Prescott Real Estate Data!

To all of you real estate information junkies out there, we wanted to end the year by doing a summary of 2008, taking a close look at each of the 4 local markets individually, but also the area as a whole. The chart to the left, which you can download by clicking on image, is a special version of our "inventory charts", which we publish monthly. In this case, we put together a 3 year summary graph, which has the total number of area site-built homes (blue), under the total number of sales (red) for each of the last 36 months. As you can see, our graph ends in October 2008, as our November and December inventory charts will be published soon.

Taking a close look at this graph, you will note that historically, our inventory balloons in the summer months, and tapers off through the winter. However, in 2005, Inventory shot straight up, not taking a breather until late in 2006. This was due to many people trying to jump on the "cash out" bandwagon a little too late, as our local market price point peaked right around Christmas 2005. As a result, inventories, or our supply of homes, has mushroomed for the last 3 years, but if you watched our webcast (viewable at www.LFTperspective.com on the sidebar, or by visiting our youtube channel at http://www.youtube.com/acalong77), you know that stastical indicators suggest a cap to inventories fast approaching.  What is to come in 2009?  We will break it down over the next week, so be sure to check back daily.  We will also be posting new inventory charts in the days to come.  Until then, Happy New Year!  

Falling Interest Rates! The Stars Are Aligning!

With home prices continuing to fall in the Prescott Area, and interest rates falling even faster, the optimum time to buy is fast approaching, if not already here! Rates are hovering just above 5% but with a 1 point buydown, are readily available below 5%! We haven't seen this territory for years, and who knows when the next time will come. We get a particular question from buyers very frequentl, that being, "should we wait and see if prices come down more before we buy?". This is a common, and fair question. Consider for a moment that just a few months ago, we were experiencing interest rates close to 7%! And, again, they are close to 5% as of the time of this blog. Lets consider for a moment that you were purchasing a $200,000 home at 5% interest with 5% down. Your PI payment would be $1020/ month. Now, consider for a moment that the price on that same home falls another 5% over the coming months, but interest rates jump back up to 7%, that same home with 5% down, while now selling for $190,000 would cost you $1,287/ month! So, is it really a better deal? Depends on whether or not you are financing the mortgage. In fact, your break-even for payments would only come if that same home fell a total of $38,632! That is equivalent to nearly a 20% decline in property value! Now, we are all a little curious just how far the market will continue to slide, but with the massive devaluation in property (yes, even in Prescott) over the last 3 years, we believe that another 20% is VERY HIGHLY UNLIKELY!

So what does this mean for buyers in the local Prescott Area market? Simple. Either way (waiting or buying now) there is a certain amount of calculated risk. However, in buying sooner as opposed to later, the risk is more managed. In other words, it is more predictable. See, one of the underlying reasons as to why our market is in the current condition it is, has to do with home buyers not managing their risk in a sensible way. They let their emotions get the best of them, and rolled the dice, hoping that the phenomena we saw in 03'-05' would continue at historic rates. We all know that this didn't happen, and looking back, it seems now that it was foolish for masses of people to assume that it might. So, where does that put us in 1 year. Looking back not believing how more people didn't take advantage of the amazing opportunity that exists right now? Time will tell...........