28 April 2008
Sedona AZ Real Estate Market Watch
Roy E. Grimm, PhD
At a recent Sedona Verde Valley Association of Realtors meeting, a local broker decried the latest round of property price reductions, exhorting members to hold the line by replacing negative thinking with positive attitudes. Rightfully, he reminded listeners of the glories of living in Sedona and pointed out that local prices work with a genuine bargain compared with those in other sought-after locales like Aspen and Vail. I am a firm believer in the power of positive thinking and I absolutely agree with his comments on the excellent value proposition to be found in Sedona real estate and the delightful quality of life here.
What concerns me, however, is giving unwarranted support to the sort of wishful thinking that many would-be sellers still seem to be clinging to. As much as we want to have faith in divine intervention, the Law of Supply and Demand remains in effect, even in Sedona. The market determines proper pricing for which properties will actually sell. Sellers who ignore the market realities will, for the most part, be sitting on unsold homes and land for a very long time to come. It does happen, occasionally, that an unrepresented or ill-informed buyer will grossly overpay, but that is a rare occurrence. Few buyers are that foolish. The fact remains that if a property owner really wants to sell, the price set must be in line with what the market is saying.
So what is it saying? Essentially that we’re likely to be in for long ride before we return to our more normal strong Sellers’ Market. Buyers do appear to be getting back into the game in increasing numbers, but the key element in the equation is lopsided supply. Single family home inventory was 106 back in the spring of 2005. That figure hit 498 in September 2007. After dropping off through the rest of that year, it has steadily climbed back in 2008 to over 500, an all time high, this spring. The inventory of luxury homes ($1 million+), has likewise set a new mark of 136. So, even with a massive injection of demand, the huge supply loads the dice in favor of buyers and must keep prices in check across the board.
What about prices? The Median Recorded Selling Price for single family homes hit its peak in the spring of 2006 at $660,000. By the end of 2007, it had slipped to $500,000. It rallied a bit this spring, climbing to $532,500, but a peek at pending sales indicates a retrenching. The median list price (the actual selling price won’t be known until the sales are completed) of homes under contract now is $477,500. When those sales close, expect see a drop in the overall MSRP, at least for the short term. Contrast that with the current median list price of the 506 homes currently available: $695,000. That indicates a pervasive seller disconnect with reality that will not help get those homes sold. Wishful thinking has its price, too.
Sedona Area Market Stats Snapshot
Single Family Homes:
# SOLD: 1 Jan – 28 April 2007: 90
Median Recorded Sales Price: $573,500
Price per sq. ft.: $280
# SOLD: 1 Jan – 27 April 2008: 58
Median Recorded Sales Price: $532,500
Price per sq. ft.: $256
# SOLD: 1 Jan – 27 Sept 2007: 21
# SOLD: 1 Jan – 27 Sept 2008: 16