For those looking to sell this year, we anticipate it will be the best year in Flagstaff’s history.
Some may say the current Flagstaff real estate market is “hot” for sellers, but how will it look come spring or summer? A crystal ball would be nice to have right about now, right? But without a crystal ball, world events and unforeseen affairs can materialize and change any, or all, of the following anticipated trends.
Specifically for Flagstaff
It is predicted by industry experts that 2022 will continue to be a healthy seller’s market and that home values will continue to appreciate. There is currently a housing shortage in Flagstaff that is putting pressure on seasoned home buyers, first-time home buyers, and even investors. Many new residents are relocating from California, Nevada and surrounding states. On a macro level (across the country), the National Association of Realtors predicts the following, “For 2022, the group of experts predicted that annual median home prices will increase by 5.7%, inflation will rise 4% and the Federal Open Market Committee will twice increase the federal funds rate by 0.25%.” Those who are on the fence about purchasing a Flagstaff home—whether for personal use or as an investment—should strongly consider buying now as prices and interest rates could increase over the next year.
multiple offers
If a home is priced properly and in a good location, there will likely be multiple offers. Competition among buyers for available homes is to be expected. This will not happen for every property, but for those “cream puff” properties, buyers can expect to be up against some stiff competition. Do not let this discourage you from submitting an offer. At this point, however, it’s essential to contact an established real estate professional. You need someone on your side, on your team and on the ground daily, ready to go to bat for you. Never before has it been more important to have someone who knows the intricacies of the local market, knows other brokers and agents (on a personal level) and the methods (tips and tricks) to have an offer successfully accepted. By far, the vast majority of real estate transactions in Flagstaff have a professional realtor involved. Ask how much local knowledge your agent has. How many deals did he or she close in 2021? Does your realtor work with predominately buyers, or sellers, or both? Feel free to google your prospective real estate professional and investigate their recent sales, reviews and testimonials.
Interest Rates Will Be Fluctuating
Historically, higher inflation has caused mortgage rates to rise. In the short term, inflation may continue to rise until the Fed acts upon it. If the Fed can tame inflation by hiking rates as they said they will do, we may see the economy start to relax and inflation decrease. We may see supply chain recoveries (RE: increased availability of building materials) and we just may observe mortgage rates drop. I have heard both sides of the coin on this one, so don’t count on future low mortgage rates. As I write this, there is uncertainty in other countries. For example, how will the war in Ukraine affect domestic interest rates? We just don’t know. Currently, rates are still at historically low levels. If you are in a position to lock in a mortgage rate, you should strongly consider acting sooner than later. Remember, when your interest rate increases, your purchasing power decreases. I asked a prominent Flagstaff local lender, Farren McMahon with Geneva Financial Home Loans, LLC, about this topic, and here is what she had to say: “Purchasing power is influenced by many factors including: total income, loan amount, down payment amount and interest rates. When interest rates increase, the purchasing power can be reduced. A 1% increase in the interest rate can reduce the purchasing power up to 10% (this percentage is smaller for lower loan amounts). It is important to remember that the housing market and interest rates are never static. If you are considering purchasing real estate, it is essential to talk with a trusted mortgage lender to learn what your true purchasing power is!”
Inventory
I expect, and hope, to see more inventory hit the market in the spring and summer months. Remember the spring and summer of 2020? It was the beginning of the pandemic. We began to see a higher demand for the Flagstaff lifestyle. Those who purchased a second home in the Flagstaff area two years ago may consider selling, given the trajectory of prices and the fact that there are major capital gains tax savings when you sell at or after two years of ownership. The Flagstaff real estate market tends to be at its busiest in the spring and summer. Summer temperatures are why we shovel the snow, right!? We expect the buying pool to remain stable or even increase; Thus, we should continue to see available inventory being bought up rather quickly.
sellers
For those looking to sell this year, we anticipate it will be the best year in Flagstaff’s history. Securing a licensed Realtor will arm you with knowledge of pricing trends, contract law and how to navigate multiple offers. You also want to gain access to marketing. Real estate marketing has evolved digitally and virtually in ways that engage buyers, no matter their physical location. Along with enticing a local buyer, buyers are now sourced regionally or even worldwide. With the right expert advising, you have the potential to make thousands or even hundreds of thousands more than if you were to sell on your own. I have first-hand experience seeing lives changed by offers far in excess of what the seller expected. Imagine this true scenario: a buyer purchases a home a few years ago for $550,000, lists it for $800,000, and sells it to the best offer for $920,000.
Only time will tell what is in store for our local market, but rest assured with the right Realtor in your corner, you can be comforted in knowing your most precious lifelong investment is being handled with the utmost respect and care. Happy buying and happy selling Flagstaff! FBN
By Blake Cain
Blake Cain is a local Realtor with Russ Lyon Sotheby’s International Realty. He can be reached at 928-856-9071 or blakecain.com.
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