Rim Country real estate remains pedal to the metal, while the rest of the state and nation taps the brakes.
“There’s not a lot of people talking about the inventory shortfall,” said Gary Nelson, the 2021 president elect of the Arizona Association of Realtors. “We have more people wanting to buy than inventory available.”
He attributes the millennial generation (those born between 1980 and 2000) for the sudden uptick in home buying across the nation.
“Millennials are older, in their late 20s into their 30s,” said Nelson. “Those are the times that they go out and buy their first home.”
In comparison, Arizona’s rural mountain communities attract retirees and folks from the Valley interested in a mountain cabin.
“The second home buyer and seller from Maricopa has a much bigger effect (locally),” said Nelson. “I’ve been a Realtor for over 27 years in Flagstaff ... more than 50% of my sales are second homes.”
Retirees and second homeowners have discovered Rim Country during the pandemic. This has shortened the time Rim Country houses remain on the market, at the same time increasing the price.
According to MLS data on the local market, Rim Country homes have gone from remaining more than 100 days on the market down to 70. Home prices have increased by 28% to an average of $357,000.
In this type of market, Nelson sympathizes that “it’s hard for a buyer to be successful.”
Especially a first-time buyer with a federal home loan or veteran administration loan home buyer.
He advises clients to hire a real estate agent that will “guide them through the process.”
Nelson said to check out their experience and ask about ideas on how to get a seller’s attention.
“Ask what methods that they’ve used to have their offer accepted,” he said. “Make sure that you are pre-qualified and ready to go.”
Methods can include writing a “love letter” to sellers to waiving an appraisal contingency, “meaning the buyer would make up the difference” between the appraised value and the sales price.
For those veterans or first-time homebuyers, Nelson suggests using a professional that will introduce them to the federal first-time homebuyer or veteran loan programs.
“We have to react to the market, especially if you are dealing with a lower income buyer or a buyer with certain loans,” he said.
It’s tough to shepherd this kind of sale in this market.
“I know what it’s like to have a VA buyer who can’t buy a home with a VA loan,” he said. “You put your heart and soul into a buyer and to have them fail over and over and over again — it keeps you up at night.”
On the other side of the fence, sellers struggle to choose who to sell to.
Nelson asks his sellers, “if they are maximizing their investment? (or) are they picking the right person? Is it better to sell to an all-cash investor? Or is it better to sell to the veteran with the VA loan?”
Nelson said he tries to pull on his sellers’ heart strings to make a difference in society, instead of going for the money from an investor who probably won’t live in the house.
“(I tell my client this offer) is from someone that served our country (I ask) are they going to add to the community?” said Nelson. “Sometimes, the seller receives less money,” when they choose someone using a VA or federal home loan, but some make that choice.
At the end of the day, Nelson and the Realtors in the state association recognize a severe lack of affordable and workforce housing, so he starts many of his millennial clients in a condominium.
“It’s a way to get your foot in the market,” he said.
But as governments add regulations to construction, land and building materials increase in cost, causing prices to continue to rise.
“Those have gone up high in the last 20 years,” he said.
For those on a tight budget, Nelson suggests they “have to be looking out further locally than where you want to live” or “look at a different home type.”
The City of Flagstaff is trying an interesting partnership with Habitat for Humanity and a local school district to create workforce housing.
Habitat has built housing for teachers on district property.
Northern Arizona University and the local community college have gotten involved by providing labor from its construction classes.
Whatever it takes, says Nelson.
“I don’t give up on the end prize. The end prize is not selling houses, it’s selling a home.
Home means family, it’s not a structure,” he said.