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Prescott Area Association of Realtors

Real Estate Values Climb Steadily as Market Struggles for Balance

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“When the rates come down, and they do, there will come a time when you will be able to refinance,” she said.

Home prices continue to rise, inventory continues to fall short of a balanced market, and the interest rate on a standard 30-year mortgage is hovering around 7.8%. Prescott Area Association of Realtors President and KMF Real Estate Broker/Owner Faye Humphrey says the Quad Cities remains a seller’s market, but she says, “It’s always a great time to buy the right real estate.”

For those who remember interest rates of the 1980s in the high teens, 7.8% looks pretty good. But compared to just a few years ago, the rate has tripled. For Humphrey, who has owned her house for five years and refinanced it three times to reach the historic low interest rate of 2.25%, her philosophy is: “Marry the house; date the rate.”

“When the rates come down, and they do, there will come a time when you will be able to refinance,” she said.

Humphrey also acknowledges that houses in desirable areas like the Quad Cities are expensive. The average list price in September 2022 was $632,000. Today, it is $701,000, up about 11% year over year.

“That makes me want to choke,” she said. “We have fewer sales today than we did a year ago because money is tight, but value seems to keep going up. Buyers need to shop harder and smarter.”

With just 1,097 residential homes currently available in Yavapai County, down about 20 from this time last year, the real estate market has more than three months of inventory. Six months of inventory, says Humphrey, would be considered a balanced market.

“We are much closer to a balanced, normal market than we’ve been in a long time,” she said, “but we are still in a seller’s market; however, not the frenetic kind of seller’s market we were in one or two years ago.”

For sellers, that means pricing the home based on comparable sales and expecting the home to stay on the market longer. “Some buyers are going to be asking for concessions. Eighteen months ago, that was almost unheard of.”

Prescott still remains the most expensive city in the Quad Cities area for real estate.

“If you want to get the most bang for your buck, go to Prescott Valley or Chino Valley or to Dewey. Today [with many people working from home], the geography doesn’t make that much difference,” said Humphrey. “If somebody comes to town and wants to buy a house for $300,000 to $400,000, there is a high likelihood they’ll be buying a manufactured home as opposed to a stick home.”

No matter the market, Humphrey recommends hiring an experienced, licensed real estate agent, familiar with the cycles and strategies of buying and selling homes. More than 2,500 licensed realtors make up the Prescott Area Association of Realtors (PAAR), where she currently serves as president. QCBN

By Bonnie Stevens, QCBN

Courtesy Photo: Prescott Area Association of Realtors President-Elect Jeanelle Shearer, President Faye Humphrey and Chief Executive Officer Suzanne Westrum accept the Community Service Award from the Arizona REALTORS on Thursday, Oct. 19, in Litchfield Park. 

Real Estate as an Economic Indicator

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In our local Quad Cities area, we’ve been fortunate to experience a resilient and diverse housing market.

For many, owning a home is the epitome of the American Dream. It represents a sense of stability, provides a place to raise a family, and is an investment in one’s future. Homeownership can offer the potential for wealth accumulation through property appreciation and the opportunity to build equity over time.

This quintessential dream does not stop there. It is deeply connected to economic security and, in fact, real estate is often cited as a key economic indicator. The housing market’s performance reflects broader economic trends such as consumer confidence, interest rates and employment levels. When the real estate market thrives, other industries follow, making it a stabilizing force in the economy. Unlike other sectors that are more susceptible to cyclical fluctuations, real estate often maintains its value over time. During economic downturns, property values may dip but generally recover in the long run, providing a cushion against severe economic shocks.

According to an economic impact report released this year by the National Association of REALTORS (NAR), in Arizona, a single home sale in 2022 had a total economic impact of $143,400. This means real estate related industries as well as the expenditures that result from a single home sale, including aspects like home construction costs, real estate brokerage, mortgage lending and title insurance, all generated on average over $140,000 each time a home sold. Not only that, but the income generated by the real estate industry itself amounted to $40,713, constituting 28.4% of the total impact to the state’s economy. And overall, real estate accounted for a remarkable $91.9 billion, or 20% of the gross state product, in 2022.

