2017 a Record Year for Real Estate in Sedona

The final results are in. As anticipated, 2017 turned out to be a record breaking year for the entire Sedona real estate market.

Single Family Home sales exceeded 2016’s by 10 percent: 465. That’s the highest number in the past decade andthe strongest showing since 2005. In fact, with a Median Recorded Sales Price of $525,000, we’re close to 2005’s $529,000 price level. The peak was $600,000 in 2006. What makes this showing all the more remarkable is that it occurred when inventory was at the lowest levels on record.

We also see that strength the resurgent Luxury Home Sector and even more so in the soaring Condo/Townhome Market. Even Vacant Land continues to show notable vital signs not seen for a decade.

It’s been a breakout year for Luxury Homes. 2017 was the fourth strongest year for million-dollar residences on record. Its 38 sales beat every year since 2007. Yet, it remains a source of excellent value for buyers.  Its average cost per square foot of $334 is the third lowest of the decade and an 11 percent drop from 2016. And, unlike the rest of the housing market, luxury home inventory has risen to near normal levels.

The Condo/Townhome Sector has been on fire. 2017’s 124 sales outstripped 2016’s total by 31 percent.  That beat every year going back to 2004.  The median sales price, $280,000, was the best since 2008. Meanwhile, there’s hardly any inventory. Of the 20 current listings, 5 are million-dollar villas at Seven Canyons, leaving only 15 “ordinary” townhomes.  That gives us an extraordinary Seller’s Mar Absorption Rate – there’s a month and half’s supply. Six months is considered a balanced market.

Finally, the much-abused Vacant Land Sector set a new record for number of sales. Like homes, land sales hit their highest level since 2005, 141.  That’s 33 percent better than 2016. The Median Price, although improved from $130,000 to $137,500, remains disappointing. Back in 2013, it was $157,500. And, dare we say, abysmal, compared with 2006, when it was $519,000. Still, closed land sales have been brisk this winter and pending sales are surprisingly robust for or usually quiet season. While demand is vigorous, the inventory is eroding quickly.  The Law of Supply and Demand should kick in soon and start driving up prices significantly.

That begs the question, what are the prospects for the year ahead?  The National Association of Realtors projects sales and prices flattening in 2018. The changes in the tax laws that dis-incentivize home ownership and future sharp rises in mortgage rates is likely to dampen demand nationally. Paradoxically, however, Arizona is already seeing prospective buyers show up wanting to flee California and other high-tax states. We’ll look at the impact of the tax law and Fed policy next month. Meanwhile, expectations are high for another robust year in Sedona.