Flagstaff Real Estate: Is it a hedge against inflation?


If you’re lucky enough to have a home in Flagstaff, good for you!

Welcome to our phenomenal Flagstaff 2022 Real Estate Sellers Market. Predicted to top our 2021 real estate sales prices, even the most seasoned Realtors are surprised at our fast-paced sales. Properties listed in the $600,000 to $900,000 range receive 18 to 20 offers within days of posting on MLS. The number of buyers in Flagstaff far exceeds the number of properties available for sale.

Although Phoenix real estate sales prices are up 27% from this time last year and Flagstaff has kept pace 26%, there are still opportunities for investors. Yes, home sales prices in Flagstaff are at an all-time high, but they’ve also been at an “all-time high” every year since the third quarter of 2018. Bank rate forecasters predict this trend will continue until in 2025. Housing in Arizona is fueled by southwestern migration for employment opportunities, our relatively attractive property and sales tax base, weather, and lifestyle. Rental fees are also rising and hard to come by as buyers with jobs in Flagstaff wait for escrows or try again to submit an acceptable offer to sellers.

If you’re lucky enough to have a home in Flagstaff, good for you! You may have checked with your real estate agent or the many sites to see how much your property has appreciated in value/equity, even though you bought it three months ago. Have you ever considered an investment in Flagstaff real estate in addition to your primary residence? Certainly, it would have been more advantageous to buy a property in 2011, when the market was flat after our famous “bubble” because of lying loans, but as we all know, we cannot go back in time!

What options exist today for your investment funds? Stocks, ETFs, mutual funds, net funds – inside or outside your IRA or 401K. Watching what could be the end of our long “bull market” may be disconcerting for many investors, but the long-term rate per Financial Advisor is a conservative rate of 3% to 5% per annum. Hiding funds in bank accounts with very low interest rates, CDs and other fixed instruments, such as under your mattress, may seem like the safest place, but is it the wisest choice in the world? current economic climate?

Now that our inflation rates have gone from 2% to 4% and now to 7%, do you have a plan for your assets to keep up with rising inflation? Buying real estate in Flagstaff now can have a few advantages. First, selling prices are rising, and forecasters predict this trend will continue through at least 2025. Second, if you need financing to buy your investment property, Chris Hallows of Flagstaff with Wallick and Volk Mortgage says “Most people are risk averse, but mortgage interest rates, even with the planned hikes, are still at historic lows. Third, if you’re paying cash for your investment property, if the forecasters are correct, you can hopefully get a higher rate than your average stock portfolio and get the added benefit of higher rental income while looking at the increase in the equity in your property over the years. the next years. And fourth, consider the tax implications of writing off repairs and expenses, property tax and mortgage fees, and amortization schedules over the years.

Another option may be to use your existing IRA or 401K to fund your Flagstaff real estate investment. As with any plan, work with professionals you trust. Your realtor can help you strategize how to get your offer to purchase accepted in this fiercely competitive market and explain how the market has changed for buyers and sellers. Speak to your tax and financial advisor to explore the pros and cons of all your investment options and to determine which ones are best for you. Once you have set your course, be brave and don’t look back! NBF

By Paula Mack

Paula Mack, SRES, is REAL ESTATE AGENT at Russ Lyon Sotheby’s International Realty. She can be reached at 928-699-6837 or paula.mack@russlyon.com.


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