Everyone seems to be saying the housing market is improving, but what does that really mean for Flagstaff home sales in 2013? I still think I’m going out on a limb to say we’ll see price increases, but it’s a strong limb that I’m willing to climb onto. But I say that with a firm note of caution: 1% or less is also in increase. What I really expect to see is a firming up and leveling out of the overall Flagstaff real estate market in 2013 along with a return to housing scarcity and higher prices for those looking for single-family homes in the $250,000-$300,000 price range (of course, forget anything below that).
Flagstaff single-family home sales were up almost 11% during 2012 compared with 2011. 732 homes sold in 2012 vs. 660 in 2011. The year 2012 was the first year since 2006 where the MLS for the Flagstaff metro area topped 700 single-family home sales.
Home prices were down in the year-to-year comparison for nearly every month of 2012until December, when prices were up over 10% compared with December 2011. (There was a slight, under 1%, uptick in median price for October, but in November the median price dropped nearly 9% to make up for that.) Distressed properties accounted for 63% of sales in January 2012; whereas, by December they accounted for under 25% of sales. Banks will have some more foreclosed homes to sell in 2013 and we will still see short sales, but I doubt they will get to 40% of our market again in the next few years.
In each of the last six Spring “selling seasons,” we’ve seen Flagstaff home sales prices drop. The inventory/demand ratio is such this year that it may not happen again, and if not, THAT will be a real sign of a turn-around. Right now, it’s a “seller’s market” (sales-to-listings ratio below six – see the December home sales chart accompanying this article). If a lot of homeowners jump on the selling bandwagon, it could quickly become a “buyer’s market” again, but we’ve not been in this low-inventory situation since 2006.
Prices nationwide have recovered to about the same level as in the fall of 2003, according to the widely-followed Case-Shiller index. They remain about 30 percent below the peak reached in the summer of 2006. In Flagstaff, we’re also at about the 2003 price level, but that’s down nearly 40% from the peak because we had a higher than national level at the peak. 2013 will be a recovery year, but don’t expect to see those 2006 prices again this year.