News from the long-suffering Vacant Land Sector has been grim, if you’ll pardon the expression, particularly the past couple of years. Despite the various housing sectors all gaining strength since last fall and building momentum, land continued to flounder. In the 1st Quarter of 2017, the Median Recorded Selling Price (MRSP) for land hit $108,000, the lowest that we’ve seen this century. Even then, a ray of hope. Sales numbers saw a considerable uptick, compared to the truly abysmal figures in 2016 and Pending Sales were robust.
I hazarded a prediction, then, that this just might be a Come-back Year for land sales. At the end of April, that little ray of hope seems to have expanded into a veritable sunbeam. Not only are sales up 85 percent over this time last year, the MRSP has jumped from $108,000 to $163,000 – one of the highest of the decade. We may well see a bit of a retreat as the year progresses, but that strong a showing is heartening.
Not only are the sales and price figures showing surprising vigor, Pending Sales are at a level we haven’t seen for years. Twenty-six sales in progress in late April. We had seventeen at the end of March and considered that refreshingly strong. The list price levels of those Pendings indicate continued support for the current level of the MRSP.
So, why the apparent turn-around? First, I think it’s fair to say that it is long overdue. Since the bottom of the housing market in 2011, that sector, with a few fits and starts, has generally made steady progress in recovering its strength, both in numbers of sales and in price levels. Land hit bottom in 2011-2012, had encouraging rallies in 2103 and 2014, started to retrogress in 2015, and had a dismal 2016. The most cited reason for that, until recently, has been that it’s generally less expensive to buy an existing home than to buy land and build. That equation is starting to change. While land prices have slid in the past couple of years, the MRSP of Single Family Homes has advanced roughly sixteen percent. At the bottom of that sector, in 2011, the MRSP was $330,000. Now, it’s over $500,000.
Rising prices, added to an historically low inventory of homes, are pushing more prospective buyers toward the buy-land strategy in which they can build to their tastes rather than settling for a pre-existing home that doesn’t quite fit their needs.
Even for buyers who aren’t ready to build yet, there is a growing realization that, plentiful as it may seem now, vacant land in Sedona is a non-renewable resource. Bounded as we are by National Forest, the supply will inevitably diminish to a point at which prices will spike dramatically. As that dawns on more prospective buyers, the land market come-back will gain momentum.