RE/MAX And Other Favorites Win Best of Flag Again!

RE/MAX Peak Properties was again named Best of Flag! The 2012 honor was voted on by local residents for the Arizona Daily Sun’s annual poll of the best businesses in town for various categories. A great appreciation is given to our many satisfied clients who voted for RE/MAX Peak Properties.

RE/MAX Peak Properties is locally owned but has the resources and training of the larger RE/MAX network, which is part of what enables us agents to provide superior service to our clients.

Congrats to a few other industry winners, such as Wallick and Volk Mortgage, JKC Builders, and Spots Carpet Care!

There are too many other good places on the list to mention them all, but here are a handful of places that I enjoy or where I’ve had particularly good experiences (links included when possible): Coppa Cafe, Crystal Creek Sandwiches, Bigfoot BBQ, Beaver Street Brewery, Lumberyard Brewing Company, Salsa Brava, Jeff Karl Jewelers, and Ogden’s Cleaners.

One of the best features of Flagstaff is that we have so many great local businesses! Here’s to being the Best of Flag again in 2013!

Unusual Market Conditions Mean Good Time to Buy AND Good Time to Sell

In the real estate boom, we had an absurdly strong seller’s market, where instant sales and bidding wars were commonplace. Then in the bust, we had the opposite: a very strong buyer’s market where prices were tumbling, selection was overwhelming, and low buyer confidence kept most buyers on the sidelines. Now, we’re in an unusual real estate market where it’s both a good time to buy and a good time to sell, at least momentarily.

This is very good news for anyone who’s contemplating a move. There are a number of reasons for both buyers and sellers as to why now is a favorable market.

Why Now Is a Good Time to Buy Real Estate in Flagstaff

  • Buyers can take advantage of historically low interest rates, which gives them unprecedented purchasing power. At the time of this writing, rates have been just over 3.5%! Keep in mind that as recently as 2008, the rates were above 6%. If you’re not clear as to how much of a difference the interest rates make, read this post.
  • Home prices have essentially been rolled back to 2004 prices. This alone should be incentive enough to buy, but coupled with amazingly low interest rates, this may be the one chance to get into the home you want. You can likely afford more than you think and the prices are showing signs of increasing, so don’t miss out.
  • Rents have been increasing in Flagstaff for various reasons, including increased enrollment at NAU. In most cases, it is quite a bit cheaper per month to own than to rent.

Why Now Is a Good Time to Sell Real Estate in Flagstaff

  • The inventory of available homes has dropped by 37% in the past year! Low inventory means you have less competition from others trying sell. Also, you’re competing against far fewer foreclosures, which are typically priced aggressively.
  • Prices have begun stabilizing. This is good in that you don’t have to worry as much about putting your home on the market and watching the prices plummet before you can get sold. Some segments of the market have even begun seeing price increases.
  • The number of sales in Flagstaff has picked up over the past year by about 10%. Essentially, there are more people buying and fewer available homes.

In the past few years, most people have dreaded the thought of having to sell, but, as you can see, the market has become more favorable for selling. In fact, with the lack of available homes for sale, we’re technically in more of a seller’s market. However, with the low interest rates and good prices, you can’t go wrong being a buyer either.

Hot Year Begins to Slow – Better Time for Buyers or Sellers?

Although Flagstaff home sales in late spring and early summer were hot, sales in early fall have tapered off and are shaping up to look at lot like last year. Every month from January to July had more sales this year than last, and in some of these months it was significantly more. But then something interesting happened… August and September reversed course and actually had fewer sales than last year, although just barely. It seems strange that the entire year has been “hotter” than last year and then we see a sudden shift. Explanations could be that people are more focused on the upcoming elections, that demand was merely shifted from August and September to prior months, or that this was just an anomaly.

Another possible explanation for fewer sales recently is that due to limited supply, many would-be buyers aren’t finding the home that suits their needs. The inventory of available homes in Flagstaff continues to be very low, making the home search slightly more challenging. The low inventory, along with a 13% increase of year-to-date home sales over last year-to-date, has changed the balance from a strong buyer’s market to somewhat of a seller’s market.

