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2016 Special Flagstaff Market Update!

by Gary Nelson

Special 2016 Report!  Here is the information you are looking for about what is happening in Flagstaff housing in 2016 and what occurred in 2015.  Inside Flagstaff, the average price paid for a “home” in 2015 was $320,785 and the median price was $295,000. This compares to the 2014 calendar year statistics of an average of $308,500 and the median price for a “home” was $291,900. This is for all types of homes. More accurately, a single family home had an average sales price of $388,288 last year as opposed to our all-time high, which was the 2006 average of $452,200. The average townhouse is at $277,349 and a condo is at $162,209.  It took an average of 94 days to sell a home in the past 12 months. That is down from 112 days on market the year before. Again, this is for the city of Flagstaff for the past 12 months. Rural markets near Flagstaff are slightly different, so please contact me for accurate information in rural areas.

When reading the above information, keep in mind that I average information over a one year period, not quarterly and not monthly.  Why do I average over a 12 month period?  Because we are an extremely seasonal market and a small market at that!  A comparison of a one month period to that month of the year before may show an increase or decrease of activity, but a minor fluctuation in closed sales would throw the data off to indicate a problem in the market.  Also, sales in Northern Arizona are typically slow during the colder months and heat up nicely during spring and summer.

When looked at on a monthly basis, we are seeing a steady increase in values in townhouses, and in single family homes. Less so for condominiums. Condominium sales continue to remain sluggish due to the difficulty in financing them and most sales are still cash.  This will change in 2016 as FHA has announced changes to their condo guidelines.  I will blog about that later, I am sure.

Flagstaff and its surrounding communities are under what many consider a “Seller’s Market”, with lower inventory of homes than Buyers ready to buy.  That is to price ranges to about $400,000.  Above that is a neutral market and above $700,000…I think is a Buyer’s market.  We are seeing very low inventory in most housing categories, but single family homes are leading the charge here in Flagstaff. 

For buyers looking in the Flagstaff area for a home this all means that there are very few choices when searching for a home and every once in awhile a “good deal” to be had.  Again, we are seeing very low inventory in Single Family homes and townhomes, making for increased demand.  We shall see how this year progresses.

For sellers looking to sell in the Flagstaff area, there is not as much competition depending on location.  Some areas in the Flagstaff market and some price ranges are still difficult to sell in, but we have had much stronger market conditions this past 12 months.  This means that you still have to concentrate on 3 things: price, preparation and presentation. You must be priced at market value. No “fishing” and hoping it sells. Secondly you must be well prepared, in good repair and staged to sell. Finally, you must be well presented with a great internet presence, graphics and a huge MLS (Multiple Listing Service) presentation, etc. Of course you need a top notch, experienced Realtor© to get the job done.

Who Buys?

Having been involved with Realtor association and MLS leadership on a local, state and national level, I continuously have conversations with Realtors from various parts of the state and country.  Realtors and real estate economists from across the nation and across Arizona all agreed that our markets have continued to increase nationally.  However Arizona, as usual, is beating to a different drum.  Almost all Realtors in various parts of Arizona are reporting a change in their market this past few years, of course. We have increased slightly in values and we will continue to experience a Sellers’s market in the outlying areas, but not in the Metro Phoenix market.  There is a change brewing in the Metro Phoenix area.  A HUGE change.  Demand has increased and supply is decreasing.  We know what that means, right? Typically, Flagstaff and the rest of Northern Arizona follows Phoenix by several months.  Also, there are several factors that are leading to the market we see in the Flagstaff area, which is much STRONGER than most in the U.S.

First, we have experienced less inventory on the market for the greater Flagstaff area this past 3 years.  Buyers still have choices, especially in the Townhouse and Condominium markets, but fewer choices.  Also, we continue to enjoy very low interest rates that are still hovering above the 4% mark, and have fallen slightly since January 1st.  In my work with the National Association of Realtors, I have heard many real estate economists that feel that relatively low interest rates will continue for 5 to 6 more years, barring any unforeseen economic disaster which the U.S. Government spent 2009 through 2011 staving off.

Secondly, Northern Arizona is greatly impacted by second home buyers from other areas.  I heard an estimate that for 2006 (Flagstaff’s all time high year for real estate), 57% of Buyers in the Flagstaff area were second or vacation home buyers!  Buyers come mostly from the greater metro Phoenix area and especially the Scottsdale and Sun City areas. The greatest impact seems to be from the completion several years ago of the 101 freeway both east and west of Interstate 17.  When the completion of the 303 occurs in the west Valley, it will have the same effect. This has made Flagstaff and its surrounding areas 20 minutes to a half hour closer to those trying to escape that blazing metro Phoenix weather!

Another impact, although a smaller one, is the buyer relocating to Flagstaff for its weather and lifestyle. This is a great place to live. Clean air, good schools, wonderful forests and tons to do. We are not seeing much of an increase in population (about 2.7% per year), so relocating buyers may be mostly replacing those that are moving out of the area.

In my opinion, California has a blown-out-of-proportion impact on home prices here. We do see buyers coming in from California, and many of them over-paying and in cash. However, as a percentage of our market they do not have that big of an impact on demand in Northern Arizona. Scottsdale has a much bigger impact on demand than the entire state of California!

