Home sales in greater Flagstaff rebounded to their second
highest level for October since 2005 as buyers snatched up larger
homes at discounted prices.

A total of 82 detached, single-family homes sold last month in
greater Flagstaff, according to information compiled by the
Northern Arizona Association of Realtors Multiple Listing
Service.

That’s up 60 percent from the number sold in the same month a
year ago, aided in part by a price per square foot for a
median-priced house of just $119, the lowest since 2002.

Sellers of houses well over 2,000 square feet appeared to be
lowering their prices all at once, and the result was that the
median-priced house in October contained 2,378 square feet, the
biggest in more than a decade.

At $283,000, the median price was up 13 percent over last year,
but buyers this year are getting nearly 40 percent more house.

LOW INTEREST RATES

Stephen Brighton with Century 21 Flagstaff Realty is encouraged
by the figures for October, saying they generally reflect record
low interest rates as well as an end to the glut of housing, at
least for homes priced below $400,000.

For the first time in recent memory, the number of homes listed
in the price point represents only an eight-month supply of
homes.

A supply of homes listed for sale between six and 12 months is
considered to be a healthy supply.

Local Realtors are also reporting that the number of foreclosed
homes hasn’t dramatically increased as banks look to sell their
backlog of foreclosed homes, sometimes referred to as the shadow
inventory.

Realtor Jerome Naleski frequently drives by two bank-owned homes
during his daily travels.

Both are local examples of the millions of empty, unlisted homes
across the nation created by the housing crisis.

Flagstaff has not seen a sudden release of a pent-up supply of
foreclosed homes.

“We had this slew of Bank of America inventory go on the market
(here in Arizona), and Flagstaff had one property,” Naleski said,
noting the bank put tens of thousands of homes on the market
statewide.

SHADOW INVENTORY

Paula Monthofer, a Realtor with Realty Executives, said
distressed properties – primarily foreclosures and short sales –
still account for roughly a third of the monthly sales in the
greater Flagstaff area.

The number of distressed sales, however, has led to a new
“normal” here in Flagstaff, affecting the price of almost any home
placed on the market.

“I say foreclosures and other bank-owned properties are
dominating the market, but appraisers are using their numbers,” she
said.

Distressed properties are found in all neighborhoods, she said,
but “there are certainly some neighborhoods that are more affected
than others.”

When pressed for specifics, Monthofer said property values in
Doney Park, Rio Homes and Ponderosa Trails have been hit hard by
foreclosures and short sales.

She contends the looming threat of the shadow inventory is
interesting to discuss, but it is more of a ghost story than
reality.

“The shadows are fun because you can’t fight a shadow, you can’t
see how big it really is,” she said.