Flagstaff is one of the most beautiful places to live in Arizona. If you’re thinking of moving to Flagstaff, Arizona, the current housing market might have your head spinning. The rule book has been thrown out the window, and everything we thought we know about buying or selling a home is no more. Take a look at some of the biggest challenges in the current market, and what you need to know about moving to Flagstaff.
What Challenges Are Buyers Facing In Flagstaff?
There Is a Lack of Supply to Meet Demand.
One of the biggest issues in the Flagstaff real estate market (and honestly, everywhere in the country right about now) is a lack of inventory. After the complete shutdown of 2020, homes were not being built, or even renovated. But even without new construction, life marches on, and people still must buy and sell houses. Whatever was on the market in 2020 was quickly snatched up. Even if a home had been sitting on the market for a long time, people adjusted their expectations due to the unprecedented economy. After those homes were bought, with no new homes to take their place, the entire buyers market dried up.
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There are still homes for sale in Flagstaff, but you probably won’t get them.
The common perception is that realtors are not getting as many listings currently as they have in the past, and in Flagstaff, this isn’t actually the case. The number of listings this year is just about the same (as we mentioned before, people still have to move) but these homes are going live on the market for a fraction of the typical amount of time. While there are about 300 to 400 homes on the market in Flagstaff any given year, currently you will only find somewhere between 60 to 80. Homes are being purchased faster than the realtor can get there to put a SOLD sign in the yard.
Keep in mind that the days a home is on the market is a calculation of the time from the day it goes live until the final, FINAL dotted line is signed. Homes at any point throughout the buying/selling process that are under contract will remain on the market, even though they have a buyer. So don’t think you have three months to make a decision on a home. This volatility is actually somewhat advantageous to a potential buyer if you missed out on a home or were outbid. The old phrase “It isn’t over until it’s over” is true of the current housing market. With ‘sight unseen’ purchases being at an all time high, some homes go back up for sale before they can close.
You’ll see prohibitive cash offer competition.
Another somewhat unprecedented occurrence in the current market is the swift and aggressive cash offer, and excessive over-asking-price offers. While sellers will often wait for a few offers to come in, they are quick to accept a couple specific kinds of offers these days. Cash is king, which has always been true. But currently it seems to have gone from king to continental ruler. Buyers who can offer the payment in cash truly have an upper hand in this market. Sellers need money in this recovering economy, and an offer that doesn’t require financing might as well be gold coins in your hand, especially considering most sellers are also soon to be buyers.
Even if you can’t pay for it this very minute, you are still likely to seal the deal if you can offer, oh…a hundred thousand more dollars than they are asking. Yes, you read that number right. Traditionally, a seller gives an asking price, and it is just that. It’s the amount of money they hope to get. Well, not in 2021. Buyers are giving first offers that exceed the asking price, and some go more than $100,000 higher than what the seller is asking. This isn’t necessarily the case all over the country. You might not have to offer 100k over the asking price in Hazard, Kentucky, but it’s certainly happening in Flagstaff. All a buyer can really do (aside from be a millionaire) is to offer their highest offer right away and hope for the best.
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It Can Be Hard to Find Financing for This Aggressive Market.
As we see these homes selling for such exorbitant price tags, the next challenge is of course being able to back that offer up. Most Americans don’t have a few hundred thousand extra dollars just lying around. If you aren’t part of the one percent, you’re likely going to need to find financing when you’re buying a home.
Getting a loan isn’t usually the most difficult thing in the world, but it does come with a cap. The difference in needing to finance a $350,000 home or a $600,000 home is pretty significant, and don’t think the bank won’t notice. Because housing prices are so high, buyers have to put in much more of their own money, and this can get tricky. You’ve likely budgeted in your appraisal fees, inspection fees, and earnest money, so if you have to dip into those funds, you can quickly end up in the red. More loans can be taken out, but who wants to start out their new life in their new home with a ton of debt looming over their heads that will likely outlive them.
With the quick turnaround at which homes are selling, you almost need to be able to drop everything and go view a home the moment you see a listing you are interested in. This, unfortunately, is not only inconvenient if you work, but impossible if you currently live far away. The housing market is seeing more sight unseen deals currently than ever before. Luckily, realtors have done an excellent job adjusting to this hurdle.
Virtual walk throughs are at an all time high, and your realtor has your best interest at heart when they are conducting a walk through without you. With the volatility of seemingly finalized deals, however; there are still sellers who refuse to sell to a buyer who has not stepped foot in the dwelling.
The Outlook Is Dim for New Construction Homes in Flagstaff:
As we mentioned above, new construction has taken an utter leave of absence in the past year. Even though things are beginning to pick back up, there is a lot of slack to pick up. Augmenting this issue is the fact that Flagstaff is a unique area with limited free space. Nearly all of Flagstaff is surrounded by national forest, which limits the options when it comes to building infrastructure. Not only are there no new homes to be bought, there wasn’t much to begin with even before the COVID19 pandemic. There are a few big name builders in the area who have plans to resume construction, but these are almost always limited to large subdivisions. If you have an idea of your own little mountain escape in Flagstaff, it might be necessary to adjust your expectations.
Assuming you are desirous of building your own home, the truncated truth is, it’s a very bad time to do so. Not only have builder’s prices gone up, but supply is up exponentially. Lumber, PVC pipe, copper, aluminum, flooring, siding…basically everything that will be going into your new home is going to be more expensive now. If you can wait even just a couple years to build, it’s going to be in your best interest.
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How Can You Overcome These Home Buying Obstacles?
- If you have to buy a home in the current market conditions, the most important thing you can do is stay positive. You will probably lose a few offers before you get one. Try to keep an open mind and know in these unprecedented times, we are all just doing what we can.
- Having a reliable lender can also give you an advantage when making an offer. Buyers who see financing that is stable are more likely to consider your offer.
- Even if you are tempted, due to the “act fast!” nature of buying today, do not waive your inspection. This is a buyer’s right, and home inspections can really bring out some of the ugly hidden truths about a seemingly incredible home. Sellers are certainly giving favoritism to buyers who will waive an inspection, but don’t be one of them. In a year or two there are going to be some very unhappy homeowners out there that didn’t realize what they were getting into.
- Last, but certainly not least, the very best thing you can do in this housing market is wait. Yes it’s hard, yes we are all ready for life to move on. But if you don’t absolutely have to move right now, waiting a couple years will greatly open up your opportunities.
