|
|
||
 |
||
Roy's Cell: 928-300-0690
Sedona AZ Real Estate
Market Conditions
Sedona Monthly Magazine – April 2012 Issue Article
Sea-change in Sedona’s Real Estate Market
Roy E. Grimm, PhD.
A sea-change is a gradual, but profound transformation, usually for the better. That is an apt description of what is occurring in Sedona’s real estate market. As the national economy has slowly found its footing, consumer confidence has returned. So have home buyers with renewed faith in the long-term value of property here and a sense that now is the time to take the plunge before prices start spiking.
It’s been a long time coming. From 2008, in the depths of the Great Recession, when home sales sank to record lows and inventory rose to record highs, buyer demand has steadily drifted to back the surface, while the mountain of homes for sale has inexorably eroded. Both have returned to 2006 levels, the high water mark of the real estate boom in terms of prices and the beginning of the market slide. It makes an excellent benchmark for judging the recovery.
In the 1st Quarter of 2006, while the market was still relatively robust, 112 single family homes were sold at a median price of $551,250. Prices continued to rise to well over $600,000 later in the year and more buyers were priced-out. By the end of the year sales had dropped 30% from 2005 levels.
The 1st Quarter of 2008 saw home sales dropping to 43, but selling prices were still high, $509,500. Active listings ballooned to 486 and pending sales slipped to 39. And, that was all before the Wall Street and Credit Industry meltdowns. It wasn’t until late 2008 that we began seeing foreclosures show up in sufficient enough numbers to crush prices. For following three years median selling prices bounced around in the three hundred thousand dollar range.
The upside of those persistent low prices, however, was that they lured bargain hunting buyers back into the market. Sales picked up momentum during 2009 that carried over into 2010. That was a breakthrough year that saw home sales exceeding those of 2006. 2011 had its ups and down, but its sales figures also eventually trumped 2006.
1st Quarter 2012 prices remained stubbornly low, with the median dipping below $340,000. Other indicators, however, are prodding the Law of Supply and Demand back into action. Home sales for the 1st Quarter of 2012 hit 102 mark (10 less than 2006) and Pending Sales hovered around 90! Compare that with 87 at the end of the 1st Quarter of 2006. Or, 2011’s 68. Or, 2008’s 39. Those pending sales have chewed up the inventory. At the end of March we were down to a shockingly low 280 homes on the market. At the same time in 2006 there were 289. So, demand is up and supply down – both dramatically.
Unless we see a slew of new foreclosures come on the market, REO’s are losing their ability to suppress prices in general. There were only 7 on the market at the end of March – a quarter of the numbers we’ve seen in the past three years. And, frankly, those are the dregs. Nor, have we seen the promised inundation of Short-sales. In fact, only four have sold in the past three months and far fewer are on the market than last year.
It has been those distressed sales and listings that have kept the Law of Supply and Demand from operating efficiently since late 2008. With that dam breaking down, tides will in rush in and raise all boats.
So, it’s no longer a question of if prices will begin rising, but when? My take is that it’ll be much sooner than the pundits are expecting.
For Current Sedona Real Estate Market Statistics,
Click on the the next link below:
First Quarter 2012 Market Statistics
BACKGROUND:
Sedona real estate in Historical Perspective
Single Family Homes:
The apex of the price curve was $660,000 in the spring of 2006. And, what we thought was the Bottom in January 2009. The Median Recorded Sales Price then bounced up into the $400K range before settling into the high $300K’s for next year or two. By June of 2011, we hit a Second Bottom of $330,000. Since then we’ve seen a sharp upturn in the monthly MRSP into the mid-$400K’s that has pulled the yearly figure up to about $350,000, only to slide to $333,000 in the 1st Quarter of 2012. Prices are now on the rise, however.
Sedona townhomes and condominiums are popular here since a large percentage of our buyers purchase second homes and condos are ideal for that. Currently the median selling price is roughly $190,000, down from nearly $400,000 in 2006.
Sedona vacant residential lots appreciated at an average annualized rate of 21% a year between 1996 and 2006. The median price soared to over $520,000 in 2006, but that started coming back to earth in the first half of 2007. That figure stands at about $135,000 for now in 2012.
FUTURE:
The General Outlook: for Real Estate in the Sedona Area
2006 shaped up to be a year in which the pendulum began to swing back toward the Sedona real estate buyer. That swing has continued since. We’re still in great Buyer’s Market with prices in general more like 2003. In some cases homes are selling for what they went for ten years ago.
But there are definitely signs of a shift. Inventories of homes and land peaked in 2008, but have dropped dramatically since. There were 598 Single Family Homes on the market in 2008; now there are 275. Demand is way up. The number of homes sold in 2010 and 2011 exceeded the number in 2006. With supply down and demand up, prices should be soaring. That’s not the case, however, thanks to the impact of foreclosures on the market. But, that has lessening since 2011 and is way down in 2012. We will see prices shoot up this year.
