Prescott Area Market Summer 2020

Well, I was going to post this as an offering originally (746 Division St. ), but 2 hours after listing it got an offer and eventually went into pending status and today we closed. This was a 1940's home fixed up and refreshed inside. 2 Bd 1 Bth, 997 sq. ft, listed at $237,500. Sold for $240,000.  The lesson here is probably that the sub-$300,000 market is very competitive here in Prescott. Inventory is not considered high right now. The sense in the local market is that it is robust despite the challenges to the local, state, and national economies. Give me a call, text, or email if you need guidance or are considering a move to Yavapai County. I have much experience with out of state home seekers, my goal is to expedite the learning curve. It is a bold move to switch towns after many years. Let me know your questions, Ill do my best to answer them or get answers for them. If you are in town and are interested in selling, give me a call.   derekbresson@gmail.com 928.420.0635

Interesting note, DOM or Days On Market averages are the lowest since the same date last year, June 2019.

Covid-19, Real Estate, and Trail Access Updates from Prescott Arizona

Just some info updates from Prescott, Arizona and surrounding areas for those planning for a move to Arizona and Yavapai County in particular. For the Governor's Executive order, go to the Governor's webpage and click on "Stay Home, Stay Healthy" about half way down on page for the PDF. A summary version on the page is here.

In Yavapai County, as of 4/23/2020 the AZDHS website shows 75 cases out of 2149 tests. There is a 2019 population of about 235,000 according to the US Census. The area size of Yavapai County is just over 8,000 square miles. Like everywhere we have essential business only. Stores seem normally populated, there was a mass influx when the order was issued, but things seem to have calm down to a normal clip at this time. Hiking, Biking, Horses, and Golf Courses are open. We have a tremendous trail system in Yavapai County. I have heard over 200 miles of trails open to hikers, runners, bikers and horses. There are different numbers with different sources but there are plenty of trails. Alltrails.com shows 97 trails in Prescott alone. There are probably much more depending on how one aggregates them and including National Forest fire roads and such. It does seem like there has been an uptick in trail usage with hiking and biking, but they are still quite open. You can go 10 minutes from town and be on a trail with virtually no one depending on which trail you choose. Here is the biker and hiker density from a trail quite near town from a couple days ago:

and here:

I saw one person on this ride of 30 minutes. Sometimes there may be more, sometimes less....but the point is there are plenty of trails for everyone, even at this time of restricted socialization. For details on the Covid-19 situation in Arizona, go straight to the source, Arizona Department of Health Services and (or) CDC.  Regarding National Parks and National Forest areas in Arizona, you have to research particular areas, it seems the regulations are on case by case.  Developed recreation sites are closed and there are possibly group limits in general open forest area according to US Forest Service as of 4/23/2020.  Get that information from www.fs.usda.gov. 

Regarding the general real estate market, inventory is relatively low.  There is still activity and closings.  There are about 130 properties in escrow in the Quad-Cities area (Prescott, Prescott Valley, Chino Valley, Dewey-Humboldt).  No one knows exactly how things will develop over Summer and the near future, but at this time there is still activity.  At a glance over the last week there were about 100 price changes in all types of properties: land, commercial, residential.  Most of those were slight reductions.  The sheer limited mobility of home seekers likely has decreased showings, especially for those making a substantial trip.  I imagine that will pick up after changes to stay at home orders change.  

Stay Safe.  Thoughts and Prayers to all and in all places. 

Covid-19 And Prescott Real Estate...

What a different world we live in at the moment.  Stay safe and stay positive.  Even in the midst of this we still have transactions going on, and some eventually will drop or postpone.  And, of course the statistics are based on lagging data, so we will see how March plays out.  February had it's highest month over month sales increase in 13 years as compared to January sales.  Demand is still high and likely will remain, but, consumer spending will be down and job situations may change dramatically which would affect buying decisions and ability at some point.  But for now, there seems to be a surprising amount of persistence in closings. 

A rapidly emerging focus on keeping folks afloat during this time of crisis is happening.  There are rumblings of some mortgage companies providing temporary forbearance programs.  Bank of America announced such a program. It sounds like a typical forbearance whereby the waived payment will be on the back end, but for some this may be a life saver. Check in with your bank or credit union or mortgage company and if it is not posted on the company site then:  chat, email, or call them directly and ask. There may be valuable info just not posted yet. 

If you have been working with an I-buyer such as Opendoor, Zillow, or Redfin,  there may some programmatic pauses or changes, so be aware and get your information from that particular source.  

Chase Bank Covid Info

Forbes.com Article. List of Banks with Customer Assistance Programs.

If you have questions about the Prescott Areas or want to check in on the market when you are ready,  drop me a line. 
  
Thoughts and Prayers to All.  

SAVED BY ZERO....Fed's To "Fixx" Liquidity...Interest Rates Zero Percent! May Not Be What You Think.

I received an email from a mortgage broker saying how slammed they are by applications and that they are busy all day explaining the difference between "Fed Rates" and mortgage rates.  I am not in mortgages or economics and like anyone else, when I hear "Zero Percent" rates,  immediately I make the logical leap to end user rates, i.e. mortgage rates and re-financing possibilities.  A common, but incorrect leap.

