Real Estate for Sedona
and the Verde Valley 2012
It is in Sedona, the Verde Valley and just about everywhere across the United States. What is “It” you say –“It” is that residential real estate inventory across the country is at its lowest point in the last 10 years. In the Sedona area we have 25% less residential (single family homes, condos and townhomes, mobile homes) inventory than we had at the peak of the market in 2006 and for the Verde Valley we have a whopping 38% less inventory than we had at the peak of the market in 2006.
Since May of 2009 we have seen a steady drop in residential inventory. In May of 2009 there were 705 residential properties on the market in the Sedona area, as of this writing there are 362. That is a 49% drop in total residential inventory in the last the last 45 months.
So where is this drop in inventory occurring? The graph below shows for the Sedona area the different price ranges, the amount of inventory one year ago for that range, the amount of inventory today, the number of sales in that range for 2012 and the number of month’s supply based on the sales for 2012.
|Price Range||Sold||Active||Active 1 year ago||Supply|
|1 Mil -1.49 Mil||14||31||31||26 month|
|1.5 Mil – 1.99 Mil||7||13||14||22 month|
|2 Mil – 2.49 Mil||2||6||7||36 month|
|2.5 Mil and Over||1||12||11||12 year|
From the graph above you can see that the sweet spot for Sedona real estate is in the $200,000 to $400,000 price range. 48% of the total residential sales in 2012 occurred in this price range and based on absorption, there is a 4 to 6 month supply of homes available in this price range. For this price range we have definitely moved away from a buyer’s market into a seller’s market with multiple offers being the norm. As you move into the higher price ranges you move away from a seller’s market back into a buyer’s market with homes priced above $500,000 having anywhere from a 12 to 36 month supply of inventory. If you are trying to sell a home over $2,500,000 you will be in for a long wait. In the $200,000 to $300,000 price range we have 40% less inventory than we had a year ago and in the $300,000 to $400,000 price range we have 29% less inventory than we had a year ago. This is the most competitive area of the market right now and I expect this segment to be on fire as we head into the spring selling season.
Sales of distressed inventory, foreclosed and short sale properties, continues to have an impact on the real estate market in Sedona and the Verde Valley. Of the 1,096 single family homes sold in 2012 in the Verde Valley, 381 of them were distressed sales, 35% of the market. There is light appearing at the end of this tunnel. In September of 2010 there were 304 distressed properties on the market making up 29% of the inventory, today there are 158 distressed homes on the market making up 25% of the inventory. That is a 48% drop in the number of distressed homes on the market. More good news on this front is the drop in the Notice of Trustees filings. There was 43% less Notice of Trustees filings in Yavapai County in 2012 than there was in 2009, when they hit their peak in. As this trend continues we will see less and less distressed inventory on the market.
Interest rates will stay historically low, not increasing until the unemployment rate falls to 6.5 percent, according to Federal Reserve Chairman Ben Bernanke. (It is currently at 7.7 percent.) However, getting financing will continue to be a major challenge for buyers. This has an overall dampening effect on the market, especially in Sedona where many of the homes purchased are second homes. You have to really qualify for these loans. The lender’s underwriters will scrutinize every aspect your financial picture before they grant you a loan, so be prepared.
Driven by continued low inventory and low mortgage interest rates, I expect to see some real increase in the median sales price of single family homes in Sedona and the Verde Valley in 2013. The unknowns here are: will prices rise enough to convince more home sellers to list their properties, causing the low inventory factor to evaporate? I think that 2013 will be the year that some homeowners will start to come up from being underwater and there is pent up demand to sell from these sellers. Prices could rise enough by later in the year that there will be sellers tempted by higher prices and they will put their homes on the market. But the vast majority of sellers waiting on the sidelines for higher prices will be waiting for a bigger jump in prices, keeping inventory low for most if not all of 2013.
Now for just the facts:
- Single family median sales price for 2012 was at $349,950, virtually unchanged from 2011. 2013 will be the year prices go up.
- There were 406 single family transactions for 2012, compared to 387 in 2011 and 413 in 2010. We have settled into around 400 transactions per year. I do not see much increase in this number until we see the US economy as a whole improving and a significant drop in the unemployment rate nationwide.
- Vacant land transactions were 120 for 2012. This is up 26% from 2011 but has a long way to go to be called a healthy market.
- Vacant land median sales price for 2012 was at $120,625, off 3.5% from 2011. I believe that we are nearing the bottom of the market in vacant land sales and 2013 will be the year land sales find their bottom.
- The luxury market, over $1,000,000, had a yearend spurt and ended up with 24 sales. Up from 17 in 2011, a 41% increase, the biggest jump percentage wise since 2004. Luxury home inventory has settled in the range of about 60 homes on the market and has been in that range since the fall of 2010.
- Cumulative days on the market has settled into the 160 day range with 158 days in 2012, relatively stable for the last three years
- The median sales price for Condos and Townhomes was the real bright spot for the Sedona market in 2012. The median sales price rose to $221,000, up from $196,500 in 2011, a 12.5 % increase, driven by the dramatic jump in the number of transactions up to 111 from the previous year’s 56.
- The medians sales price of mobile homes and manufactured homes rose to $138,889 up 31% from 2011. Number of transactions fell to 28 down 17% from the previous 12 month period, mostly due to the acute shortage of inventory.
- The median sales price for single family homes in 2012 rose to $137,000 up 14% over 2011. The number of transaction edged up 5% to 117 transactions in 2012. The lack of quality inventory being the most significant factor for the increase in prices.
Lake Montezuma and Rimrock:
- The median sales price for single family homes in 2012 rose to $99,975 up 22% over 2011. This is really good news for the area most impacted by the last 6 years real estate crisis. Numbers of transaction were up slightly to 83 from 78 in 2011.
Cottonwood and Cornville:
- The median sales price for single family homes in 2012 rose to $142,000 up 13.6% compared to 2011. Number of transactions for the last 12 months was at 501, down 4% from 2011. Again the lack of quality inventory being responsible for the increase in median sales prices
Bottom Line: Inventory will be the name of the game for 2013. Will low inventory bring supply and demand forces into play to raise prices? Will prices rise enough to get sellers who have been waiting on the sidelines to get in the game? Will the US economy show more signs of recovery, providing more jobs in our feeder markets in the upper Midwest and California to bring more buyers to the Verde Valley? Prices are still down significantly from their peak in 2006, is it time to lock in a piece of the Red Rocks. I say YES to all these questions. Stay tuned for the answers. Hindsight is 20/20.
For the full 32 page Sedona and Verde Valley 2012 report in easy to read and understand graphs click here: 2012 Sedona and Verde Valley Real Estate Statistics