Sedona’s bizarre real estate market in 2020-2021 has produced all manner of unexpected results. One is a shift demographic in buyers. For the past couple of decades, the mainstays of the market were Baby Boomers purchasing retirement properties for primary residences or second homes. Generally, they have been relatively affluent buyers, but a home sale over $2,000,000 was a rarity until this past year. For the super-wealthy, Sedona tended to be more or a second or third residence.
The new generation still includes Boomers, but is a bit more diverse. And, wealthier. And, they tend to want Sedona as their primary residence. First, we are seeing more younger families – with children, even! Second, we are beginning to have a refreshingly greater degree of ethnic diversity. Third, we are attracting more high-end professionals who prefer to work from a home-office with a red rock panorama than to subject themselves and their families to a high-stress urban environment.
They are here for the beauty, Nature, slower paced lifestyle, a sense of personal security, and, perhaps, spiritual fulfillment. Many also see Arizona as a wealth-friendly tax haven with less intrusive government. Yes, they do understand that Sedona is a small town with limited shopping and lacking the full spectrum of urban resources, but are willing to trade the malls for a higher quality of life.
SFH Median Price as of end of Oct. 2021
Pending home sales up 2021 vs. 2020
Sedona a Luxury Destination
A number of the new super-high-end buyers share those values, but perceive a coming era of hyper-inflation and economic chaos. In preparation, they are diversifying their equity holdings and moving into tangible assets like real estate – especially if they can “get off the grid” a bit.
They often come from areas in which Sedona’s prices are an attractive bargain. So, Sedona is becoming more and more of a luxury destination in competition with places like Carmel, Aspen, and Santa Fe. Consequently, the market increasingly reflects that, making the quest affordable housing here, sadly, even more quixotic. Like it or not, Sedona is, indeed, clearly establishing itself a luxury market.
The latest twist in the saga of the Sedona real estate market is its seemingly contradictory nature. September and October saw Single-family Residence sales numbers plummet 40 percent compared with 2020’s freight train building steam last fall.
Yet, all other indicators showed an extremely strong seller’s market. Prices continued to rise. The Median Recorded Sales Price, at the end of October, stood at $860,000 – $10,000 more than in August and a 35 %increase year-over-year. As of today, November 9th, It’s $863,000 – so continuing to creep up. And, Zillow is forecasting a 9.5 %value increase for Sedona in 2022.
Active Listings were down 13 % and Pending Sales up 7.5 % compared with 31 October 2020. All the underpinnings of a supply and demand equation tending toward higher prices. At those higher prices, the pool of buyers gets shallower, but so is the depth of inventory.
Consequently, the dominant market sector is the million-dollar bracket. Making up 35 percent of all home sales, at the end of October 2021 doubled 2020’s extraordinary sales volume. At the same time, the least expensive single-family residence sold in October for $475,000. That would buy you a mansion in Decatur, IL.
The Condo/Townhome Sector continues its banner year with 23% more sales in 2021 than 2020 and a 35% increase in the MRSP to $512,500. The List-to-Sales-Price Ratio is 102%, meaning that on average, townhomes have sold for 2% above the list price. For Single-family Residences, that figure is 101% and for Luxury Homes it’s 100%.
After a booming first half of 2021, when sales had tripled those in 2020, Vacant Land sales, the perennial Eeyore of our real estate sectors (alert: Winnie the Pooh allusion), have trailed off sharply this fall – with only 12 sales in October – yet 115% ahead of 2020, year-over-year. And, the Median Recorded Sales Price has held steady at $250,000 since June – now 35% higher than 2020. So, a plateau for the time being. Expect that price point to resume its upward trend as inventory continues to dwindle. Thanks to Sedona’s being an island in the midst of the National Forest, vacant land is a non-renewable resource.