2020 was a record setting year for Sedona real estate. The first half of 2021 shattered several of those records in a year that appears to be poised to make history. The signs are mixed, however, regarding the outcome of the second half.
At Mid-Year, Single-family Residence sales were up 35% over 2020. The Median Recorded Sales Price of those homes jumped 47% to an astounding $850,000 with an average Price per Square Foot of $385. With multiple offer competition for new listings becoming commonplace, the Sale-to-List-Price Ratio rose to an unprecedented 101%. That is, on average, homes sold for 1% higher than list price. That price acceleration is largely due to a severe shortage of inventory in the face of continued strong demand. In 2021 the number of homes on the market has been 27% of the figure in 2020. Contributing to the skyrocketing prices has been the fierce competition for properties that could, legally, be used as vacation rentals. That attribute has led to a sales price premium well beyond what a usual Comparative Market Analysis would have indicated and sharply boosted the median and average price figures.
SFH Median Price as of Mid-year 2021
SFH price per sq. ft.
Luxury Home Sales
Even the Luxury home market has had a significant number of vacation rental property sales and that has pumped up one of the most remarkable statistics I’ve ever encountered in the Sedona real estate market. If we include the seven condo sales at Seven Canyon and the Cottages at Coffee Pot, there were 112 homes sold in the first half of the year at $1,000,000 and above. 2019 saw a new record of 56 million dollar home sales. In 2020 there were an astounding 131. Not only was the sales number mind-boggling, but the average cost per square foot jumped 25% to $471 – a new record. With luxury inventory plummeting from 53 homes on the market last July to 17 this summer, multiple offers were also the norm at the high end of the market.
Condo & Townhomes followed suit with sales nearly doubling 2020’s and the median price shooting up 36% to $515,000 – with an average price per square foot of $360.
Finally, Vacant land had its best run since the “Land Rush of 2004” with 222 sales versus 54 in 2020. Prices, however, still haven’t matched that great leap. The median was up a very healthy 25%, but still only $242,250 – vastly short of 2006’s $515,000. Still, with supply dwindling, it’s only a matter of time before we’re back to those sorts of prices.
Market Cooling Off?
All-in-all, without question, a phenomenal performance. Can it be sustained? Opinion and evidence are mixed on that point. Pending Sales across all market sectors are as strong or stronger than they were at Mid-Year in 2020 as the market revved up for it’s amazing run. And, inventories across the board remain at historic lows. That imbalance between demand and supply would seem to support robust prices. On the other hand, the National Association of Realtors reports a 1 percent decrease in sales across the country for the past four months, modest, but a slowing nonetheless. But, a 1.4% increase in existing home sales in June – so a bit of a bounce back.
Locally title companies are telling us of a sharp decline in new escrows in Sedona and statewide for June and July. Some of that could be attributed to a return to our former market seasonality, but there does seem to be a sense of a bit of cooling. And, we are seeing more and more list price decreases as sellers begin to back off some of the overweening valuations. Multiple offer situations are, however, still standard for well-priced homes and even some vacant land new listings when they hit the market. One shift, though, that we’ve seen with our clients is our increasing success for buyers with loans competing with cash buyers for those properties. That’s not only good news for those clients, especially with rates so low now, but it also opens-up the market to a sizeable level of pent-up demand from folks needing financing. They’ve been largely shut out of the market, until recently, by cash buyers. Having them back, in increasing numbers, keeps the market strong and healthy.
I expect a busy fall season.