Market correction? Momentum slowing in 4th Quarter

For most of 2018, the Sedona Real Estate Market has been on a roll, easily surpassing 2017’s exceptionally strong showing. But, are we due for the falloff as we’ve seen in California, particularly, and the nation, generally? There are some signs of a recent loss of market momentum. Question is, is it temporary or a deeper market correction?

Through the 3rd Quarter, Single Family Residence sales were 12 percent ahead of last year’s record. The Median Recorded Sales Price and Average Price per Square Foot have both been 8 percent ahead of 2017. Luxury home sales are up 22 percent, although prices are virtually the same as in 2017. Vacant Land sales are up 15 percent, yet prices are also identical to last year’s MRSP of $150,000. Condos & Townhome sales are only 4 percent above 2017, but prices have advanced 8 percent.

Sounds like a robust market, but October housing stats are particularly soft compared with the pace of the rest of the year – closed sales are off about 20 percent from the average of the previous three months. Pending sales are down 12 percent compared with the same period in 2017. And, inventory is finally rising its record low. In the Luxury Home sector, while the number of Pending Sales is quite strong, there were no closings between September 28th and late October. And, October is typically the apex of our fall high season.

As noted in our September column, the Sedona market has been beating the odds, by trouncing the weak national sales figures throughout the year. The National Association of Realtors’ website reported that September sales numbers had fallen 3.4 percent nationally. The hardest hit region, however, has been the West with a 12.2 percent decline. Sedona may be an island in the midst of the National Forest, but it does rely heavily on buyers from around the nation, especially California and the Pacific Northwest. Having seen their markets plummet, those prospective buyers tend to be cautious about the future of our ours.

Beyond the stats, we have recent anecdotal evidence from many top agents that some of the wind has gone out of the sails that has made the 2018 market so remarkable. From late September through October, our colleagues report that the phones have not been ringing as they once did. Buyers are not making appointments as they once did. Showings have declined significantly, especially at the high end of the market. Real estate statistics lag several weeks behind current events, so it will take a while for what’s happening now to show up in the recorded numbers. What we’re noting in late October may be a short-term aberration – perhaps a function of political turmoil and Midterm election angst. Or, it may be a genuine market correction – a response to rising prices and interest rates and concurrent drop in affordability rates. Stay tuned…