Longterm, I think that we can expect a hyperbolic market ahead for at least another couple decades based on our local market fundamentals, very limited supply and strong demand. Prices will go sky high within this decade and stay there. Right now is probably the buyer’s best opportunity to get in with the expectation of phenomenal capital gain.
Long-term
So what generally drives the Sedona real estate market in the long-term? Economics 101, Supply and Demand theory in action. Sedona is an island of private land surrounded by National Forest and the supply is shrinking inevitably. Demand is being pushed by the demographics of the Baby Boom. The majority of our clients these days are Boomers in their 50s and 60′s. They’re buying land and second homes with an eye toward retirement in a few years. The “forty some-things” are just starting to appear. This demographic phenomenon is likely to continue for another couple of decades, ultimately pushing prices to unimaginable heights as the supply of land runs out.
Land:
“Buy land. God ain’t makin’ anymore of it.“
Will Rogers’ famous quotation is especially true in the Sedona real estate market.
Back in 1996, the median selling price of a Sedona residential lot was $86,250. As noted above, it’s now about $135,000 – back to 1990′s levels after having hit $520,000 in 2006. The current flat market is, in my opinion, merely a short-term pause in an eventual massive move up. Many local and national observers see Sedona’s real estate situation as akin to Aspen’s twenty or thirty years ago as we anticipate a virtual sell out of Sedona’s vacant land within a decade or so, once the market recovers.
Many of our clients are buying property now as a hedge against what they know will be a dramatic run up in prices over the next few years. Some are buying second homes that they can use for vacations or rent out with long term leases or as short term vacation rentals. Others are opting to simply buy land to build on later. There is a longstanding debate over the virtues and hassles of building a home, but many people are willing to persevere to customize a home to their own tastes and there are several outstanding builders and architects in Sedona that I am happy to recommend.
At the moment, though, a luxury building site, which may be a small envelope at Casa Contenta or a little under an acre at Back O’ Beyond, or one acre plus at Cathedral Rock Ranch or two acres bordering National Forest at Cross Creek Ranch start at under $200,000 and can range up to well over two million dollars. What you can expect from them are stupendous views, gated privacy, and multi-million dollar homes in the neighborhood.
In any case, there remains, for the moment, an excellent, but finite, supply of land in Sedona and prices have plummeted.
Properties Outside of Sedona -The Verde Valley & Flagstaff Real Estate:
In areas such as Lake Montezuma , Oak Creek Valley , Camp Verde , Cornville, and Cottonwood , home prices are significantly lower and $150,000 (the median price of a home there is $120,000) will still buy a nice house. The median sales price of a single family house in the rest of the Verde Valley is considerably less than half of that in Sedona. Of course, you sacrifice the dramatic red rock views and ambiance of Sedona, but it does make economic sense and there are some spots with dramatic settings of their own, all within twenty or thirty minutes of Sedona. Many people, understandably, prefer some of the delightfully green hidden valley spots along Oak Creek or the Verde River with their big trees and sounds of gurgling water although water-front property can also get very expensive.
In fact, a housing construction boom occurred in the Verde Valley in the first half of the decade with so many people wanting the beauty, climate, and lifestyle here without the Sedona prices. A good example of this is the rather large, but tasteful, development called Verde Santa Fe being built around the new golf course near Cornville between Sedona and Cottonwood . From there it’s about a 15 to 20 minute drive A modern southwestern style house or townhome with great views of the mountains can be purchased on or near the golf course at a cost ranging from $120,000 to $450,000. Presently there is a huge over-abundance of supply there with both resales and new construction. I think they’re a good value. Remember that it is just as important for you to have buyer broker representation at new home developments and with “spec house” builders as it is on home re-sales.
27 miles to the north of Sedona is Flagstaff. In spite of its proximity, it’s a world away; as different from Sedona as is Phoenix on the opposite extreme. At 7,000 feet, it’s an alpine climate with real winter and a decent ski area. The median price of a home there is about $300,000, so there’s more bang for your buck and lots of pine trees if you don’t mind snow.
If you’d like to explore that option, visit our Flagstaff real estate site at: www.FlagstaffBuyerBrokers.com. Or, call us at the toll free number:
(800) 282-2959.
For clients interested in these alternatives, we can find you the best buys, in the nicest locations throughout the Verde Valley and Flagstaff.. Give us a call at (800) 282-2959 or email us at: Roy@SedonaRealEstate.com We will send you full reports and be your guide to the Verde Valley and/or Flagstaff.
 |
|
|
|
||
|
|
|
