Thursday, September 21, 2006

Understanding the White Mountains Real Estate Market

Understanding the White Mountains Arizona Real Estate Market

We have to take a deep breath here. Although we provide buyers with a very nearly overwhelming verbal explanation/discussion of the market intricacies during many of our initial contacts, the subject of what forces drive the market in the White Mountains of Arizona is important enough to deserve wider distribution. We’ve studied it in-depth ad nauseam, watch it on a daily basis, and are probably one of the best resources a White Mountains Arizona real estate buyer can work with. At least that’s what they tell us, and we appreciate that very much.

Our market is predominantly a vacation/second home market. As such, “real value” as in price-per-square foot considering age, condition, upgrades, comparables, etc., must be considered in the context of many intangibles to value, both real and perceived that are overarching big players in our market. Many buyers have a “sticker-shock” reaction to the prices asked for vacation/second homes and mountain cabins in The White Mountains with—“That’s crazy!” But is it really? Or, “It’s a buyer’s market— hasn’t anyone up here heard that?” Sure we have; but, the White Mountains Arizona real estate market has some thick and natural (of course!) insulation against national real estate downturns.

A good place to start getting your head around this market, is a comparison of “real value” versus intangible value, so take a look at Aspen. There, a small, ancient single-wide mobile, cheek to jowl with another equally ancient single-wide mobile will command in excess of $1million dollars. Well, you may say that the White Mountains is no Aspen— and others may answer, “Not yet…” (because indications are that the White Mountains is heading resolutely in that direction). Anyway, from your $1million dollar-plus trailer in Aspen, you may sit on your front steps, strap on your skis, and get on the lift. Just like that. To many, that ability is not only worth millions, it’s priceless.

Similarly, with some of the nation’s most glorious lakes, rivers, streams, four-seasons, skiing, camping, fishing, good water, no pollution, no industry, no gridlock, no crime, peace and quiet, security--- ad infinitum lifestyle benefits, the White Mountains may have even more to offer than “ski from your doorstep”. These attractive and compelling qualities are hyperactive “location, location, location” realities. And these qualities may not be to-the-eye represented in the wood, brick and mortar of homes and their prices.

Did you know that there are areas in New England that actually tax homeowners on the view they enjoy? That’s true. Should homeowners there have the right to ask more for these million-dollar view homes? Sure. If a governmental body has decided that the views have value, why not? Fortunately, no one is taxing views here in the White Mountains; but, the market is placing a value on these “intangibles”, including views, be it mountains, thick pine, peaceful meadows, the golf course, etc., outside the square footage, age and amenities of homes.

So much for some of the valuable intangibles that fuel our market prices. Now let’s talk about the area, itself, and what that means to the pressures of supply and demand. Over 750 square miles. Big, yes. But, out of that, only an estimated 12% to 13% can be privately owned. The rest belongs to The Tribes and to the State/Federal Government, the BLA, too. Now out of that 12% to 13%, there is a vast amount of land that is wild, windswept, rocky scrub where the traditional cattle herds needed huge amounts of land to graze. This use is disappearing, but this difficult land still remains, much of it for sale. There still remains the “wide-open spaces” appeal to many for this rugged land and independent lifestyle (we appreciate those individuals and salute them), but the majority of buyers want the flip-side of our market’s coin. They want our cool mountain vistas, and they want trees. Pine. The more the better. And so, the small remaining balance of available land is considered prime with correspondingly supply/demand high prices for obvious reasons. The White Mountains can boast of the largest stand of Ponderosa in the nation; but, the majority belongs to the aforementioned entities. That leaves very little for private use.

That fact reminds us of some very revealing stories about potential buyers from out of our area—and there are many similar stories, all with the same general theme. A private pilot, while flying in his plane over Rim Country from Flagstaff to Show Low was very impressed with mile after square mile of heavy Ponderosa pine forests. He figured, out of all that forest, he’d be able to buy at least 100 acres with no problem. And since there was so dang much of it, most probably the 100 acres could be had for a song. He was, therefore, extremely disappointed and slightly angry to learn that he’d been flying over miles and miles of National Forest Service land. Similarly, many who drive to our beautiful area arrive at our office wanting land “close to the Ski resort” or “on that big lake”, or “on that stream with the little waterfall”—again, disappointed to learn that all those miles of pine, aspen, meadow, lakes and streams belong to The Tribes or the government.

But, hey, we learned that lesson when we first came to Arizona, to Flagstaff, in particular, where, talking to a Realtor we were asked, “Do you like trees?” Well, what else were we there for but Ponderosa and maybe a view of the San Francisco Peaks? We thought the Realtor was fibbing when she told us each Ponderosa added about $5K to an asking price… Abandoning Flagstaff for the White Mountains in the belief that things might be different here afforded us a similar situation with the addition of lakes, streams and creeks added to the "no can do" list. But! The White Mountains was the closest to "heaven on earth", in Arizona, and we soon realized we'd stumbled onto something very special. And so, when OUR buyers show some anger and disbelief when they hear “the news”, about what they can and cannot have at any price, we totally understand, because on the face of it…

All this sounds like, “You’ll take what you get and like it”; but that’s not true. With good understanding of the market, and happy appreciation of all the wonders and beauty a vacation home in the White Mountains offers in addition to the enjoyment of your White Mountains vacation home’s four walls, you can “Take what you like and love it”. It doesn’t have to be a full-out glam vacation cabin, either. It can be a modest dwelling in the pines, a headquarters, a quiet place to come back to after days of fun, adventure, plenty of sunshine and clean air. Cool summers for the children to enjoy, crisp autumn air with just the hint of a distant wood-burning stove at dusk, delicious trout sizzling in the pan, sunrises and sunsets from your deck, pleasant neighbors— we could go on and on. When you open the door of your new vacation home OR your permanent home here in the White Mountains of Arizona, you open a whole world.

Life is better in the White Mountains