After a very sluggish start, the The Sedona housing and land markets continue to roll – despite warnings from some observers at the national level that real estate may have peaked in the 1st Quarter and could taper-off for the rest of the year. Locally, housing is having a spectacular year and gets most of the attention, but Vacant Land is now making a play for the spotlight.
While Single-Family-Residence sales and prices have continued to out-strip 2017’s impressive showing by roughly 10%, land sales are up about 50%. That’s particularly astounding when one considers that, in 2017, the Vacant Land Sector recorded its best sales numbers since 2005. The land market, after having been moribund for a decade, is robust and on the move. That’s because more prospective home buyers are opting to buy land and build. And, they are seeing the price of land as a relative bargain compared with escalating home price-tags – even as building costs shoot up.
187
Sedona home sales year to date
50%
Land sales up from last year
The buy vs. build formula is beginning to change
Still, we have yet to see a corresponding leap in land prices. The Median Recorded Selling Price has hovered around the $150,000 mark for much of the spring. That’s a 9 percent improvement over the $137,500 with which we closed-out 2017, but hardly commensurate with the startling pace of sales this year.
The weak element of the Supply and Demand equation has been inventory. Years of negligible sales led to a surplus of land on the market. For much of the past decade it’s been less expensive to buy an existing home than to build. That may still be true in some segments of the housing market, particularly luxury homes, but the formula is beginning to change. Nevertheless, we still have about a two-year supply of lots for sale and the Average Cumulative Days on Market of this year’s sales is remains very high – 484 days in late April.
In the shorter-term, we’ll see prices advancing this year as low-end lots disappear and more luxury buyers enter the land market.
That said, inventory is eroding precipitously. The spring of 2016 saw roughly 360 land parcels on the market. This spring we are seeing about 250. As that figure relentlessly diminishes, there aren’t many undeveloped parcels hidden away that will pop up to replenish the supply. Surrounded as Sedona is by National Forest, vacant land is pretty much a non-renewable resource. Once lots are built on, we’ll not see the City pushing its boundaries into the U.S. Forest Service to draw in more raw land. As we get closer and closer to full build-out, expect land prices to sky-rocket.
In the shorter-term, we’ll see prices advancing this year as low-end lots disappear and more luxury buyers enter the land market. The 2018 selling price range has been from $68,000 to $1,000,000. 18 percent of the lots sold went for under $100,000. Another 18 percent were over $300,000. That’s due for a change. Among current active listings, only 8 percent were under $100,000 and 35 percent were over $300,000. The market is shifting upwards as it, inevitably, must. In terms of market timing, it’s a good window of opportunity for buyers. As for sellers, patience will have its rewards.