In our local Quad Cities area, we’ve been fortunate to experience a resilient and diverse housing market. Home sales have consistently maintained their year-over-year stability, reflecting similar steadiness in other aspects of our economy such as employment and income levels. For example, as of July, Yavapai County boasted an unemployment rate of just 4.3%.

Earlier this year, NAR unveiled additional compelling data in its “Wealth Gains by Income and Racial/Ethnic Group” report showcasing the impressive wealth accumulation of homeowners in Prescott over the past decade. Specifically, local homeowners saw their home values appreciate by more than $200,000, surpassing the national average in this category by a significant $60,000 margin. This data emphasized the invaluable role that REALTORS play in facilitating home transactions that not only fulfill housing needs, but also contribute significantly to the creation of generational wealth for their clients.

While homeownership promotes personal wealth development, a thriving real estate market also creates demand for improved infrastructure within our local municipalities. The growth in residential and commercial properties requires investments in roads, utilities and public services. In turn, this need for development creates jobs and enhances the overall quality of life, making regions more attractive for residents and businesses.

We’ve witnessed firsthand the impact of these improvements within our own community, particularly when we see such strides as the improvements to Highway 69 in Prescott and Glassford Hill in Prescott Valley. These infrastructure developments make our beautiful community even more appealing to prospective residents while ensuring the safety and improved quality of life of those currently living here. Moreover, there are ongoing projects aimed at further enhancing our infrastructure. The City of Prescott recently announced the State Route 89 (SR89) Roadway and Infrastructure Improvements Project, which encompasses the construction of sewer infrastructure improvements along SR89 spanning from the Phippen Roundabout to the Willow Lake Road Roundabout, with the potential of additional roadway improvements. Such improvements are intricately linked with the real estate market as infrastructure development and real estate are mutually beneficial to one another.

The importance of real estate in the economy cannot be emphasized enough. It offers individuals a pathway to wealth accumulation while catalyzing improvements in our communities. A consistent real estate market not only signifies a stable economy but actively fuels its long-term prosperity. As we are well aware, the Quad Cities area is an exceptional place to call home, and by engaging in the housing market, we not only secure a place to live but also contribute positively to our local economy. QCBN

By Suzanne Westrum

Suzanne Westrum is the CEO of Prescott Area Association of REALTORS.

Championing Private Property Rights

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Realtors are also advocates for their clients. A realtor’s job is to represent their clients’ best interests at every stage of the transaction.

Homeownership is part of the American Dream, and realtors play an essential role in that dream, but their value extends much further than that. Every home sale generates $88,000 in local economic activity, accounting for 18% of the nation’s GDP, and every two home sales supports one American job.

Real estate transactions are complex and include far more than many people know; attorney reviews, filing state/federal forms, tracking mortgage rates/terms, coordinating with lenders, scheduling appraisals/inspections, researching property taxes, public records, price trends, neighborhood details and school district ratings, handling negotiations, fielding incoming offers and showing requests, auditing your home before listing, requesting repairs or concessions, executing a multi-channel marketing strategy, and much more.

While some may be tempted to go it alone, known as “For Sale by Owner” (FSBO), research shows the wisest choice is to trust a trained professional. According to data from the National Association of REALTORS (www.nar.realtor), FSBOs accounted for only about 10% of home sales in 2021. To put it in perspective, homeowners who decide to market their own property experience only an 11% success rate. That’s like a football team only making it to their own 10-yard line on every kickoff. No one is headed to the Superbowl, or even the postseason, with those stats! Additionally, homes sold by a trained realtor typically achieve a final sale price 74% higher than that of the average FSBO.

Realtors are also advocates for their clients. A realtor’s job is to represent their clients’ best interests at every stage of the transaction. This means ensuring that they receive fair and equitable treatment under the law. Realtors, who are bound by a strict code of ethics, can guide buyers and sellers through the process, ensuring that they understand their rights and obligations.

