What a difference a year makes? On the surface, not much change from January 2012, but there is big change brewing in inventory.
If you look at number of Flagstaff home sales and median home prices for January 2012 compared with January 2013, there was virtually no change. The median sale price of for single-family homes in January of both years was exactly $240,000. In January 2013 we sold exactly one more Flagstaff home than in January 2012 (47 total in January 2013). Don’t jump to the conclusion that nothing has changed in the Flagstaff real estate market, however.
The big change is the number of Flagstaff homes available for sale. Inventory is down 38% year-to-year as of the beginning of February. As you can see in the accompanying chart, there are many pending contracts for sale. February is likely to see heavy sales reports. February and March are not typically big months for new listings. This means we’re likely to see even greater reductions in available inventory, especially in those lower price ranges.
Another big change: Fewer than 32% of January 2013 home sales were distressed properties (Short sales or bank-owned). In January 2012, 63% of Flagstaff home sales were distressed properties. There is thought in some circles that banks have distressed inventory they are holding back for sale, but there is no real evidence of that. We do know that there are still interest-rate resets to come in 2013 that are the final part of the shaking out of ill-advised mortgages created during the real estate boom. This means there will be some more distressed inventory coming onto the market over the next year, but it’s more likely to be a trickle than a wave.
The key remains the demand side – buyers remain few and cautious. If the economy continues its steady improvement without major political or global disruption, I expect more buyers this Spring than we’ve seen in several years. Loan criteria are still very tight, so the increase in buyers is likely to be slow and steady, but we’re already seeing the increase in contract reports.
Next, as I’ve said before, it will be interesting to see what Flagstaff homeowners will do – will they try to sell now, or wait a few more years? That collective decision will determine the course of prices in 2013.
To buy or sell any Flagstaff home, please contact me: Ann Heitland at RE/MAX Peak Properties.
Note: The data reported here are based on home sales in the Flagstaff metro area (the City of Flagstaff and immediately surrounding county areas that have Flagstaff mailing addresses) as reported in the multiple-listing-service maintained by the Northern Arizona Association of Realtors.® The data may not reflect all sales (but it surely reflects most of them).