It’s too soon to know what effect this limited supply will have on pricing in the long-term. If sales continue to taper off, even to just last year’s levels, this will likely keep the market balanced and keep prices steady. If this recent cooling of sales is just an anomaly and sales go back to outpacing last year, and/or we continue to see a drop in available inventory, it seems likely that prices would increase. This, of course, will depend on many factors such as the economy, employment levels, consumer confidence, etc.

Based on all of this, the current lack of inventory could make now a good time to sell due to less competition and slightly higher pricing power. Plus, we don’t know how long it will be until the economy improves enough to significantly increase prices. However, from a buyer’s perspective, it’s still a good time to buy if you’re patient and focused. After all, it’s hard to know when we will again see these extraordinarily low interest rates (hovering below 4%) coupled with the lowest prices in years.

Action Packed Fall in Flagstaff!

There are so many great events coming up in Flagstaff this fall! One of the benefits of living in a place with four seasons is the variety of events we have year-round. Here are some hand-selected events between now and the end of the year. See the links in most items for more details.

  • Every first Friday of the month attend the First Friday Art Walk starting at 6pm and ending at 9pm. Located in downtown Flagstaff.
  • October 6th from 11am-8pm, join in for some yodeling, beer, brats, Mug Root Beer floats, and live music at the Flagstaff Oktoberfest held at Wheeler Park. Cost is $5 or donate a pair of glasses.
  • Oct 14th will be the last Sunday for the Flagstaff Farmer’s Market held in the parking lot of City Hall. Shopping starts at 8am.
  • Oct 20th the Arboretum will be hosting the Pumpkin Walk featuring nocturnal animal displays, plants, hot cider, fire pit, and kids craft. Come in costume! Fun is from 9am-4pm.
  • The Grand Canyon Railroad is now featuring The Pumpkin Patch Train going out to their secret pumpkin patch every weekend from Oct 6th-Oct 28. The train leaves at 11a, 1p, 3p. Tickets are $20 for adults and $15 for kids. Kids be ready to pick out your free pumpkin! For more info call 1-800-THETRAIN.
  • Bearizona is featuring its Howly, Growly, Owly Fall Festival with the Howl-O-Ween Express, Haunted Bear Cave, and Raptor Show. Weekends only October 6th-October 29th!
  • Halloween Harvest will be located in downtown at Heritage Square on October 31. There will be games, a pumpkin patch, costume contest and more! Little ghouls can do some trick-or-treating too! Starts at 4pm. Click here for more info.
  • Ride the Grand Canyon Railway’s Polar Express anytime between November 9th-January 5th (days, times, and ticket prices vary). Be sure to reserve your seats now as the trains fill up fast and space is limited. Go to their website to get your tickets today!
  • November 23-December 2 NAU Theatre presents Romeo and Juliet at the Clifford E. White Theater. Check out their website for times and ticket prices
  • On November 24 Little America will be flipping the switch for the 18th Annual Holiday Lights Festival. Activities start at 3pm with the lights turning on at 6:30pm.
  • Winter Wonderland in downtown Heritage Square will begin at 6:30pm on Dec 7th to turn on the Christmas Tree.
  • 14th Annual Northern Lights Parade will be held on December 8th in downtown Flagstaff starting at 6pm. There will be twinkling floats and marching bands!
  • Christmas in the Mountains is a festive holiday concert of familiar carols the whole family will enjoy. Held on December 16th at 3:00pm at the Ardrey Auditorium on the NAU campus. Cost is $20 for adults, $8 for students with ID, and free for children 12 and under.
  • Ring in the New Year with the Weatherford’s Pine Cone Drop on December 31st at 10pm and midnight.
  • Make sure to check out the Flagstaff Convention and Visitor’s Bureau’s calendar here for additional events! Let me know if you’re able to enjoy any of these!

1 in 3 Realtors Leaves the Business

As you would expect from this challenging real estate market, the number of real estate agents has really taken a dive over the last few years. At the peak of the market, people were joining the real estate industry in droves, thinking it was a glamorous business or that they could make a lot of money easily. As soon as the market started correcting downward, however, these agents realized just how difficult it would be to stay in business. In other words, only those who were serious about their career and committed to gaining the skills necessary to sell homes in this market were able to stay in business full-time.