Realtors also play a critical role in ensuring that property rights are respected and protected. Local, state and federal regulations can have a significant impact on property rights, and realtors are often on the front lines advocating for their communities’ interests. This can include working with local zoning boards, advocating for property tax reform, and lobbying for legislation. PAAR sends a team of representatives to the Realtors Legislative Meetings in Washington, D.C., every year to stay on top of developments on a national level that may impact those they serve here at home in the Quad Cities.

Ultimately, realtors play an essential role in the United States, and even beyond into the global marketplace. From guiding buyers and sellers through complex transactions to advocating for their clients’ interests, realtors are on the front lines in the communities they live and work in every day. By fostering a culture of professionalism and ethical behavior within the industry, a realtor helps to ensure that property owners’ rights and investments are respected and protected for generations to come. As such, it is critical that we continue to support and invest in the real estate industry and the professionals who make it thrive. QCBN

By M. Faye Humphrey

Faye Humphrey is the 2023 president of the Prescott Area Association of REALTORS. With more than 20 years of experience, Humphrey is the broker/owner of KMF Real Estate, with offices in Prescott and Scottsdale.

The Prescott Area Association of REALTORS® (PAAR) is the trade association representing more than 2,000 REALTORS® serving the greater Quad Cities area. Established in 1944, PAAR’s mission is to advocate for private property rights, and provide its members with resources to foster their business success. The term REALTOR® is a registered trademark, which identifies real estate professionals who subscribe to a strict code of ethics as members of the National Association of REALTORS®.

For more information, contact:

Elissa Portela

Communications Director

Prescott Area Association of REALTORS®

Office: 928-445-2663 x 203

Elissa@paar.com

www.paar.com

Preparing for the Quad Cities Real Estate Market

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The code of ethics all realtors abide by may make the difference between a seamless, painless experience and potential disaster.

Most business owners know that the real estate market is the backbone of every successful community; buyers move in, have families, open businesses, shop locally and so on. Property transactions have a ripple effect that is often a key predictor of economic growth.

So, how can property owners, both commercial and residential, prepare for the inevitable ups and downs of the market and ensure long-term equity growth and a solid investment? Here are some things to focus on:

History matters. The market is known for certain cycles and patterns, which can aid in making educated guesses about when to buy and when to sell. Look at the record of market data in your area. Your local realtor association tracks market data and can point you in the right direction.

Know your priorities. Do you have capital tied up in your business? Do you anticipate needing to move in the near future for a new job or an expanding family? All of these factors will affect your strategy.

Check your finances. You’re going to need cash for down payments, deposits, earnest money, repairs, the list goes on and on! Have you spoken with a lender to see what you’re qualified for? Have you crafted a budget and checked your credit score? This side of things can get complicated, so lean on your realtor to point you in the right direction for your individual needs.

Use a realtor. The code of ethics all realtors abide by may make the difference between a seamless, painless experience and potential disaster. Choose a realtor who has the education, experience and support to be exactly what you need.

Track your data. How have property values changed in your area, whether it’s your business or your personal residence? Do you have equity in your property? Are you relying on outside financing to supplement a transaction? Knowing how your money has behaved in the past will inform your timing and strategy.

Overall, preparing for the worst but hoping for the best is something we can all try to do. I’m hoping for a successful year for all of us here in the Quad Cities, but you can bet I’m also preparing for whatever comes next. QCBN

By M. Faye Humphrey

Faye Humphrey is the 2023 president of the Prescott Area Association of REALTORS.

About PAAR:
The Prescott Area Association of REALTORS (PAAR) is the trade association representing more than 2,000 REALTORS serving the greater Quad Cities area. Established in 1944, PAAR’s mission is to advocate for private property rights, and provide its members with resources to foster their business success. The term REALTOR is a registered trademark, which identifies real estate professionals who subscribe to a strict code of ethics as members of the National Association of REALTORS.

