Please explain this to me. (Prescott, Prescott Valley: sale, 2013, renting)

[Wanderling]

The Census ACS 1-year survey reports that the median household income for the Prescott Arizona metro area was $39,895 in 2013, the latest figures available. Prescott median household income is $8,615 lower than the median Arizona household income and $12,355 less than the US median household income.


Prescott median home price 2013: $350,000.

[Hschlick84]

Does the geographical location and 4 seasons climate play a factor in home prices? I know Prescott is on hilly terrain while PV is more flat. Home prices like that are similar to parts of metro Denver.

[PhureeKeeper]

There is a very large retiree population in and around Prescott. I'm sure that skews the numbers.

[Wanderling]

USA median:The median amount of outside retirement savings is $49,000 for workers ages 51 through 60, $1,294 average monthly benefit for SSI, median net worth Age 65 to 74: $206,700.

Your average retiree in the US would not even come close to qualifying, much less make ends meet.

At 350,000 100% of the median income would not even cover the payment. much less qualify for a loan.

The median home price here in 2013 is 8.77 x the median pretax income.

Average loan is roughly 3X median pretax income.

Does not add up for me...

[azdr0710]

the census "metro area" includes, I think, much of the rural areas outside the entire Prescott area, which might explain the lower income average....

the house prices are purely a result of supply and demand....many buyers are paying cash now and have been doing so for several years....

also, many residents have income from various other sources which is not included in the "household income" amount....

and the retirees who are buying most certainly are not having to qualify for any kind of loan (they're paying cash)

also, some long-time locals are now property rich and cash poor and have no chance of qualifying for a new loan, so they stay where they are and make those tiny payments on the old loan

[Wanderling]

Good point; Its hard to know what was included in those median income calculations, still when one sees numbers so lopsided like that its hard not to notice and ask questions.

So; I assume money that is fueling home prices here is coming from outside the local economy, and not being declared as income like IRA distributions, SSI, pensions, capital gains, would be.

Than I would assume that it would be the sale of property else where reinvested in property here would not be taxed as income, or people that have 300,000+ cash on hand that has already been taxed.

If long time Prescott residents that bought before home prices inflated, are cash poor and house rich that means in order to raise cash they would have to sell, rent, or borrow against their home to make ends meet, after all, the cost of living is a lot more than making a house payment.

Sounds like the locals are being pushed out of town by outside money; if so where are so many independently wealthy people coming from?

Most retirees I know arent even remotly that well off.

Am I starting to get the right picture?

[BriansPerspective]

Originally Posted by Hschlick84

Does the geographical location and 4 seasons climate play a factor in home prices? I know Prescott is on hilly terrain while PV is more flat. Home prices like that are similar to parts of metro Denver.

Prescott homes command about $50K more than Prescott Valley for a comparable house. This is partly due to the hilly vs. flat terrain, and partly due to the restaurants and amenities that exist in Prescott. Prescott residents also tend to view Prescott Valley as a lower class, strip mall city. That view is changing as Prescott Valley grows, but the image is still being propagated.

[BriansPerspective]

Originally Posted by Wanderling

The Census ACS 1-year survey reports that the median household income for the Prescott Arizona metro area was $39,895 in 2013, the latest figures available. Prescott median household income is $8,615 lower than the median Arizona household income and $12,355 less than the US median household income.


Prescott median home price 2013: $350,000.

Households earning less than $40K/yr are renting in Prescott unless they have accumulated cash over the years (e.g,. retirees). If someone has paid off their mortgage after so many years, they can parlay the cash from the sale of that home, and buy in Prescott with a very small mortgage. There income may be low, but their house payment would also be low or non-existent. I do not know the percentage of retirees in Prescott, but I would guess that the number is fairly high.

[like-2-hike]

Originally Posted by BriansPerspective

Prescott residents also tend to view Prescott Valley as a lower class, strip mall city. That view is changing as Prescott Valley grows, but the image is still being propagated.

Seems like a reasonable view (the "strip mall city" part) - all one needs to do is drive from Prescott East Highway to Navajo on SR69 to see why people have that view. I don't think the town of PV is doing anything to change that.

Too bad, because there are some nice amenities in PV. They seriously need a good master plan and the fortitude to implement it. That and a traffic engineer (although that could be an ADOT issue).

[Wanderling]

So, money coming in from out of state home equity, and retieries living off SSI, pension etc, that makes sense.

However; that would mean that the people coming in would have to sell their homes for at least somewhere close to the Prescott median home price just to get their foot in the door so to speak, given that there was a huge correction in housing not to long ago in which I lost all of my equity on my previous home, where on Earth are these people coming from that could withstand the loss and still have that much equity left over after the carnage?

They would have to be coming from areas with very much higher than the national average median home prices.

As a realtor, talking to people coming in would you have any insight into this?