Without going into great detail, (you can do that on your own), the "Fed Rate" is not "the mortgage rate". A Fed Funds rate is a rate that banks charge other banks on short term loans, REALLY SHORT as in an overnight term. The Rate is decided 8 times per year. A mortgage lender rate can change daily and this is what lenders are busy explaining right now. Some speculated that posted lender rates ticked upward last week to actually slow down the barrage of applications. Back to fed rates, banks have to maintain certain levels of reserve based on their deposit levels and so this short term cash swapping goes on between banks and is regulated by the Federal Reserve.  So, no, you will not get a zero percent loan at this time. However, rates are still historically low. I imagine no one is interested in stifling economic movement with high rates with all that is going on.  From what I have read, the CPI (Consumer Price Index) and job indices are more directly related to how interest rates move.  The CPI basically is the percentage of change in costs for consumer goods and services over a time period.  It will be interesting to see what the job indices are in the near future.  Again, I am not in mortgages, so do not get your education from here, do your due diligence and speak to your mortgage professional, accountant, or banker before deciding on your re-finance or type of mortgage.

I read a few days ago that the search term "should I buy a house" had it's highest frequency ever, actually doubling during March.  Even in the midst of this chaotic time and unprecedented set of variables we are facing, there are lots of people at least wanting to buy a home. You cannot read too much into the search frequency, but, it seems like demand is still high.

There is a large chunk of soon to be first time home buyers waiting in the wings (Millennials are more or less 20-38 yrs old now), there is a perceived lack of supply, there is continued demand by mid-career and retirees to move out of high-tax/high-regulatory states and into other states such as Arizona, Nevada, Idaho..etc. , and of course rates are extremely attractive still.  If you are in that boat and are considering Arizona, give me a call or email!

Posted Mortgage Rates Are Higher But May Not Actually Be Higher....Say What?

An article today at housingwire.com says lenders are slammed with business, and this may be the reason why there seems to be a sudden posting of higher rates after record low rates recently.  "As the mortgage business continues to try to deal with repercussions of interest rates hitting an all-time low last week, it appears that some lenders are inflating their advertised mortgage rates to try to stem the tidal wave of mortgage applications....." 


Wow, if you are locked in to a rate right now, it seems you have house hunting competition in the pipeline.  The good news for buyers overall it seems is that this slight rate increase may be a temporary reaction to a surge in applications.  It could even be just an advertising measure to slow applications down according the the article. 

Of course there are many rare factors pressuring markets right now, not the least of which is the confusing impact of this particular strain of Corona Virus/COVID-19  that has even an entire country on lock down.  Some articles attributed this latest decrease in interest rates to the higher demand in bonds which result in lower yields  and ultimately lower lending rates, all likely based on Corona panic effect on Wall Street. 

Another aspect of this confusing soup of market factors is that inventory is down in the vast majority of major US cities on a year over year basis.  The near future number of potential home buyers is increasing.  And what impact will this current state of affairs have on contractor supplies?  Flooring, drywall, lumber, metal goods, roofing materials, HVAC, nails, epoxies, paint, insulation, and on and on.......much of these items are imported from Asia.

The widely accepted factors at this moment that we do know are: there are a lot of home buyers filling out applications according to the above article, inventory is not in abundance, and rates (whether they spike a tad this week in reality or only in advertising) are very low.  It may still be a great time to keep pushing towards the goal of making that move despite the craziness around us.  What a tight rope to walk, pursue living as normally as possible but use wisdom.

500k to 600k Activity......

As of this writing, there is a deluge of information about markets, coronavirus impact, real estate market observations, short-term outlook, interest rates, baby boomers, millennials and on and on.......One commentator says housing is strong, inventory is down, demand is up, interest rates are down, therefore it is a great time to buy.  Another on the same page says folks are choosing to rent still, the boomers homes are not homes millennials will buy, re-fi's are slowing things down....etc.   Most have learned to sift through the information and know you can get opposing opinions from literally the same information source.  One bit of news is indisputable though, interest rates are as low as ever...8 years ago everyone was bracing for increasing rates,  but for now, borrowing continues to be a bargain.  In a very general sense, it seems supply is low.  However, housing starts are up in the private sector. Here is the Fed Reserve Bank of St. Louis 5 year starts chart:
Maybe in the near future demand and supply will get closer to one another with the increase in starts and permits in the pipeline. Here in Prescott, I was curious about the 500k to 600k price range activity in the Prescott proper area excluding the surrounding towns and cities. There are about 103 site built homes listed in the 500k to 600k range either for sale or in escrow. As of the writing, 60 are available, and 43 are in escrow. If you are financing your next purchase, it may be a good time to take the dive. A 1.5% difference in a 30 year mortgage interest rate on $500,000 (from 3.5% to 5%) can be a $500 +/- difference in a monthly payment. What can you do with $500 monthly? Lots!