Real Estate Remains Fundamental to Local Commerce

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If we have the “outdoorsy” part covered, then the “affordability” factor is what we should focus on.

For most of us, 2022 was a year spent watching the housing market closely. As mortgage rates fluctuated and home prices continued to rise, many began to expect that the real estate industry was in trouble. However, a better word would be “transition.”

Although inflation continues to be a concern, consumer sentiment remains strong. According to the most recent data from the U.S. Bureau of Labor Statistics, employment numbers are holding steady in our region. Stable employment is good for commerce, generally speaking. But, what does this mean for the housing market in the Quad Cities, and, by extension, the business community as a whole?

According to a joint analysis from The Wall Street Journal and Realtor.com published in July, “All of the top 20 markets in [the] index fall into one of two categories: affordable or outdoorsy.” The Quad Cities has an abundance of outdoor attractions; more lakes than any other city in Arizona, which offer fishing, boating and swimming; hiking, biking and exploring along our extensive trail systems; Prescott is home to the World’s Oldest Rodeo and a vibrant horse culture; our culinary scene includes Master Chefs, farm-to-table retreats and dining options with outdoor patios that can stay open for most of the year.

If we have the “outdoorsy” part covered, then the “affordability” factor is what we should focus on. Record low mortgage interest rates and increased time spent at home during the pandemic resulted in a surge of home buying. This caused a drastic reduction in available homes just as we saw an influx of families relocating to our area from around the country. You can look around and see neighborhoods being developed to try and meet demand, but labor and material shortages continue to impact new construction. Inventory is increasing but is still low, far below expectations. Historically, one of the biggest drivers of price is inventory, and a key reason for higher home prices is that the country is millions of homes short of projected demand. A thriving real estate market is an integral part of the local economy; what supports one supports the other.

There are a few things to keep in mind as we look forward to the 2023 business year:

The recent slowdown will take some time to show up in the price index. According to the monthly housing data provided by the Prescott Area Association of Realtors, median sales prices in 2022 are not increasing as rapidly as last year, but are still increasing. Talk to a licensed realtor if you’re considering listing a property so they can prepare a Comparative Market Analysis (CMA) and place you at the best price point for the current market.

Economists expect home price gains for the foreseeable future. Transitions in the housing market are rarely sudden and dependent on a complex host of factors. Residential, commercial and rental properties are likely to continue gaining value. Your realtor can provide up-to-the-minute market trends to keep you informed.

Many cities are concerned about the strain on resources and are trying to curb development. A big part that local realtor associations play is to advocate, educate and serve to protect private property rights in your community. We build relationships with local leaders, track national legislation and act as an arm of the National Association of Realtors in pursuing grants and campaigns in the public’s best interests.

High demand and low inventory are likely to persist. The current transition in the housing market and its associated effects on the business and residential sectors is likely to continue for some time. A realtor is there to represent your best interests and fiduciary responsibilities. They are licensed, bound by a strict code of ethics, and work for you.

 

The Quad Cities is an amazing place to buy a home, raise a family, start a business or retire. Regardless of any changes we see in the coming year, that’s one fact that will never change. QCBN

By George Beitzel

To find a REALTOR, visit www.paar.org/find-a-realtor.

George Beitzel is a local realtor and the 2022 president of the Prescott Area Association of Realtors (PAAR). For additional information or to contact PAAR, go to www.paar.org.

Area Real Estate Market is Mixed

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Is it still a good time to sell? I would say yes, because prices have held fairly well and days on market is still fairly low.

According to recently published statistics from the Prescott Area Association of Realtors, the area real estate market remained reasonably strong in August 2022 versus August 2021, but there are signs of weakness.

For the entire market area, the sold median price versus a year ago is up 7.4%, from $437,500 to $470,000. The median days on the market went up from 11 in August 2021 to 33 in August 2022. By most measures, that would still qualify as a seller’s market, but the trend does seem to be heading to a more balanced market. However, for the same period, total sales went down from 436 to 321,  or 26.4%.

