To understand Flagstaff real estate, one needs to understand that we have a shortage of land. It’s hard to grasp at first because Flagstaff is surrounded by (beautiful) open spaces. Those open spaces are mostly either National Forest or Arizona State Trust Land. Most of our national forest, especially anything that runs into the San Francisco Peaks, will never be developed. (There are no cozy cabins for sale in those mountains, sorry.) The State Trust Land is preserved by our state constitution to be sold and developed for the benefit of schools. The state board in charge of the land decides when to sell it with the goal of having a perpetual trust fund available to provide financing for schools in the state, forever. This means that land
around Flagstaff is sold only every few years – when the state believes the prices have reached a point that it’s good for the educational trust fund to sell it.

Right now, there is a piece of land southeast of town that has been sold and is ripe for development – sometime in the next 10 years when the developer, the city, and the Arizona Department of Transportation work out the details of adding access roads and entrances to I-40 and I-17. This would add roughly 3000 homes to our housing stock – but only about 300 per year and only once the building begins. In addition, there is a smaller piece of land that the state trust sold recently between I-40 and Butler Avenue which will be developed in the next five years or so. Meanwhile, relatively few new homes are being built.

Whether you believe Flagstaff homes are expensive or not depend on where you are coming from. Comparable Flagstaff homes are often more expensive than Phoenix and Scottsdale homes because of the price of land. For most Californians and New Yorkers, Flagstaff is an inexpensive haven. For much of the rest of the country, it’s high. The median price of a single family home sold in May 2007 was $386,250. That number is up only slightly from May 2006, when the price was $383,000. Like the rest of the country, we’ve slowed, but here this is reflected is lower price increases instead of falling prices.