This attrition has been just as true in Flagstaff as in the nation as a whole. There was a high of 656 Realtors* in northern Arizona in 2007 and it’s down to 401 Realtors in August 2012. That’s a reduction of over 250 agents or 39%! Essentially, more than 1 out of every 3 local Realtors didn’t make it through the recession.

Nationally, the drop was about 27% from a high of 1,370,758 Realtors in October 2006 to 998,983 Realtors in August 2012. This is a return to the same level as spring 2004 and marks the first year that membership has declined to below one million since 2004.

This really is good news for both the full-time agents who are serious about their real estate career and for consumers who are better served by a knowledgable and professional agent who has experience in this type of market.

*Realtors are real estate agents who are members of the National Association of Realtors and their local board, such as the Northern Arizona Association of Realtors.

Source for national membership numbers:

Local stats provided by the Northern Arizona Association of Realtors.

Increased Demand But Prices Remain Unchanged From A Year Ago

Interestingly, despite the flurry of home sales we’ve had in Flagstaff this year, the trailing average price is about the same now as it was a year ago. We saw prices bump up a little bit this summer, but those increases seem to have faded over the past couple months.

One would think that with demand being up and supply being down, prices would continue to rise. However, the balance of supply and demand has just barely reached a normal level. In other words, there are just enough sellers and buyers to keep the prices steady; there’s not enough of an under-supply to dramatically increase the prices. One explanation could be that the demand exists only because of the lower prices and that as buyers face the prospect of paying more for a home, some just change their mind about buying.

Fortunately for those Flagstaff buyers who stay in the market, the combination of exceptional prices and historically low interest rates make this an incredible buying opportunity. And for those needing to sell, the balanced market has made the conditions for selling better than they have been in years.

Could You Be A Real Estate Investor?

Many people may have a misperception about the typical real estate investor. They often think you have to be very wealthy to invest in real estate. Fortunately, that’s just not the case. It turns out that many real estate investors are your average, everyday people. It may be your neighbor who owns one or two rental properties or a friend who moved into a new home and kept their old one as a rental. And, in reality, it could very easily be you if you wanted.

Real estate investors are just those who have chosen to utilize real estate as a way to diversify their investments and build wealth.

The most common reasons my clients invest in real estate are to diversify investments, save for their kid’s college education, and to create wealth for retirement. Think about this: wouldn’t it be great to have renters pay off your mortgage for the next 15-30 years and then have a cash producing asset that you now own free and clear, just in time for retirement? Then at that point, you still have the rent payments coming in but without the mortgage!

Still not sure if you could fit the profile of a real estate investor? Consider that the median household income of those who purchased investment property in 2011 was $86,100, which doesn’t compare that much differently than the median household income of those who bought primary residences – $72,400. Plus, the median age of investors last year was 50, with half of investors under the age of 45.

Here are some other interesting facts about investors:

  • A large portion of investors purchased in their own community – 38% of investors bought within 15 miles. However, it’s fairly common for investors to buy in other areas – 30% of investment purchases are over 100 miles away from the investor’s primary residence.
  • 27% of all residential real estate purchases in 2011 were investment property, up from 17% in 2010.
  • Almost half of investment properties were purchased with a mortgage. So, yes, there is financing available for investment property.
  • The median length of time an investor expects to hold onto a property is five years, but a significant percentage plan to hold on even longer than that.

Keep in mind that most people’s attitudes on investing are different now than at the peak of the market. Most investors are now looking for longer term opportunities that bring in a positive cash flow.

Another interesting tidbit is that 78% of investors surveyed believe that now is a good time to purchase real estate. This, of course, explains why so many of them are doing so!

Think Flagstaff is too small for investment opportunities? You’ll find it interesting that 37% of investment property purchases were in small towns or rural areas. Plus, having a steady flow of students from NAU contributes to the strong rental market in Flagstaff.

There are good investment opportunities in this market and now may be a good time to learn about diversifying your investments with real estate.

All statistics are from the Investment and Vacation Home Buyers Survey 2012, ©2012 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.

RE/MAX Peak Properties Outranks Competition at Mid-Year

When looking at Flagstaff home sales for the first half of the year, RE/MAX Peak Properties is clearly outranking our competitors! RE/MAX is the highest ranked brokerage in both the number of sales and the total sales volume.

