Faqs

Some CA residents may believe those of us who were born and/or raised in Prescott may have a chip on our shoulder for our Golden State friends…this is not true at all. Although there may be some pockets of people who don’t like anyone new moving to town, most residents understand and welcome new neighbors.

Prescott is currently being flooded with buyers from California (Autumn of 2022). A recent buyer looking for a home in the subdivision we currently live sent me an email and indicated interest in the area. Because of the scarceness of homes in this particular community, I informed them they may need to move quickly on the property if their interest was high. They responded rather coarsely with “we don’t do anything quickly…” My thought on that particular and rare attitude is; “then you won’t be living in Prescott.”

The property was priced a tad under $400,000, which is a rarity in the current market. The home will likely not be on the market for more than a day. I’m somewhat familiar with this particular property having visited 5 years ago when it was last on the market for $139,000. So WHAT EXACTLY HAPPENED WITH THE AZ MARKET?

COVID happened and many people simple wanted out of the large metropolitan areas. Millions of people started shifting all over the country, and most of them have been sitting on an investment since the crash of 2008-ish. Prescott’s market was actually pretty perfect in 2018…not too high and not too low. The average selling price for a 3 bedroom, 2 bath home was just around $318,000 at $183 per square foot. In 2019 it jumped to $330,000. Still not too bad. If you remove a 2-car garage, the average price per square foot dropped to $175. In 2021 those prices jumped to $260 per square foot, and in 2022 it jumped to $300. 2023-24 it jumped to $317 per square foot. The real take away is the average listing price in 2022 was $295.00 per square foot…meaning people paid an average of approximately $10,000 over asking price for a typical 1,750 sq.ft. home. This is the market we’re currently in right now. That same house priced at $318,000 in 2018 is selling for $573,000 in 2024.

TIPS TO HELP YOU:
If you moving from California to the Prescott area, here’s a couple things to keep in mind.

1. Be ready to pull the trigger. If you’re sure Prescott’s your destination, have your “ducks in a row”. Have your lending or cash status already secured and documented. If you’re unsure where you want to land, spend some time in a particular town before reaching out to a local agent. You may save everyone some time. If you’re visiting Prescott, do yourself a favor and stay at least one night within walking distance to downtown. Book well in advance, rooms are scarce for last minute decisions.

2. Agents are very busy currently, especially the good ones. If you’re driving to town to “look around” and “get an idea”…feel free. However, you need to understand any home you look at will likely be gone by the time you return home with multiple offers. This is the current market for any home under $500,000. If you’re in the $500k – $750k range, you may have a few weeks. If you’re over $1-million, the average days on market is two weeks.

3. Find a good agent. Some of us are doing dozens of transactions per month and we want to help you…Help us do just that. We know what to look for and how our market is flowing. We know how many days on the market an overpriced house will sit before dropping its price. Be ready to adjust quickly.

4. If you need to sell your current home in CA to buy in Prescott, please don’t waste anyone’s time by believing a seller will accept a contingent offer…they simply will not. An imaginary line is forming at the door with cash, full-price, or over full-price offers right behind you. Have your home under contract, and completely through the inspection and appraisal period, or be willing to waive those contingencies with your offer. This means if you make an offer, and the home you wish to purchase does not appraise, you’ll be responsible for coming in with the cash to close the difference. Once you’ve jumped through those hoops with your current sale, then you’re ready to make offers.

5. If you’re looking for future investment, let’s say to retire in a year or so…let your agent know up front. At this stage viewing properties is a largely irrelevant exercise, instead have your agent tour neighborhoods and take good notes. If you really like a particular area, we’ll help you find the right home when the time comes.

My wife & I have made some dear friends over the years who were California residents. We’ve embraced many with open hearts and with some with built life-long friendships. We hope our next adventure is with you and your family…and we sincerely hope these honest approach helps you get on the right path whether you’re a veteran home-buyer, or it’s your first time.

Permalink.

Since I last posted my article August 31, 2022, regarding being a California buyer; the market has changed. Let me explain how and why.

Has the market in Prescott slowed down?

