PRESCOTT, ARIZONA REAL ESTATE MARKET:  HOT OR NOT IN 2012?

My response to this query is a positive and unequivocal “Depends”!  The key factor playing into the heat level of our current market is purchase price, as lower priced homes are receiving multiple offers and getting snatched up by second home buyers, first time home buyers, and investors while higher priced homes languish.  Sales volume is increasing while both average and median sales prices continue to decline, albeit at a slower pace.  I foresee this trend continuing into and through 2012.

Prices in Prescott, Arizona have declined to 2001-2002 levels and home affordability has improved dramatically.  Our local market is not dominated by distressed sales--74% of sales in the last 3 months were traditional sales--but is strongly influenced by them and both average and median sales prices continue to decline-- down 4.6% and 5.2% respectively in the last 3 months.  Indeed, 50% of all Prescott home sales in the last 3 months were for homes priced $200,000 or less.  This trend seems well entrenched and I see it also continuing into and through 2012.

For those who study market statistics, it is clear that Prescott’s local real estate market is steadily improving in terms of sales volume.  Sales of residential units in the city of Prescott increased by 26% from 2009 to 2010, and another 16% from 2010 to 2011 year to date.  The days on market declined in the same time frame by 6.75% and 6.5% respectfully.  Prescott homes are selling and they are selling more rapidly!

However… the caveat to this increase in total sales is that sales prices have dramatically declined during this time.  Average sales prices declined by 8.5% while median sales prices decreased 10.8% from 2009 to 2010.  This trend continued from 2010 to 2011 year to date as average sales priced decreased another 8.3% and median sales price fell 11.9%. It seems clear this trend too will continue in 2012.

I am heartened by the fact that, in the city of Prescott especially, there has been a resurgence of second home buyers, a market that had virtually disappeared in late 2008 through mid-2010.  Of course, the historically low interest rates are encouraging buyers to purchase now rather than wait for any anticipated further declines in value.  It doesn’t seem likely that interest rates will increase dramatically in the coming year, even if there is some upward movement.

One critical factor effecting home sales in Prescott is our decreasing listing inventory.  As the number of homes for sale in Prescott declines, competition for those that are currently listed and well-priced increases, giving sellers more negotiating power than they have seen in quite some time.  Multiple offers are more common as there continues to be pent up demand for purchasing in the Prescott area.  I and other Prescott AZ listing agents are encouraging sellers to list their homes even now, during our traditionally slower winter season, as buyers are eager to purchase and unable to find their dream homes.

Overall, I am prepared for 2012 to be a toasty real estate market and hot for lower priced homes.   Prescott continues to be a destination town enjoyed by both full time residents and as a weekend getaway.  With low interest rates, low listing inventory, and pent-up demand simmering, 2012 be a great time to sell for those who have owned their homes for 10 years or more.  It will continue to be a hot market for buyers looking for screamin’ deals, but they best be pre-approved and prepared to present an offer at a moment’s notice as well-priced homes don’t last long.

PRESCOTT AZ 2012 REAL ESTATE OUTLOOK: HOT OR NOT?