by Tod Christensen, Manager, Russ Lyon Sotheby’s International Realty
Spring is in the air all over Prescott and Prescott Valley and when spring returns the housing market heats up. I am the manager for Russ Lyon Sotheby’s International Realty, and I will be happy to periodically provide you all with an update on the housing market in our area.
There’s no doubt if you’ve lived in Prescott, even for a short time, you’ve seen some big changes in the area. Growth is constant and shows no signs of subsiding. To give you a little perspective, Arizona is the fastest-growing state in the nation, according to a 2018 report, both in total growth and percentage of growth.
As a state we add well over 200,000 residents every year. Plus those are 2018 numbers. I fully expect that when the 2020 census numbers are released it will show Arizona adding closer to 300,000 people a year. California transplants alone account for 75,000 new residents a year.
The impact this growth will continue to have is fairly obvious. New home construction will not slow down any time soon and home prices will maintain a steady increase. To give you some actual numbers let’s start by comparing prices of sold homes in February 2018 versus this February. In February 2018 the average price of a sold home was $309,000 and the median was $285,000. In February 2020 the average home sold for $359,000 and the median was $306,000.
Now, a couple of interesting observations. First, that’s very strong growth in pricing, roughly a 14% increase over two years in the average price. What that indicates to me is that the upper price ranges in Prescott are selling better today than two years ago. If you have more homes selling for over $1 million, that will drive the average price up. One note here: Don’t confuse average price changes with home appreciation values. These are two separate figures.
The median price increased from $285,000 to $309,000. That’s an even more interesting number. Average price can easily be influenced by a couple of high-end sales, but median price is a very accurate determination of the overall strength of a market. To show an increase of 8% over two years means an average of 4%, which means this is a very strong, healthy market we are in.
When it comes to pricing there is one indicator that would appear to show that the rising prices may be slowing down, that indicator is the list-to-sell ratio. That ratio looks at the price a home was listed at and the price it sold at. Typically, anything above 95% is fairly normal. Anything below that would be a very soft market. Anything above 98% would be a hot market. In 2018 that number was 98.82%! In February of this year we are back down to 95.96%. Still very, very strong, but not the red-hot market for pricing we saw two years ago.
In summary, the market shows no signs of truly slowing down, so if you are thinking of buying do it now for two reasons. Interest rates may never again be this low in our lifetime. I know we’ve heard that before, but I was just quoted a 2.75% rate on a 15-year refinancing. Prime isn’t much lower than that, so take advantage of these rates while they last.
The second reason is growth shows no signs of slowing, so delaying a purchase won’t save you any money and will probably only limit your options.
Feel free to call me at 928-300-3369 if you ever just want to talk real estate or need some advice. Always happy to help and at your service.
Russ Lyon Sotheby’s Int’l Realty
2971 Willow Creek Rd., Prescott