Here’s the data:
We have an average of 158 active listings on the market every month, with an average of 57 being new (YTD Prescott proper 86301, 86303, 86305).
An average of 39 of those sell every month with 39 going under contract.

What does this mean?

It means half of the homes sit on the market for more than 30 days.
Since 2022, price per square foot has risen by $26 on average in our three most popular zip codes.
Homes sell at 95% of their original list price on average. This means if you have a home listed at $500K, it will likely sell around $475K. However, homes drop in price, right? Prescott has a whopping 98% ratio of sale to list price ratio. Active days on market are right about 63 on average. That explains why some of those homes are sitting on the market for more than 30 days.

The average sales price in Prescott is $675,000. Yes, you heard me right. In our three most popular zip codes…that’s the avg. price. Think that’s high, our average list price is $884,000.

Of the 1,432 homes that sold in Prescott during the last year, 83 were manufactured. The average sales price was $313k with a high of $495K…for a manufactured home. (This does not include leased-land homes which are not real estate.)

What does this mean, part 2?

Prescott is no longer a place to get a deal. “What about all those short sales and foreclosures?? I’ll just wait to snag one of those!” Good luck, in 2023-24 we had two.

Prescott is no longer a place you can buy a home for under $250K, although 34 homes sold under $250K. 34 out of 1,432. Most of them sold within days and many for over asking price which means bidding wars.

People move to Prescott because they can, and they want to. Prescott is a place to live your life…it’s not a place to hunt for unsavvy homeowners who will take $200K less than they deserve. Those days are long gone.

Thinking of moving to Prescott?

Wonderful! We’d love to have you! Bring your prequal or your cash, know what you want ahead of time, and get ready to pounce. You may have several days to make a decision…but don’t count on it. The market is still moving fast and you’ll need a good agent who can handle the pressure and negotiating.

Permalink.

2024 Climbing Interest Rates

Buyers are finding themselves in challenging times in the Arizona real estate market not only with massive price hikes, but with rising interest rates.

Perhaps you’ve been thinking, “hey, maybe it’s time we purchased our home in Prescott, Arizona” only to find out our average home price is over $685K! Perhaps the price of the home isn’t the issue, but instead the rising interest rates.

With interest rates pushing into the 8% territory this could mean pushing some people right out of the market. Why? Because the same person who could afford that 30-year fixed at 5% is paying $600+ more a month at 8%. ($400,000 loan with 10% down). These massive increases in not only monthly payments are high, but overall expense for the life of the loan are tremendous. Kind of makes you pine for the COVID days again, eh?

What is a 2:1 Buy-down?

A 2:1 buy-down is paying up front cash to the lender to reduce your interest rate during the first two years of the loan. Sometimes other deals can be worked also (called “buying down points”) but the purpose of the 2:1 buy-down is to offer relief for at least two years, during times of interest rate hikes. A 7% rate becomes 5% year-1, and 6% year-2. Hopefully by year 3, things have dropped again and the owner can now refinance.

Sellers can often offer this as an incentive for buyers who are trying to get into a home. Perhaps a buyer is well-qualified regarding credit score, but doesn’t have the financial girth to withstand a high interest rate yet. Maybe they’re just getting established in a new community and could use some help.

The double-dip

This is where things get interesting. Should a buyer have some extra cash on hand, they can request to buy down points. Should the home sell at $500,000, purchasing 1 point would cost $5K up front. So for $10K, a buyer could buy-down his rate from 7% to 5%. Now the seller decides to kick in money from the proceeds of the sale to contribute to a 2:1 buy-down. Now the interest rate drops to 3% the first year and 4% the second.

Is it worth during the 2:1 buy-down timeline?

Yes, if you have the cash, the buy-down is very much worth it. On a $500K home with an interest rate of 7.5% a combined 4-point buy down would take the payment from $3,500/month to $2,250/month, and a break-even date at 16 months…meaning you would recoup the $20,000 in buy-downs with the lower payment.

This strategy could put buyers back in the game! Working with a good agent who understands this and has connections in the lending industry is imperative during times of high interest rates.

Permalink.