Will scarcity and demand continue to push home prices to new heights in 2022?
Currently, the average price of a single-family home has increased 12% month over month from September 2021 to October 2021, from $737,916 to $827,565 respectively. Last October, the average price of a single-family home was only $675,332 and now is $152,233 more for the same house, which represents an increase of 22% year over year, landing at a whopping average of $347 per square foot. Thus, it is not simply the luxury market experiencing exponential surges in price, it is prevalent across the board. In fact, even prior to the historic price increases this year, the Flagstaff City Council declared a Housing Emergency on Dec. 1, 2020.
As a result of the declaration, the City of Flagstaff recently released a 55-page 10-Year Housing Plan (draft) acknowledging the issues while providing a framework for initiatives and strategies. According to the Housing Plan, the goal is to substantially increase the number of homes available and also address affordable housing for community residents. Specifically, one of the overarching goals is to create or preserve 7,976 units by 2031 with a minimum of 10% of these homes deemed affordable. But what is the definition of affordable?
According to the United States Department of Housing and Urban Development (HUD), a household should spend no more than 30% of monthly gross income toward housing costs. If a household spends more than 30% on rent or mortgage, it is considered “housing cost burdened.” Within our community, 45% of all households are living in a cost burdened situation and 12,072 households with an affordable household need. This number is staggering and without some relief, Flagstaff is in jeopardy of losing the opportunity to employ the talent necessary to keep our community running.
The silver lining is new construction communities on the horizon that will help relieve some of this pressure. Yet, Flagstaff will need additional partnerships to bring to fruition the almost 800 new units per year necessitated to alleviate our housing deficit. Fundamental issues impacting the entire country are material and labor shortages.
Will scarcity and demand continue to push home prices to new heights in 2022? Will limited supply exacerbate an already tight market and escalate prices beyond next year? We will examine this phenomenon in a four-part series regarding growth and sustainability in Flagstaff. Nationally, home prices have increased 18% according to CoreLogic, a data and analytics company, which is the largest annual gain since 1976 when CoreLogic home data mining commenced. As a whole, home prices have increased 29% across Arizona and 30% in Phoenix, which is the top metro increase in the U.S.
Thus, at an average price increase of 22% year over year, Flagstaff is not experiencing a phenomenon of greater magnitude than that of our state. It is more prolific than that of our nation. It is with tremendous anticipation that we watch to see the success of our City Council’s collaboration to deliver on one of the basic human needs for our lives: shelter. FBN
By Lori Anna Harrison
Lori Anna Harrison is a Flagstaff native and 17-year real estate veteran commencing post graduate school with Shea Homes. Lori is a full-time realtor with Zion Realty, LLC and head of Arizona Dream Lifestyle. Call her today at 928-396-5851 or text 602-524-5674, email lori@AZdreamlifestyle.com and visit AZdreamlifestyle.com.
Hear more from Harrison and the real estate market later this month on Zonie Living: Business, Adventure and Leadership at https://starworldwidenetworks.com/shows/bonnie-stevens, sponsored by Flagstaff Business News.
