Roy Grimm's Sedona Real Estate Blog

Recently I received a surprising inquiry about Sedona from a prospective client in Southern California who reported having visited here “a few years ago” and came away “unimpressed.”  Like most Sedonans, I take, as given, that we live in God’s Country.  Hearing such heresy, I was taken aback.  Clearly the person was suffering from smog induced hallucinations while being stalled in on the I-5.  But, the comment caused me to reflect on my own Articles of Faith that this is holy ground.  Is Sedona really the Paradise that we believe it to be?  Why DO we love it here?

Let me count the ways:

1. From the Gospel of USA TODAY, 2003, Weekend Edition: Of The Top 10 Most Beautiful Places in America, Sedona is Number 1.  OK, there are other places that are almost as gorgeous, but can you live in them?  Really, the natural surroundings are so breath-taking as to be spiritually uplifting, regardless of your beliefs about vortices.
2. If you appreciate the out-of-doors and enjoy, hiking, biking, golf, or just hanging out in Nature, this is the Promised Land.
3. If you like a climate with four distinct, but relatively mild and lively seasons -where you can enjoy dinner on your patio in the evening without being carried off by demon mosquitoes – Sedona makes the choir sing. Continue reading →

Mid-Year Market Update & Historical Overview
Roy E. Grimm, Ph.D.

Compared with other parts of the country and previous years here, the Sedona real estate market is doing relatively well and gaining traction.  Sales numbers for Single Family Homes are strong, prices hit a new bottom and are quickly heading back up, and foreclosures have slowed significantly.

For comparative purposes, the bench mark year for the market is 2006, when it began its swoon.  Although the Median Recorded Sales Price (MRSP) continued to climb well above $600,000, sales dropped 34% from 2005’s 582 Single Family Homes sold for the year, to 386 in 2006.  In hindsight, dismal as it seemed at the time, 2006 was a pretty good year – especially seen from the perspective of the market’s nadir in 2008 when 517 Single family Homes were on the market and only 227 sold.  And, it was a terrific year if you were selling a luxury home.  Sales and prices in that sector continued to boom before sliding off the cliff in late 2007.

2009 saw the market turn around.  Prices dropped to what we then thought was The Bottom in January – a MRSP of $369,000, and popped up to the low $400,000’s before settling in the high $300,000’s for the next couple of years.  It was the year that unprecedented foreclosures hit the market in force, suppressing prices ever since, despite increasingly strong demand and diminishing inventories.  On the positive side, those prices did, indeed, bring out the buyers and 2009 closed well with 345 Single Family Home sales for the year. Continue reading →

Back in March, I reported evidence that led me to believe that the Sedona real estate market had finally turned the corner and was on the upswing.  That evidence: a high number of pending sales, strong luxury home sales, declining inventories, and a drop in foreclosure listings and sales, all remain in place – even as prices seemed to be sliding a bit.  Now we’re seeing new signs of a strengthening market, including prices.

We tend to keep the Phoenix market at arm’s length because its fundamental makeup is so much different from ours.  But, in recent years the general market trends have been similar.  Phoenix took a much more massive hit and has been prostrate far longer than Sedona, but it, too, is now showing signs of life.  As reported in a recent Arizona Republic article, respected real estate analysts, Jay Butler of Arizona State, Tom Ruff of The Information Market, and Mike Orr of the Cromford Report are upbeat, if cautious, in their projections.  All echo Ruff’s statement, “I am not being overly optimistic when I say home prices could climb during the next six to nine months.  Those indicators that went negative last year are now turning positive.”

The caution, though, relates to the glut of foreclosed properties on the market.  Prices will not fully recover until that has been cleared.  There are signs, however, of an easing there, too.  Statewide, the numbers of pre-foreclosures is, apparently, down this year as is the number of people falling behind in their mortgage payments thanks to a slowly improving economy. That translates to fewer future foreclosures. Continue reading →

“Vacation Home Sales Surge Higher,” was the national headline in a recent news flash from Real Estate Information Services Media. That tantalizing news morsel proved to be a mixed salad, however, for local market watchers.  Turns out that, so far in 2011, home sales in Hawaii and Florida, two of the hardest hit areas in the country, are up well over 20% compared with the 2010 figures.  Most of the action, though, has been in the condominium segment.  And, the vast majority of those sales have been distressed properties, foreclosures and short-sales. As a result, median home prices continued to decline.  Still, RISMedia, took that as, “a sign that the housing market is finally making a major move in a positive direction,” particularly because vacation homes are often at the top of the list when families are adjusting their discretionary spending.

