As of February, A Slow Start for 2014, But It’s Picking Up Steam. In December of 2012, the MRSP stood at $345,000. A year later is was $395,000. That 13% increase is a solid indication of an increasingly healthy market, but it does not mean that the value of any given home has appreciated by that figure. The median certainly does reflect real valuation, but it also comprises the price mix of what is currently selling. Two or three years ago, when nearly half of the home sales were distressed properties – foreclosures and short-sales – the volume of lower priced houses pulled the overall median down. Now, less than 2% of the inventory and 7% of the sales are made up of distressed properties.
Luxury home sales are more robust than they’ve been since 2007. That gives us an exaggerated boost in the MRSP. By how much? Hard to say, but I would tend to trim that figure in at least half to estimate an actual value appreciation. The Average Cost per square Foot appears to be a more reliable and stable metric – especially until we have a larger sample of sales.
One positive trend for buyers is that we are seeing an upswing in inventory. It had hit 2005 levels early in 2013. Now, we’re about 20% ahead of that. There is a lot of pent-up Supply to match the pent-up Demand. As prices trend up more sellers are returning to the market. And, builders are now making their presence felt with new “Spec Homes.” That gives buyers some extra, welcomed, high quality choices. Again, an indication of a healthier market.
Sedona AZ Single Family Homes: In a nutshell, the Sedona real estate market is teetering between being a Buyer’s market and a Seller’s market. Prices are still relatively low compared with where they’ve been in the past and where they’re headed in the future. But, it’s obvious that we’re well past The Bottom.
That was set in 2011 when the Median Recorded Selling Price 0f single family residences was $330,000. In 2012 the Sedona Real Estate Market stumbled around that mark for most of the year until the 4th Quarter ended at $390,000, giving us an MRSP for 2012 of $350,000
In 2013 that momentum continued with a 1st Quarter MRSP of $427,000. At Mid-Year, 2013, the MRSP settled back to a more sustainable $399,000 and pretty stayed there through the rest of the year and closed it at $395,000.
So far in 2014, the MRSP are are still in that range, but recent activity has been strong and the price levels of the properties Pending Sale are up sharply.
The apex of the Single Family Residence price curve was over $600,000 in 2006. My prediction, based on Sedona’s distinctive market fundamentals – Supply and Demand, is that we will be approaching those levels again before the end of this decade.
For Sedona Luxury Homes – above $1 million – 2013 was their best year since 2007. Thirty-one sold. Prices in 2013 were up about 5% from 2012, but down 2.5% from 2011, unlike the general housing market’s sharp uptick since then.
In 2014, luxury homes sales have been off to a bit slower slow start with 13 sold by 21 June this year versus 17 sold last year. But, the Avg. Price/Square Foot is actually down 9% to $306 versus $325 last year at this point.
One positive trend for buyers is that we are seeing an upswing in inventory. It had hit 2005 levels early in 2013. Now, we’re about 20% ahead of that. There is a lot of pent-up Supply to match the pent-up Demand. As prices trend up more sellers are returning to the market. And, builders are now making their presence felt with new “Spec Homes.” That gives buyers some extra, welcomed, high quality choices. Again, an indication of a healthier market.Roy E. Grimm
Sedona Townhomes & Condominiums have been popular here, historically, because a large percentage of our buyers purchase second homes and condos are ideal for that. From 2007 through 2011 that was even more depressed than Single Family Homes. but in 2012 that popularity returned with a bang. Twice as many condo/townhomes were sold in 2012 than in 2011. 2013, though, was not as strong either in sales numbers or prices.
Currently the Median Recorded Selling Price is roughly $230,000, way down from $411,000 in 2006, but above 2012’s $221,000 and 2013’s $215,000. On a Price Per square Foot basis, 2014 is up 12.5% from $176 to $198.
Sedona AZ 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 $179,500 for 2014, up from 2013’s $157,500.
Land sales were up over 30% in 2012 compared with 2011. 2013 was 6% stronger and exceeded 2006 levels. 2014 is on at least that pace. As that market shakes off the doldrums and the foreclosure inventory, we’ll see prices continue to shoot up there as well. Meanwhile, we are still seeing luxury lots selling for a third to half of the prices they fetched in 2006 and 2007.
For more details on the Land Market, click here to go to our Sedona Land Page
While prices remain relatively low for the time being, the pendulum has clearly swung back toward the Sedona real estate Seller. We still have a Buyer’s Market with regard to prices, which are, currently, more like 2004.
But there are definite signs of a major 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; In January of 2013 there were 222 and 243 in July. Compare that to the end of 2005: 245. Fortunately for buyers, the inventory expanded in the the fall, with 255 in December and 300 in March 2014.
The number of homes sold in 2012 and in 2013 well exceeds the level in 2006. Even with supply down and demand strong, prices didn’t move up strongly until late 2012, thanks to the earlier impact of foreclosures on the market. That lessened in 2011 and was way down in 2012 and even more so in 2013. In 2014 distressed sales make a neglible part of the market.
In 2010 foreclosures (aka, REO’s) represented 33% of single family home sales. In 2012 was figure was 15%. Right now (March 2014) it’s 5.5%. At any given moment in 2010 there would have been 28-30 REO homes on the market. In 2012 that figure was down to 11. Now it’s 4.
We’ve seen a similar trend with Short-sales as well – actually even more dramatic; only one short-slae so far in 2014.
Reduced competition from the receding number of distressed properties on the market has finally allowed overall prices to rise.
Longterm, I think that we can expect a hyperbolic market ahead for at least another decade or two based on Baby Boom deomgraphics and 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.
So what generally drives the Sedona real estate market in the long-term? Economics 101, Supply and Demand theory in action. Sedona AZ 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 or now. 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.
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