Sedona’s available housing market has dropped to just 15% of the city’s regular housing inventory.
“We were running probably an average of 200 active listings at any given time, sometimes a little more. Right now, we’re right around 30,” Drew Clark of RE/Max Sedona said.
With only these few and far between listings in the area, Sedona has been a long way away from a buyers’ market for months with even fewer options for affordable housing as the market continues to shut out anyone short of a million dollars.
The Seller’s Market
“[The buyers are] kind of 50-50. When Airbnb first passed, I would say it was a lot more investors,” Sedona-based Coldwell Banker Realty agent Danielle Giann said, referencing Senate Bill 1350, which was signed into law in 2015, legalizing vacation rentals statewide. “But now I noticed that I’ve had lots of clients that are looking to make Sedona their full-time home. They’re not interested in the Airbnb aspect of a property as much. But it really depends on what property they resonate with though.”
In just one year, from 2020 to 2021, the median house price in the Sedona area rose by a 35% increase overall. This has made the average listing price sit at $875,000. According to the annual report from Randy Crewse of Berkshire Hathaway Arizona Properties, this rise in average prices are mostly due to the huge rise in single-family houses selling for over $1 million.
As of January 2022, there were 31 active single-family homes for sale with 21 of those priced over $1 million. This put the median asking price at the time to $1.65 million.
And with unprecedented prices come unprecedented low inventory. Clark, who has been a buyer specialist in the area for the past six years, has been encouraging clients to be as aggressive as they can be, mostly with cash offers.
Multiple real estate agents in the Sedona area have also been pushing their clients with this strategy.
“Anybody buying in this market typically have missed out on a property or two or three, so they start getting very aggressive,” Clark said. “You pretty much have to be very serious. And new buyers coming into the market, it’s hard for them to kind of take steps to really be that aggressive by [saying] I’m going to go $50,000 to $100,000 over [the asking price].”
Although Clark says it does not always take that much over the asking price for an offer to be accepted, it is much more common in today’s market.
With short-term rentals still plaguing the market, as many of the single-family homes in Sedona always have the potential to be looked at as a vacation rental, home buyers cannot risk losing offers to larger investors who have cash readily available.
“Obviously Sedona has become sort of like the Airbnb capital of Arizona. So my first question is personal or investment, that’s going to determine where we can look for homes and a difference in pricing on homes as well,” Giann said. “You know, Airbnb homes sell for so much more than a home where you can do a 30-day minimum or long-term rent.”
City’s Response
Although this trend is not at all limited to Sedona’s city limits, as the entire Verde Valley has seen huge price increases and lack of inventory, city officials and staff have been working on helping working class buyers survive in these prices in Sedona.
The cities of Sedona and Cottonwood’s joint housing manager, Shannon Boone, has been working on these issues since her hiring in the fall. Most recently Boone has headed the down-payment assistance program in conjunction with the Sedona Workforce Housing Assistance Program
The program provides a 2.5:1 match of the buyer’s funds for those employed by an eligible employer within Sedona’s city limits. Buyers must make income below 150% of the median household income for Sedona to qualify for up to $25,000 in down-payment assistance. This would mean an individual is limited to annual income of $80,700 and a family of four is limited to an annual income of $115,200 of annual income to qualify for this program.
“We funded the pilot with enough for 20 buyers to take the maximum assistance. We’ll re-evaluate as those funds are spent,” Boone said. “Success will be measured in the number of applicants compared to the number of down-payment assistance loans given.”
The program just began accepting applicants last week. But with an extremely limited number of available houses all at extremely high prices with cash offers mostly being accepted, the program seems a bit premature compared to the city’s market.
“Even with low-interest rates, the median income family cannot afford the median sale priced home anywhere in the Verde Valley … where are folks who work in the Verde Valley going to live? This will turn critical for Verde Valley employers,” Crewse wrote in his 2021 market report.
The city is also waiting on affordable housing at Sunset Lofts, while looking around other city properties for other potential projects.
No Change Predicted Soon
Real estate agents all over the city and country do not expect the inventory to go back up anytime soon, until interest rates begin to rise. And in turn, prices are expected to rise.
“I see [Sedona] getting more houses that stay on the market a little bit longer. I see that shift happening, but not right at the moment. I don’t see it changing drastically right now with these low-interest rates,” Clark said. “But if interest rates start to go up, that may put some pressure on home prices or people who can afford homes and second homes, that kind of thing. I don’t think everything goes in a straight line forever.”
Other agents in the area believe that with continued buyers coming in from California and the Midwest, by the end of 2022 the market will be just as competitive and fast-paced.