Prescott’s total sales went down from 193 in August 2021 to 145 in August 2022, a 24.9% decline, and the median sold price went down 9.3%, from $600,000 in August 2021 to $544,000 in August 2022.

Prescott Valley had similar results, with a reduction in total sales of 31.5%, down from 111 in August 2021 to 76 in 2022. However, the median price increased from $405,000 to $433,250 for the same period.

Chino Valley experienced what is probably the biggest drop across the board year over year. Total sales dropped from 62 in August 2021 to 30 in August 2022, a whopping 51.6% reduction. At the same time, the median price went down from $388,000 to $365,000 for the same period, which is a reduction of 5.9%.

The Dewey- Humbolt area seems to have fared better during this same period, with total sales increasing from 29 in August 2021 to 36 in August 2022, an increase of 24.1% countering the trend in the rest of the market area. The median price also increased from $415,000 to $446,250 for the same period, showing strength in price appreciation of 7.5%, which is market leading performance.

Although days on market for the entire market area has increased about 200% from 11 to 33 days in August 2022 over August 2021, this statistic would still be considered a seller’s market.

Is it still a good time to sell? I would say yes, because prices have held fairly well and days on market is still fairly low. Is it a good time to buy? I would say yes, because prices have abated somewhat and interest rates are still relatively low, but they could go much higher before the economic turmoil we are experiencing now is over. Also, the total inventory of homes is up about double for the market area compared to a year ago, which makes the possibility of finding the right home much higher. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty, with offices in Prescott, Prescott Valley, and Cottonwood. To reach Nick or a highly qualified agent, please call 928-925-2023.

Unprecedented Home Prices Require a Careful Strategy

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A realtor with expert knowledge of this local market can help sellers maintain their focus and keep the transaction on track.

If you’ve tried looking for a home or selling your current one recently, then you know the housing market continues to be as hot as ever, with some of the highest prices we’ve seen. According to the Multiple Listing Service provided by the Prescott Area Association of REALTORS (PAAR), during the first quarter of 2022, the average sales price of homes in the area rose nearly 23% year-over-year, to $546,866.

Homes in Prescott Valley experienced the largest increase in average price, reporting a 26.8% increase over the first quarter of 2021. The average sales price increased in Dewey-Humboldt by almost 25% and in Prescott by 23%, while Chino Valley reported an 18.4% increase in average cost.

Is This the New Normal?

Tight inventory and rising prices are nothing new in today’s marketplace, and while there has been some slight tapering off, it looks like the lightning pace of the market is not slowing down anytime soon. Historically low inventory continues to push up demand and, with it, prices. Lack of building materials has caused new construction to lag, which only adds to the sparse inventory. However, the price increases, along with rising interest rates, have curbed some of the buying frenzy and helped moderate the inventory levels, even if only slightly.

The increased demand and rising prices can be very attractive to those thinking about selling. But there are still some important factors for prospective sellers to consider before listing their home.

How Sellers Can Prepare in this Market

Many people choose the spring to sell their homes because demand tends to be higher than usual. Potential buyers have often received their tax refund money and are eager to use it to supplement their down payment. The warmer weather also entices buyers to get out on the weekend and look for their next home. And, the end of the school year traditionally signals an increase in buying activity, as families seek to move between school years.

Prospective sellers need to consider that selling their home often means needing to buy another, placing them among the frenzy of buyers themselves. While selling will certainly provide an influx of money that may help make a stronger offer on their next home, sellers need to think about their timeline and the balance of the expense of purchasing versus selling to make sure it makes financial sense for them. A realtor can provide objective, professional guidance to sellers about their options and help create a realistic timeline and strategy for buying and selling at the same time.

Sellers will also need to consider their priorities when it comes to accepting offers. The highest offer is not always the best offer, so defining their goals for selling their home is key. This can be communicated to their realtor so their realtor can help keep the process in alignment with those goals.

