The rub is that it’s financially challenging to stay.
Maybe it’s the proximity to nature, the small-town charm and the massive biodiversity in a small radius, but this community definitely has its own unique flavor of mountain magic that pulls people in. The rub is that it’s financially challenging to stay.
While I can appreciate that there are a variety of reasons people may choose to go, my message this month is to the folks who want to stay and even more focused on the folks who really want to make Flagstaff work and who are part of this community but are struggling to pencil out the financial logic. I don’t have all the answers but there are very strong indicators that the next four to six months may just be the time to lock in your Flagstaff home and not to get pushed out down the road!
Spring Has Sprung for Housing
The most exciting part about the spring housing market is the typical seasonal surge in listings making the available inventory much more enticing for homebuyers. This year we are already seeing a larger increase than in the recent past, with Flagstaff sitting around 30% higher in new listings year-to-date than last year.
Nationally, surveyed buyers put “finding the right house” at the top of their challenges by far, compared to all other aspects of home buying. The increased inventory appears to be helping resolve some of those buyers’ concerns, as we’re seeing buying activity up year to date as well, with about an 11% year-to-date increase in Flagstaff.
What About Interest Rates?
Mortgage rates have also seen some marked improvement since the first of the year, dropping from the low 7% range into the mid-to-high 6% range. Big picture predictions still estimate conventional mortgage rates ending the year somewhere between the high 5% and low 6% range, but it’s not going to be a straight, smooth ride down.
While the inflation data has been a bit more stubborn than expected here in the first quarter, tariff concerns and other economic data points will continue to have a strong impact on how quickly those rates go down. It is important to note that while your 401K and mutual funds typically do not respond well to economic slowing, mortgage rates have been patiently waiting for economic slowing and truly sustainable inflation levels. That can seem a bit contrarian but just remember, a slower economy typically means cheaper borrowing costs, which ironically is good for the housing market.
A statistic commonly forgotten is that housing prices increased in 9 out of the last 10 recessions, primarily because of the cheaper cost of borrowing. Most experts are then really watching rates with the expectation of prices having a strong inverse correlation with home prices and demand.
Yes, You Should Stay; Definitely, You Should Buy
Considering these trends, the projected appreciation levels really start to mirror “normal,” with the 30-year historic average sitting in the 3-5% range, and most experts believe we’re going to slide right into that historic trend.
My advice then to anyone considering staying and wanting to make it happen here is clear: You should definitely buy and get out of the uncertainty and money pit of Flagstaff rentals. Buy before rates hit lower levels in the next six to 18 months, which will beat a likely higher demand wave and while inventory is in a surge position without demand necessarily surging equally just yet. This likely will put you in a home at a lower price than you’ll see in the next three to five years and position you to simply refinance any financing to optimal terms, should we see them as expected down the road. FBN
By Chris Hallows
For additional information or to schedule an appointment, visit ChrisHallows.Benchmark.us or call 928-707-8572. The Flagstaff location is 824 W Rte 66 Suite A-3.
Chris Hallows is the Branch Manager & Sr. Mortgage Advisor of Benchmark Mortgage Flagstaff. NMLS 306345 Ark-La-Tex Financial Services, LLC NMLS 2143 |Equal Housing Lender
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