This has been a remarkable year in many ways, but a very unusual year for the residential real estate market in Flagstaff. January and February seemed a bit busier than our previous early 2019 reports, but nothing prepared those in the real estate industry for what was to come.
After the COVID-19 pandemic changed the way we work and live in Flagstaff, many predicted our real estate market would slow down or even see price reductions, as business owners and their employees were shut down and unable to generate income. What a surprise to see that Flagstaff properties, if priced competitively, are selling within days of listing – in some cases, with multiple offers at the highest prices in recent history. What’s happening here?
Between last year and today, Flagstaff real estate prices have jumped up 21%. From 2017 to today, Flagstaff real estate prices are up an astounding 36%. Our average single-family home in Flagstaff is now $600K. And Flagstaff is not the only market seeing this trend. According to the Cromford Market Index, home prices in Phoenix and surrounding cities that sold between August and September in 2019 were compared to the same timeframe in 2020. All the numbers were up, with the top increases in Cave Creek at 23.6% and Scottsdale up 19.4%.
Are you asking, “Is this a bubble?” “Should I wait to buy until the prices drop?” You may remember the sting of the 2007-11 precipitous drop of real estate prices in Phoenix and then in Flagstaff.
How is 2007 different than 2020?
The 2005-2007 rapid appreciation of sales prices were caused by “liar loans” that were unsustainable. Buyers with these loans bought in such numbers that they depleted the inventory, causing a shift in supply/demand for properties. As home prices for this limited inventory rose, the prices continued to rise, even when the demand equalized. Luckily, these loans do not exist today.
What factors are driving up real estate sales prices in Flagstaff?
An overall population surge of Millennials who are coming of age and want to own their own home and live in a wonderful place like Flagstaff.
Now that COVID has shown us that we CAN work from home, those in city centers want to move to a location they can spread out a bit. This may explain the Cave Creek 23.6% home price increases. This is a lifestyle shift. Big city urban dwellers are moving to smaller towns with larger lots or even acreage.
Our stock market/equity holdings are nearly back to pre-COVID levels. Buyers who stay in stocks are feeling more comfortable, and others feel they would rather invest in real estate versus a choppy stock market.
Our nation’s migratory shift is headed our direction. People migrating from California and other areas are headed to sunny Arizona for our reasonable tax base, weather and jobs.
Buyers still have an opportunity for historically low loans. Ask any lender. Buyers can buy more “house” for the same monthly mortgage fee than even six months ago.
Our Flagstaff inventory is seriously low, in ALL price points. We are surrounded by National Forest. Expansion with new subdivisions like Timber Sky, Trails End and Canyon del Rio are coming along, but not fast enough to keep up with buyer demands. Less supply with more demand can only cause prices to go even higher.
Want to learn more about our pattern-defying real estate market in Flagstaff or how to find a property in your price range? Give your realtor a call to discuss how to find and strategize your purchase offer. But if you want to buy in Flagstaff, don’t put it off. Flagstaff is still a buy! FBN
By Paula Mack
Paula Mack is a long-time Flagstaff resident and sales agent with Russ Lyon Sotheby’s International Realty. She can be reached at email@example.com or 928-699-6837.