Are we seeing the same phenomenon in Sedona?  Yes and no.  Here, the Condo Market (the term comprises both condos and townhomes) constitutes about 20% of the home listings and 15% of the sales.  It’s a far smaller segment than in Florida and Hawaii.  Nevertheless, sales were 25% higher here in 2010 compared with every year since 2006.  That hasn’t carried over to the 2011 figures yet but, as in Single Family Homes, Condo Pending Sales are up significantly, so we could well see the 2010 surge continue.

We do note, so far, a downward pressure on prices, thanks, as usual, to distressed sales. They make up about a third of the Condo Closed Sales and Pendings in 2011.  And, we’re seeing those at the luxury end of the market in places like Park Place as well as in the modest end, like Tierra Sienna.  The Median Price Per Square Foot of Condos in 2010 was $196.  At this point in 2011, that figure projects to be about $188 to $190 – although it could easily exceed $200 by year’s end as the Condo Market picks up steam.

Will it pick up steam?  I think so – for the same reasons that it was relatively strong in 2010.  Condos/townhomes make sense in an area dominated by vacation and second homes.  They’re turn-key. Owners can leave them unoccupied for months at a time without undue worry.  Landscaping and exterior maintenance is often provided by the Home Owners’ Association.  And, most provide amenities like pools that most second home owners would typically eschew in a Single Family Residence because of costs and upkeep.

Finally, bargains abound at all levels.  The stars are aligned for buyers when they can buy a short-sale townhome for less than $500,000 at the luxurious Cottages at Coffepot that sold for $825,000 back in 2006.  Or, a Nepenthe unit for $200,000 that fetched $329,500 in 2005.  Most sales aren’t quite that dramatic, but sharp discounts do abound.

Dr. Roy Grimm is the Head of the Buyer Brokers Group of Russ Lyon Sotheby’s International Realty, serving the Sedona and Flagstaff areas.   For questions or comments, email Roy at Roy@SedonaRealEstate.com or visit www.SedonaRealEstate.com for the full statistical details.

It was a wild winter for the Sedona real estate market.  Normally (particularly in the past five years) it’s the season in which Realtors go on vacation because business is so slow.  Not in 2011.  I and most of my colleagues have been hopping as though it were 2005 all over again.  As a result, by the beginning of March we had set a new record for pending sales of single family homes – close to 90.  That will translate to very strong sales numbers in the weeks ahead.

That’s numbers, by the way, not prices.  As we’ve seen for the last couple of years, the impact of foreclosures and short-sales has been keeping a lid on that.  Despite the dramatic increase in demand and a sharp decrease in supply (i.e. active listings), the Median Recorded Sales Price remains at a level we haven’t seen since fall 2003.  The inventory of foreclosures (aka, REO’s), however, has gotten a bit thin lately and we haven’t yet seen the flood of new ones that credit industry observers tell us is coming.  That pig in the python, nonetheless, will have to be digested before we see the inevitable price run-up kick in.

Meanwhile, though, buyer demand has taken a big bite out of the inventory of both distressed and non-distressed properties at all levels.  By early March, the number of active single family home listings had dropped below 298.  Compare that with 367 in March 2010 and 472 in 2009.

The most remarkable surge has been in the luxury end of the market.  High-end buyers have apparently decided that now is the time to snap up Sedona real estate bargains.  Closed and pending sales of homes over $1 million are approaching levels that we haven’t seen since early 2007 – the peak of that market.  This is a good sign because these are generally very sophisticated and knowledgeable investors whose example will not be lost on the backlog of buyers who have been fence sitting for the past several years.

So, it appears that the Sedona real estate market has turned a corner as it stumbles toward full recovery.  Whether that progress is sustained and not set back by world events or a slow return to national economic health in the year ahead remains to be seen.  Ultimately we will get there.  That will take derailing the REO speedwagon and getting mortgage underwriters to stop acting like undertakers, but we will, inevitably, arrive at the point in which we’ll see dramatic appreciation in property valuations.  And, we’ll get there far sooner than the rest of the country thanks to Sedona’s unique blend of natural beauty, pleasant climate, and cosmopolitan culture that make it a perennial favorite for newcomers.

Dr. Roy Grimm is the Head of the Buyer Brokers Group of Russ Lyon Sotheby’s International Realty, serving the Sedona and Flagstaff areas.   For questions or comments, email Roy at Roy@SedonaRealEstate.com or visit www.SedonaRealEstate.com for the full statistical details.