One of the biggest topics for discussion making headlines these days in real estate tends to be about interest rates and inflation. The media has sensationalized these issues creating some concern about the impact rising rates will have on buying power. While it is true that an increase in interest will mean a slightly higher monthly payment, we have not yet seen this diminish buyer demand. For every one offer that is accepted on a home up to $800,000, there are nine offers that were not and those buyers are still on the search for their dream home in Flagstaff.
Although prices continue to skyrocket for single family homes and condo / townhomes (attached homes), supply versus demand is still the major constraining factor for absorption rate in Flagstaff and the surrounding areas. A balanced market would have four to six months of inventory available which would be 330 to 500 homes for sale. As of April 30th only 90 single family homes are available for sale thus creating a significant shortage. Since supply is not keeping up with demand, we have seen substantial increases in sales prices.
More common than not a swell of homes will be listed towards the end of the week with the majority of showings and activity over the weekend. The offer period will typically close on Monday or Tuesday with the seller selecting an offer on one of those days. Thus, inventory is usually the most lean the middle of the week. The best way for a buyer to be prepared is to have a prequalification in hand from a local lender ready to shop with their agent on the weekend. FaceTime showings have grown in popularity with the number of relocation and vacation home buyers expanding with the rise of virtual offices.
A historic moment for average price per square foot for a single family home in Flagstaff occurred in April 2022. We crossed the threshold from $390 per square foot in March 2022 to $433 per square foot in April which is an increase of 11% in one month. April 2021 we were at $307 per square foot and have experienced a 41% increase in price per square foot in just one year. As of today, the median home price is $752,500 which is a historic high. Last year this month the median single family home price was only $568,050, a difference of $184,450 which is an increase of 32% in one year.
The condo / townhome pricing has also entered a space that is unprecedented. The price per square foot for an attached home is now $403 per square foot versus $348 per square foot last month for an increase of 16% month over month and was at $270 per square foot last April for a year over year increase of $133 per square foot or a 49% increase. However staggering this number, we are also anemically supplied for attached product with only 18 units actively for sale today. In a balanced market 90 to 150 condo / townhomes would be available for sale. During April 2022 only 10 sold and in April 2021 there were 43 sold which is a 77% decrease due to lack of supply.
What does this mean? The bottom line is Flagstaff has more buyers than sellers and demand is greater than supply resulting in escalating prices. This is not a function of greedy sellers driving prices but rather the multiple offer scenario pushing prices up. Our typical peak real estate season is May through October and there are no indicators this year will be any different. It will be fascinating to see what transpires over the next six months. With average price per square foot catapulting at this pace we may see the average home price in Flagstaff over the million dollar mark this summer.
Text Lori