It ‘s been a wild ride this spring. Just as the strongest 1st Quarter on record for the Sedona Real Estate Market was coming to a close in Mid-March, the CoVid-19 shutdown hit and real estate activity simply stopped for about a month. Things suddenly started picking up again at Mid-April and gained momentum through May. Not only were prospective buyers driving from Phoenix, Southern California, and Colorado, but we also began seeing them fly in from more distant places like Seattle, Dallas, Chicago, and Minneapolis. Across the board, agents reported a flood of prospective buyers – some intent on making a purchase immediately and others skittish about the uncertainties of the public health crisis and the fragile economy. A good number appeared to be motivated by a heightened desire to have a retreat away from the myriad ills of metropolitan areas.
Median Home Price expected to increase in 2020
Increase in Pending Sales since April 1st
Where is the Sedona Market heading?
We won’t see the effects of that activity translate into Closed Sales until July. May 2020 closings were down 41 percent from May 2019. There is, however, reason for optimism. Stats for Single-Family Residence Pending Sales – properties under contract – increased sharply by the 1st of June – up 39 percent since April 1st. And, that is only 6 percent short of last year’s exceptional showing. Pendings are our best metric for indicating where the market is heading, at least in the near future, so that’s an encouraging sign.
Based, in part, on that metric, as well as buyer appointments set for June and July, we’re expecting a busy summer, assuming that the economy starts getting back on track and the next wave of the virus doesn’t close it down again.
From the national perspective, Lawrence Yun, Chief Economist for the National Association of Realtors, posits in the latest issue of Realtor Magazine that May will prove to be the bottom for Closed Sales. He predicts that the market will rebound this summer. He goes on to say, “Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11% in 2020 with the median home price projected to increase by 4%.” That’s all reaffirming for what we’re seeing locally and it’s also heartening given how dependent we are on out-of-town and out-of-state buyers who may need to sell property at home to purchase in Sedona.
The situation with financing seems to be improving as well. When the CoVid-19 shut-down hit, a number of lenders pulled out of ongoing transactions, stopped doing Jumbo loans (over $510,400 here), and rates spiked overnight.
Local financing guru, Linda Rogers, of Loan Simple tells us that 30-year rates have now settled down to the 2.875-3.375 percent range. She expects them to stabilize there and eventually settle lower, possible to below 3 percent in 2022. Jumbo loans are starting to come back, but they’re likely to be in the mid-to-high 4 percent range – with tightened underwriting guidelines. For a Jumbo, expect 20 percent down, FICO scores above 720, and 45+ day escrow periods. To avoid Jumbos, Linda reports, it is possible to write a first and second note, keeping both under the $510,400 limit for conforming loans.
All in all, the prospects for the Sedona Real Estate Market weathering the CoVid-19 Storm are promising. That said, we’ve experienced how quickly it can be blown off course by unforeseen events.