When it comes to the number of sales, we sell more listings and help more buyers than any other competitor, by quite a margin. RE/MAX Peak Properties had a total of 191 home sales during this first six months, compared to 132 for the second place brokerage, 107 for third place, and 76 for fourth place. We sold 53% more listings and helped 37% more buyers than just the nearest competitor. You don’t have to move very far down the list to see an even more striking contrast. For example, we sold over three times the number of homes as the #5 competitor.

Keep in mind, RE/MAX doesn’t achieve this by having the most agents. We achieve this by having an emphasis on full-time, very productive agents.

What does this mean for you – the consumer? It means that your RE/MAX agent has more experience in dealing with current market conditions and is better suited to guide you in your Flagstaff real estate transaction. Also, this track record means you can be more confident of a successful home sale or purchase.

Source for Statistics: Northern Arizona Association of Realtors MLS – Flagstaff area residential home sales.

June Market Update – Are the Days of Foreclosure Deals Over?

Are the days of foreclosure deals over? Or at least the days of foreclosures greatly impacting home prices? I suppose the answer to that question depends a lot on what the economy does from here, but one thing is clear – foreclosure listings are currently making up a much smaller number of the homes for sale in Flagstaff.

Currently, only 13 out of 498 active listings in Flagstaff are foreclosures (bank-owned). Last year at this time, 35 of the 748 active listings in Flagstaff were foreclosures. (As you can see, active listings have gone way down as well.) In May, only 17 of the 99 sold listings were foreclosures compared to 25 of the 77 total MLS sales in May of last year.

What does this all mean? First it means there’s less downward pressure on pricing for those homeowners who need to sell. For the past few years, it’s been difficult for homeowners to compete with the pricing of foreclosures. It also means that neighborhoods aren’t as plagued with the downsides of so many foreclosures. Can buyers still expect great deals? Yes, in many cases, but it wouldn’t be wise to limit your search to distressed properties. Not all great deals are foreclosures, and really not all foreclosures are great deals. On the flip side, for buyers wanting homes that don’t need a lot of work, it’s encouraging that their choices aren’t as slim as they were in the past few years when so many of the available homes were distressed.

What About Shadow Inventory?
With such low inventory this year, many people are waiting to see if the banks flood the market with shadow inventory. There’s great talk and speculation the the banks have a backlog of homes that they’ve foreclosed on but haven’t put up for sale, and that when they do it’s going to cause another oversupply of homes. The good news is that the shadow inventory (especially in places like Arizona) has been decreasing – lessening the chances of this happening. The reality is that the banks generally want to get rid of property they own as soon as possible because it’s a drag on their balance sheet. Oftentimes, if they haven’t put a home on the market, there’s a problem with the title or the property that they have to clear up first.

Click here to read more on the shadow inventory levels.

Will There be a Short Sale Wave?
One interesting question is whether there will there be a short sale wave. Congress passed the Mortgage Debt Forgiveness Relief Act in 2007 which waived the tax liability on forgiven mortgage debt for many people, whether through a foreclosure or short sale. Unless Congress extends it, this Act expires at the end of 2012, so it’s conceivable that many people who have been considering a short sale may try to do so now to get it done by the end of the year.

Source for Statistics: Northern Arizona Association of Realtors MLS – Flagstaff area residential home sales.

Time Running Out for Tax Relief on Forgiven Mortgage Debt

As it stands now, this will be the last year that many financially distressed homeowners will be able to do a short sale or foreclosure and not get a tax bill for the forgiven debt. In the past, if someone had any debt forgiven, it was treated as income on their taxes. In 2007, Congress passed the Mortgage Forgiveness Debt Relief Act, which waived the tax liability on forgiven mortgage debt under certain circumstances. This was renewed once, but is set to expire at the end of 2012.

Considering that many homeowners are under water $10s of thousands or more, this tax liability could really add up for anyone who waits too long. See the video below for an example.

What does this mean for homeowners? As mentioned by Alex Charfen at the Distressed Property Institute, if someone is considering a short sale, they need to take action now. Short sales can take a number of months to get approved and there will be a huge rush at the end of the year. For anyone who’s uncertain about their options, it’s a good idea to talk with a real estate agent who’s knowledgable about short sales, as well as an attorney and CPA.


As a disclaimer, this is for informational purposes and not intended to be legal or financial advice.