait and see.
Another form of “shadow inventory” doesn’t involve distressed properties, but just patient homeowners: Those homeowners who have been holding out for Flagstaff prices to improve. At the first uptick in the market, or perhaps sooner as owners lose patience, these homes will begin to move into the market. More homes available means downward pressure on Flagstaff prices. It will be a vicious cycle, keeping prices from rising reliably until we work though back-logged inventory, probably more than a year from now.
Looking at this month’s chart, you can see where all that activity was in March – the lowest priced homes. Some of these are investors. Some are first-time buyers. The higher-end homes still are not moving – the economy is not ready to support them as second homes. Many are still over-priced compared with supply. And, the high-end Flagstaff homes sector is where we really have a shadow inventory of hesitant homeowners. So this situation is not going to change for a while, IMHO.
For more information, contact the author of this post, Ann Heitland, Associate Broker RE/MAX Peak Properties.