It’s been a “Bull Market” for Sedona real estate since 2011. Is a Crash imminent? Unlikely, as long as the national economy stays on track. But, we are experiencing a plateau in the Single-Family Residence Sector. A different story, however, for luxury homes, condos, and vacant land.
A first glance, the current 8 percent drop in homes sales compared with 3rd Quarter 2018 is disconcerting until you step back for some perspective. 2018 was a record-breaking year – the best since 2005. Much of that, though, can be attributed to burgeoning vacation rental home sales. Those appear to be slowing as the short-term rental market approaches its saturation point. If we skip over 2018 and compare this year with the average number of homes sold between 2012 and 2017, we see a very impressive 17 percent increase in 2019.
A Buyer's Market
A good indicator of the general state of health of the Single-Family Residence market is the Absorption Rate. Essentially, it’s the average number of sales per month divided by the number of homes currently on the market. An AR of 20 percent or more points to a Sellers’ Market. A Buyers’ Market is indicated by a rate of 15 percent or less. By the 3rd Quarter 2019, the Sedona Area was averaging 41 sales a month and the inventory has jumped up to 218 Active (from 196) and 67 Pending listings. That gives us an AR of 14.4 percent or a 7 month’s supply of homes – a Buyers’ Market. So, it’s not too surprising that prices have leveled-off for now. In the past 5 years the Median Recorded Selling Price of homes has averaged a 6 percent increase every year. In 2019, however, there has been zero growth in the MRSP. We ended 3rd Quarter 2019 at $560,000 – the same figure with which we concluded 2018.
All-in-all, we have an extraordinarily diverse market right now with opportunities in every sector. Roy E. Grimm
Remarkably, prices in the booming Luxury Home Sector have not appreciated much. Although sales numbers are about 12 percent ahead of 2018’s stellar performance, the current $349 Average $/Sq. Ft. is only up 2.3 percent over the average over the past 5 years ($341). The AR helps us understand why. With 5 home sales a month in 2019 and an inventory of 90 Active and Pending listings, we see a 17 month supply of residences over $1 million and an AR of 6 percent – indicating a sharp Buyers’ Market. Luxury homes are selling well, but the supply is more than keeping up.
On the other end of the spectrum, we find a 2 month’s supply of Townhomes and an AR of 50 percent – a gang-buster Sellers’ Market.
At the other extreme, with 300 Active and 26 Pending listings, Vacant Land is showing a startling 29 month’s supply and an AR of 3.5 percent. A tough market for sellers, but great for buyers.
All-in-all, we have an extraordinarily diverse market right now with opportunities in every sector.
Get your market reports delivered
Sign up for the newsletter and stay ahead of the game with Roy's regular analysis of market changes in the Sedona area.Sign up for the newsletter