The real estate market is entering a different phase of its cycle as new homes and subdivisions make a very welcome return into a market that is desperate for more inventory. After the crash of 2006, construction came to a crashing halt as prices tumbled and speculative financing evaporated; remember all those half-completed homes and subdivisions that became tumbleweed “farms” and were then demolished after the buyers dried up? Well, just as the phoenix rose from the ashes, so are those projects.
Year end totals show an interesting set of facts (Not alternative facts) as to where buyers of Sedona Real estate originate. Granted, the data isn't from ALL purchases, rather from a sample size of approximately 25% of all purchases in 2016... and with a sample size so large we should be able to use this data as indiciative of the overall market. The shocking part of the study shows that 54% of all Sedona purchases are made by Arizona residents. The second largest group of buyers came from California with 15% of all buyers, then all other states make up the remaining percentages. An underwhelming percentage of buyers came in internationally - approximately 1% of our buyers were from out of country. So, those sellers waiting for an international buyer would do much better to hope for an AZ buyer - there's a lot more of those around than the occasional Canadian, European, Russian or Asian Buyer. Selling agents would be doing their clients a favor to keep the marketing dollars focused on in state buyers!
Newcomers to this article might not know that the Sedona Real Estate market is fairly predictable - with peaks in Spring and Fall and slow times in Summer and Winter. This Fall proved to be on target - with the exact same number of sales in October 2016 as October 2015... and YTD we're 12 sales + over last year - making a 4.4% increase. Inventory overall seems to be trending downwards... within the Sedona city limits, residential listings are down 27% over last year. That directly corresponds with the average price per square foot jumping 18% over the last year (for 86336 zip code at least). We're currently at 256 per square foot in October - compared to $215 psf in October 2015. Good times for sellers and smaller supply lead to shortened time on market and more competitive buying market. We're seeing multiple offers and tough competition for the best homes, with many buyers offering cash to trump any buyers that need a loan.
I was helping a buyer recently - and checking the number of available homes in Sedona shocked me. Single family homes under $450k in Sedona (86336 only)... there are only 20 homes currently available. That's a pretty small inventory of homes - so look for pricing to rise in the coming months. The Sedona market overallhas 285 homes on the market of which 63 are already tied up in escrow with a buyer - making a grand total of 222 homes available in all of Sedona (town and the VOC combined). There are an additional 44 condos/townhomes on the market - but 11 of those are tied up as well. I'd anticipate a stronger than normal winter season leading into a strong spring season... so if you're buying - look now as prices are trending upwards - and if you're selling - conventional wisdom says to wait until February, but inventory is low now - you might consider coming on the market sooner than later to take advantage of the lack of listings!
As we find ourselves in the middle of the busy fall season, it should be noted that it's on target with annual averages. There are currently 392 residential units on the market (includes homes, condos, townhomes, manufactured) and approximately 20% of the available homes are tied up with buyers. There are 85 homes in escrow, which leaves true available inventory at 307 units. If you look closely at the homes in the process of being purchased - the median price is approximately $500k. Of these 85 homes the average market time is 148 days on market - which is about a month shorter than the average market time to sell. This solidifies what I have been telling clients for the last year or so - "If it's priced well when it comes on the market it's often sold in a matter of days."
Inventory of available homes in the lower price ranges is shrinking rapidly - under $300k there are only 3 available homes and an additional 12 condos and townhomes. This is a major decrease in availability over the last year - and there's no end in sight for the upward movement of the lower end of our marketplace. There's a fair bit of interest in the mid range homes ($500k-$750k) with 26 homes currently tied up with buyers, 11 homes in escrow between $750k-$1M, and 4 homes over $1M. Most of the numbers are as expected, but the suprise is the $500k-$750k range coming in much healthier than it has been for the last few years.
The wildcard in the current Sedona real estate market is the January 1st rollout of the short term vacation rentals (see a prior RRN article here). I'm not sure of how this will play out - but there's already an increase in the number of vacation rentals available in Sedona as of January 1! There was also a recent article that showed that an apartment complex has posted eviction notices to tenants and were told that the complex will be rented out as short term rentals. I'm sure that we'll see more about this in the coming months, but a quick look at the inventory of rental homes shows that demand is very high. I'm predicting a rise in sales in the next few months as owners prepare to rent out for both short term and long term. Stay tuned...
It’s the season to be joyful as well as thankful and most people who work in the Sedona real estate market are just that. The year might have started out slowly but it got better as the months drifted by and there are now signs of some dormant market sectors coming awake just in time for the New Year.
No matter what your mood after the Presidential election, the Sedona real estate market has something to lift your spirits and be thankful for. Both residential and vacant land sales are up in terms of unit sales but the Sedona and VOC zip codes are behaving somewhat differently, so let’s look at them individually.
Last month I commented on the amount of new construction I saw on my summer vacation to Colorado, Seattle and San Francisco. While Sedona does not have the same vibrant real estate market as those two large metropolitan areas, there’s still a lot happening in our little town.