The slowdown that has hit the Valley’s housing market is spreading.
Home sales are down and so are some prices in central and northern Arizona’s second-home communities. The number of homes for sale in Payson, Sedona, Pinetop-Lakeside and Strawberry has shot up this year as the number of buyers plummeted. As in metropolitan Phoenix, overly zealous homeowners in these smaller towns are cutting prices to sell houses.
Even Arizona’s cooler summer weather to the north hasn’t been enough to encourage the bidding wars among buyers that the vacation-home enclaves saw in 2005.
“Last year, a lot of buyers mainly from Phoenix were clamoring for the same homes in Payson,” said Susan Keown of ERA Young Realty and Investment in Payson, where the number of homes for sale has tripled in the past year. “Some were willing to pay more than what the houses were appraising for. But, she said, those buyers and bidding wars are gone.
That is partly because many potential buyers for houses in central and northern Arizona are homeowners from the Valley who can no longer afford second homes. Some people trying to sell in Payson, Pine and Pinetop-Lakeside have primary residences in metropolitan Phoenix but can no longer afford two homes.
Higher payments on adjustable-rate mortgages and home equity lines are cutting into the monthly budgets of more Phoenix-area homeowners.
Also putting a damper on second-home demand is shrinking home values because of dipping prices in some Valley neighborhoods. Then there are those who want to buy but can’t because their houses won’t sell in the slowing Valley market, leaving them unable to apply some of the profit to a vacation home.
Home listings in Arizona have quadrupled in the past year to reach almost 43,600. Valley home prices have been flat since October. Through May, used-home sales were down 34 percent from last year’s record-breaking pace.
“It’s logical that northern Arizona’s housing market is following the Valley’s slowdown,” said Jay Butler, director of the Arizona Real Estate Center at Arizona State University’s Polytechnic campus. “A lot of Valley residents bought second homes in areas like Payson and Flagstaff by taking money out of their primary homes. Many don’t have that option anymore.”
Home sales in the Pine/Strawberry area are half of what they were a year ago.
Home prices overall aren’t down in many central and northern Arizona towns, but sales are closing for less than the listing prices, primarily because some sellers are overpricing homes.
“The slowdown here hasn’t been as pronounced as the one in the Valley,” said Cliff Potts of Prudential Arrowhead Realty’s Payson/Pine office. “Prices are holding, but sellers have to be more realistic.”
High-end home listings in Flagstaff have climbed during the past year. And, in Sedona, listings were up 129 percent in May from last year.
“We have already seen some price reductions,” said Ray Jegge of Coldwell Banker/1st Affiliate in Sedona.
But it’s still not clear whether this is the time to find the best second-home bargains in Arizona’s high country. As in the Phoenix area, real estate market watchers are still guessing when the housing market will hit bottom.
“This is prime season for buying in northern Arizona,” said John Foltz, president of Phoenix-based Realty Executives. “I doubt we will see anything definite on how much that market will slow until fall, when demand traditionally falls off.”
By Catherine Reagor, The Arizona Republic, Jun. 9, 2006
