The table below should dispel any notion that the bottom fell out of the Flagstaff real estate market in 2006. Given the market news we've heard from other parts of the country, where prices did fall, it also explains why CNNMoney.com identified Flagstaff as one of the hottest markets in the country. What did happen, however, is that our rate of price increases declined compared to 2004 and 2005, and sellers experienced real competition in marketing most homes while buyers had opportunities to choose among competing homes in our average price ranges for the first time in more than two years.
In some ways, the statistics seem in conflict with the basic laws of economics - the number of units sold declined, yet prices went up. This is Flagstaff's version of what national housing economists have characterized as "price-stickiness." Essentially, it means that many sellers are willing to wait for their price - even taking their homes off the market rather than sell. In past years, these sellers would have experienced phenomenal gains very quickly and then tried to figure out where to move! This year, they still could have experienced gains, but needed to be motivated to beat their competition in order to sell.
The distressing part of this table shows that the most "affordable housing" - manufactured and mobile homes - increased at the highest rate. Many fewer of these homes were added to our housing stock in 2006 compared to recent years. In contrast, we've had an increase in condo offerings with three apartment complexes converting to condos. Accordingly, that sector increased the least in price.
Sold Units (as reported in Northern Arizona Multiple Listing Service - does not reflect all sales in the market) |
Single-Family "Stick-Built" |
Townhomes | Condos |
Manufactured Mobile Modules |
All types |
# of Units 2005 (Avg. Days to Sell) | 995 (73) | 191 (56) | 86 (95) | 171 (71) | 1443 73 |
# of Units 2006 (Avg. Days to Sell) | 784 (88) | 189 (59) | 81 (103) | 151 (84) | 1205 88 |
2005 Avg. Price | $395,823 | $256,401 | $202,755 | $174,066 | $339,583 |
2006 Avg. Price | $462,444 | $294,370 | $210,387 | $387,704 | |
Change in Units Sold: | -21% | -1% | -6% | -11.7% | -16% |
Change in Average Price | +16% | +14.8% | +4.9% | +20.9% | +14.2% |
Continued on prior page . . .
Annual Market Report (continued from back page)
A quarter-by-quarter analysis for Flagstaff sales is below:
MLS Statistics | Median Price | Average Price | Homes Sold |
4th Quarter 2006 | $330,791 | $377,599 | 274 |
3d Quarter 2006 | $340,000 | $407,128 | 356 |
2d Quarter 2006 | $340,000 | $390,519 | 344 |
1st Quarter 2006 | $309,900 | $370,002 | 211 |
MLS data for single family, townhomes, condos and manufactured homes with Flagstaff mailing addresses. See footer.
The days-on-the-market number ended 2006 with an average of 87 days from listing to closing. This compares to an average of between 60 and 70 throughout 2005. The number of homes actively for sale as of January 8, 2007, was 631 compared to 317 on January 12, 2005, when we took last year's January "snapshot." The pace of sales has changed dramatically, with Flagstaff, like the most of the rest of the nation, having over six month's supply. Actually, Flagstaff has over seven months' as of the January 8 snapshot. Last year in January, Flagstaff was still a very hot seller's market with just 2 months' supply of homes available. However, looking at prices under $500,000, we are still technically in a seller's market with just under six months' supply. So, while buyers in that price range have more choices than last year, sellers are still in the driver's seat overall.
Last year, when we had just come off a year of nearly 30% gain, my annual report predicted overall gains for the year of 10-12%. As it turned out, I was too pessimistic. Flagstaff's unique characteristics continue to draw buyers in great numbers and the economy overall continues to support the second home market. To top things off, interest rates were lower in the fall and at the end of the year than they had been in the spring and summer. Thus, an average price increase of over 14% -- a rate spectacular compared to many parts of the country. In 2007, I anticipate another great year for those who already own Flagstaff real estate. Barring major disruptions on the national scene, I expect our prices will again increase in the 11%-15% range. The number of condo sales may pull down the average and median prices a bit to make us fall short of my estimate, but for single family and townhome owners, the price increases will continue. Sellers do need to remember that we're not going to see a market like 2004-2005 again for some years to come.
2006 was a wonderful year for Team Heitland at RE/MAX Peak Properties. We helped nearly 50 individuals and families find or move on to their new homes, or make or dispose of their investments in Flagstaff real estate. Some of our clients came from internet contacts, but most of our work has come from past clients and referrals by friends and associates. We are extremely thankful for such help and support, and for the compliment that referrals and returning clients imply. Also in 2006, Patty Peck joined our team as a Buyer Specialist and Celeste Chavez joined us a Client Care Manager. Our company, RE/MAX Peak Properties, was chosen as Best of Flagstaff real estate office by readers of the Arizona Daily Sun for the second year in a row.
We look forward to another wonderful year in 2007, and wish the best to all of you!
Ann Heitland, CRS, ABR, GRI
Associate Broker, Realtor®
and
Tina Sutton, ABR, GRI and Realtor®
Patty Peck, ABR and Realtor®
Celeste Chavez, Client Care Manager and Realtor®
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