So we seem to be in a more normalized market than what we have seen: A frenzied 2004 and 2005, a somewhat slow, but slightly increasing 2006 and a declining market in 2007 through 2011. The tail end of 2008 and early 2009 had the biggest drop. 2011 through 2015 shaped up to have good activity, less inventory, tentative buyers and deals to be had! The current market value of property in the Flagstaff area is roughly equivalent to what it was at this time 2005. But vastly different market conditions.

Use A Pro

The Crystal Ball:

So, what can we expect for 2016? The beginning of this year should see more of what we saw in the end of 2015 – less inventory of housing product than the year before and better sales, extremely low interest rates and “deals” to be had. As 2016 begins, our market will continue rebounding  with both number of listings available for sale and in actual sales.  Remember, 2011 through 2014 were “rebuilding” years, but each was different.  2015 will be recorded as different again.  And 2016 will have increasing buyer activity, too few homes on the market and great interest rates.

Flagstaff’s demand for housing product will continue to gradually rise driven primarily by the financial strength of the second home buyer and the availability of “cheap money”…very low interest rates in our country.


Gary Nelson is a lifelong resident of Flagstaff, Arizona and is the Delegated Associate Broker at Realty Executives of Flagstaff.  Find your own part of Flagstaff at www.GaryNelsonGroup.com.

Flagstaff's Top 3: Places To Have Lunch In Downtown Flagstaff

by Gary Nelson

I am often asked where is a great place to sit down and grab lunch with a friend or business prospect?  Since I work downtown and grew up here in Flagstaff, I will give you a couple of great ideas in no particular order.  Here we go:

Cafe Daily Fare

This is a great spot to go!  It started off as a catering company and they have expanded over the years to become a Flagstaff favorite.  One friend of mine almost always picks Cafe Daily Fare whenever we meet for lunch, and I think I know why.  Very high end feel to the food and the menu changes a bit here and there.  Although not cheap, they won't break your budget either.  This place is not really within walking distance of Downtown for most people, but a short drive away on the shoulder of Downtown behind and east of Babbitt Ford on Route 66.  Very much worth the drive or long walk.

Cafe Daily Fare

 Many locals swear by the duck tacos.  I find them to be a bit too sweet for me, but they are delicious. For me, I will usually opt for a special of the day.  The enchiladas I had last time I was there were very good, as was the muffeletta I had there once.  Of course, the best place on the planet for a muffeletta is Central Grocer in New Orleans, but...we are talking about Flagstaff, Arizona!


Muffeletta

Cafe Daily Fare is a place you can't go wrong.  A bit crowded since it is somewhat small and popular, but a great place to meet a friend or 3 for lunch.

Here is their website:  Simply Delicous Cafe Daily Fare

Charly's

A few of my friends would probably disagree with me on this one, since Charly's isn't the same since Matt left, but I think it is a good, solid choice for a friend lunch or business lunch downtown.  I think they will get it dialed in as this year goes on.  Plus, if I take a client there, it is a big slice of Flagstaff life served along with the lunch.  What I mean, is it is probably one of the most "local" restaurants in Flagstaff, much less downtown.  It is also a good choice for a larger group, as Charly's has a pretty wide menu and everyone can find something to like.


For me, it's the Navajo Taco, hands down.  Chicken with black beans, please.  Extra salsa on the side.  If you don't know what a Navajo or Native Taco is, you are missing out.  It is a serving of fry bread (kind of like a cross between a funnel cake and a sopapilla) with taco toppings loaded on top.  So your meat of choice, beans, lettuce, tomato, and other typically Mexican or southwestern toppings.

 

Probably the best place to get one in Arizona is at Cameron Trading Post in Cameron about an hour north of Flagstaff on Highway 89.  But Charly's Navajo Taco fills the bill as well.  There are quite a few southwestern options on the menu, as well as sandwiches, salads and more.

Here is their website:  Charly's Pub and Grill 


Swadee Thai

Why Swadee over the much more popular Pa To Thai?  Atmosphere.  Much less crowded and just around the corner.  Honestly I would give a nod to Pa To for their food, but Swadee is quiet and is just a better place to meet people, in my opinion.  I do love Pa To, which will be highlighted in an upcoming food blog on Thai in Flagstaff!

At Swadee, it is Yellow Curry during winter, Mixed Vegetables during summer.  The Yellow Curry features a thick coconut and chili based sauce of your choice of meat plus potatoes, carrots and a few other yummy thing.  Set the heat where you want it, but on a scale of 1 to 5 stars, 3 through 5 will take away that winter chill!  During the summer months, I think the the Mixed Vegetables are perfect because it is a quick stir fry packed with vegetables and once again, you get to tell them how spicy you want it.  Perfect for my version of a quick, light lunch.

Here is their website:  Swadee Thai

 

That's it for now!  My next blog will be Flagstaff's Top 3: Mexican Restaurants for Breakfast Or Lunch.  

Here is a link to my first blog on food in Flagstaff:  New Restaurants in Flagstaff!


Gary Nelson is a lifelong resident of Flagstaff, Arizona and is the Delegated Associate Broker at Realty Executives of Flagstaff.  Find your own part of Flagstaff at www.GaryNelsonGroup.com.

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Contact Information

The Gary Nelson Group
Realty Executives of Flagsaff
15 E. Cherry Ave. Suite 101
Flagstaff AZ 86001
Direct: 928-225-3510
Office: 928-773-9300
Fax: 928-774-1102


 

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