The Sedona real estate market is wrapping up 2024 with a touch of optimism. With a relatively strong 4th Quarter, compared with the last two years, Single-family home sales are running about 6 percent ahead of 2024. Better off than the rest of the country. Altos Research notes that we’re concluding, “three years of the lowest home sales ever.” For Sedona we’d only have to go back to the 2007-2008 crash to find fewer sales. Still, there is a national consensus that 2025 will be a stronger year. Sedona will keep pace and then some.
Pending home sales are up sharply on the national level. For Sedona, they’re double what they were last year in the 4th Quarter. That’s still 30 percent below the average for 2015-2019, nevertheless it’s a dramatic increase and bodes well for future sales.
Rapidly rising inventory has been the big story this year. In early 2022 we had roughly 20 percent of the Pre-Pandemic number of homes on the market. By mid-December 2024 we were at 75 percent – still tight and keeping prices elevated, but providing enough choice to lure some buyers back to the market. I expect that trend to continue in 2025, albeit at a more measured pace. That should moderate prices to some extent and raise housing affordability levels a bit so a few more previously-priced-out buyers can get back into the market.
Of course, a large part of the affordability quotient lies in mortgage rates. The consensus among national experts is that relatively high rates are going to be part of the real estate scenery for some time to come; “relatively” being the operative word. For much of the past half-century a 6.5 percent mortgage rate would have been embraced by buyers as a godsend. Although some observers (Altos Research) postulate that rates could go to 5.75 percent in 2025, many economists fear a reboot of inflation if the new administration follows through on instituting stiff, across the board tariffs on imports. The National Association of Realtors is projecting 5.9 percent mortgage rates and 6.1 percent in 2026. More and more buyers have, as well they should, finally given up waiting for low rates to return and are ready to get on with finding the means to purchase a new home.
10%
MRSP up from 2023
6%
Increase in SFR sales since 2023
As 2024 nears completion, the Median Recorded Selling price of single-family residences in the Sedona area is roughly 10 percent higher than it was in 2023. That’s twice as much as the national median’s increase. Much of that is due to the majority of our sales being over $1,000,000 as Sedona continues to become more and more of a luxury market. My sense is 2025 will see that moderate to something like a 5 percent increase, locally. Nationally, the Residential Real Estate Council predicts a 2.5 percent rise in the MRSP in the new year. The general expectation is for a decidedly active, yet stable housing market in 2025. That said, please keep the caveat in mind that the median, the midway point in a range of statistics, is only partially indicative of actual changes of value. It also is influenced to a large extent by the nature of the mix of sales. If there is an inordinate number of sales in a particular price point, as is true of Sedona, with its preponderance of million dollar sales, this will skew the MRSP to higher levels than actual valuation increases might support. It’s a good figure for spotting trends. Not so good for applying to the value of individual properties.