Selling a home can also be an emotional process. Memories and personal connections are tied to the property, and it can be hard to remain objective when selling something that means so much to them and their family. A realtor with expert knowledge of this local market can help sellers maintain their focus and keep the transaction on track. QCBN

By George Beitzel

To find a realtor, visit www.paar.org/find-a-realtor.

George Beitzel is a local REALTOR and the 2022 President of the Prescott Area Association of REALTORS (PAAR). For additional information or to contact PAAR, go to www.paar.org.

Will the New Year Deliver Another Hot Real Estate Market?

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So, what do prospective buyers need to do to get the home they want at a price they can afford?

For those in the business of real estate, 2021 was among the fastest-moving markets in history throughout the Quad Cities area. Some of the statistics are actually hard to believe. However, the unrivaled Multiple Listing Service provided by the Prescott Area Association of Realtors (PAAR) reveals that, last year, homes in this area spent just 11 days on the market. That is half the time it took homes to sell in 2020.

Not only is home inventory flying off the shelves, the median price buyers paid was $417,615, which is 22.7% higher than in 2020. Most of the area’s sales – about 40% – were homes priced between $400,000 and $700,000, with another 37% of home sales in the $200,000 to $400,000 price range. Home sellers in Dewey-Humboldt and Chino Valley experienced the largest increase, at 7% more sold than 2020.

Across the board, the largest increases occurred in land sales. Chino Valley was at the top of the list with a 24% year-over-year increase, or 118 sales of land. All other areas in the region reported an increase of 20% to 24% except Prescott Valley, which experienced a 4% increase.

What’s Going On?

Although the Quad Cities region has enjoyed a healthy real estate market for some time, what is the impetus for such dramatic numbers? For one thing, new homes are not being built at the same rate, curtailing available housing. Supply chain delays for new home construction, coupled with labor shortages during this time of COVID-19, have driven more  buyers to existing homes. Not only are there limited additions of new homes to the area, but prices are reflecting the higher cost of hard-to-find building materials.

Consequently, buyers have to act fast, and prices are higher than in recent years. So, what do prospective buyers need to do to get the home they want at a price they can afford?

How to Navigate Buying and Selling

Step one is to obtain the professional services of a realtor, because you will need an expert to navigate this unprecedented environment. These days, it is a must to work with a skilled realtor, who, every day, has the most up-to-date information on home inventory and understands the nuances of the local market and individual neighborhoods.

Step two: Because buyers will most likely have to make a purchase decision quickly, be ready! Get pre-qualified, and know your must-haves and what you’re willing to compromise on. Additionally, getting pre-qualified helps you know what you can afford so you can focus and not waste time when house hunting in this swirling market. Take advantage of your realtor’s knowledge to help you bid competitively.

Also, be prepared to tour homes virtually. With as fast as the market is moving, and many homes receiving multiple offers shortly after listing, you may need to take a virtual tour if you can’t see the home right away in person.

And, finally, make sure you understand the contracts and other documents you need to sign when purchasing a home or even just putting in an offer. Having a knowledgeable guide – like your realtor – by your side will give you peace of mind, whether you are a buyer or a seller.

As a seller, there is other important language in the contract to contemplate besides the dollar amount of the offer because the highest bid is not necessarily the best offer. Many factors should be considered such as the closing timeline, type of financing the buyer is using and contingencies, all of which will be stated in the legal documents.

Putting up a home for sale is an emotional experience for many sellers, which can make the entire process feel like being on a rollercoaster. After all, it’s hard not to take things personally when you are selling a piece of property that has meant so much to you and your family.

On the other side of the table, buyers may be on their own rollercoaster. This may be their first home or the place that finally brings them closer to their families. A realtor is objective and can help sellers and buyers keep their focus on the goal of completing a home sale on mutually acceptable terms and making the experience as painless as possible.

To find a realtor, visit paar.org/find-a-realtor. QCBN

By George Beitzel

George Beitzel is a local realtor and the 2022 President of the Prescott Area Association of Realtors (PAAR). For additional information or to contact PAAR, go to paar.org.