Prescott Real Estate Sales at the Moment........300k to 380k

Seems like the "affordable" pricing tier of homes is going quickly right now.  I put affordable in quotes because I simply queried 300k to 380k in our Prescott Area MLS and found myself thinking, "this is still almost a third of a million dollars at the low end".  A $300,000 mortgage at 4% over 20 years is about $1800 per month.  For the first few years about half interest, half principal.  Anyway, these seems to move quickly.  I wanted to see, of the closings 300k to 380k in pricing since Jan. 1 2020 in Prescott, what the "days on market" numbers were.  No earth shattering insights, but there was a mild but interesting inverse correlation between "days on market" and age of construction.  Also something to keep in mind is that in all of Prescott on the MLS, there are only 29 active listings of site built homes in the 300k to 380k price range as of this writing.  Perhaps if you have a renovation bug, you can benefit by targeting some of the older homes.  They can be in the older and forested areas with less inventory and if on the market longer, perhaps a "bargain" can be had.  If at all up to date or well done, they do go quickly. "CDOM" is cumulative days on market.

Water in Yavapai County, Arizona........?

About twice a year for the last few years I get a random call from someone asking, actually, telling me about water in Yavapai County or in Arizona entirely for that matter.   Mostly the callers are from greener parts of the the country where I assume there is plenty of water. But that is my guess, just like there is a lot of guessing about our water situation by folks considering moving.  They have totally legitimate questions about water supply and are smart to question.  Maybe they are pondering a move, especially during the long winter months.  I am writing this at a mile-high elevation in Yavapai county and the current temperature is 56 F and sunny. A quick googling reveals it is 13 F in Chicago with 70% humidity..........Buffalo, NY is much more temperate at 32 F but is snowing with 86% humidity and 83% chance of continued snow.....Phx is scorching with 66 F.  So who can blame one for randomly calling a stranger/agent and asking about water and weather in Arizona during February.  Back to the point, water is an extremely complex subject and many times the caller has just read an article, book, or seen a movie and they are charging hard on this platform:  "There is no water there (here), I want to move there, but water will run out, and Ill be stuck with a home with no water! The wells are drying up!"  Sometimes the caller will signal that they are speaking from a well informed position.  One fellow called from upstate NY and was a civil engineer and let me know that right away.  He is almost certainly smarter than myself about hypothesizing on what could happen in the future and how water is moved around etc....but I did tell him that I just went to a water seminar and the water engineers at the Arizona Department of Water Resources seemed pretty dang smart.  I could not articulate the exact seminar details to the caller, but the hydrologists were not planning for imminent ghost town status of Northern, Southern and Central Arizona it seemed.  We did get to chatting a bit and he was interested in sort of out of the way properties, a couple acres, which generally means in the county areas north of town where wells service many properties.  I did let him know many of the well drillers in Yavapai County have incredible specific knowledge through decades of work and they would be a great source of specific area answers, but the caller would not have it, I think he just wanted to vent that his retirement dream is colliding up against a possible water shortage, I was fine with that and let him vent.  He did allow me to convey a couple points which was great because I only know a couple points about the massively complex issue of water in AZ.   The Big Chino Sub Basin is a natural underground system north of Prescott that is estimated to contain 15,000,000 million acre feet of water.  One acre foot of water is about 326,000 gallons or basically a football field covered one foot deep.  The net mathematical result is some number I cannot even read on my google search bar. It is a lot.....The other bit of info I had is that according to the Department of Water Resources  water demand is less now than in the 1950's due to refined engineering and efficient water systems.  Amazing.  In fact we are, as a state, a couple million acre feet behind the overall demand in the 70's.  Click this link for an Arizona Republic article with a downloadable demand chart showing 1955-2017.
I am not saying everything is infinitely supplied and there is nothing to be concerned about, but, there are so many aspects to water here, if you are the research type, you could spend 6 mos. trying to learn the basic details.  The Department of Water Services has many programs, 100 yr assured water supply requirements with growth projections built in, active management areas for the groundwater depletion areas, desalination committees and studies, flood plain management, irrigation regulations....and on and on.  They are a good resource and frankly this is where one should get water info, I would not rely on an agent for this information, it is way too specific and requires an expert for reliable information.  Here are some starting to points to get yourself informed about water in Arizona.
Prescott Valley Water Resources Page.
City of Prescott Water Management. 
Arizona Department of Water Resources.
Prescott Valley info on the Big Chino Water Ranch
United States Geological Survey Big Chino Aquifer Storage and Change Report. 

Post #1 :)

Hopefully this evolves into a useful tool for those relocating to Prescott, those selling, and those researching the housing market in general.  I tend to be stats and research driven but hope to make this utilitarian. If you are at all thinking about selling, contact me, I am glad to research your property.  My sense at the moment, (2/5/20) is that there is healthy buying activity. There is some optimism in general, payrolls increased this month, rates are low, mortgage applications are up, the major indexes are healthy as of 2/05/20. Nothing lasts forever, but if your are thinking about selling, contact me now.  I want to combine long view perspective with current data and practical information for those researching a move to or from Prescott.  

On another note, just got a notification that the icon, Kirk Douglas passed on at the age of 103.  What a long and prosperous life and an example of a self-starter, creating his own film company. RIP Kirk Douglas