Sedona and Verde Valley Real Estate
2016 in Review
Lack of inventory and rising prices were the watchwords for 2016. Verde Valley residential inventory is off 17% from the beginning of 2016 and median sales prices were up in all areas of the Verde Valley. The graph below will give you a good idea of what is going on in the Sedona area and all over the Verde Valley. This graph represents residential sales and active listings for all types of residential property in the Sedona area over the years 2011, 2015, and 2016 and really demonstrates what has occurred with pricing and inventory over the last 6 years.
In 2011 there were 107 sales in the price range below $200,000 and made up 22% of the sales in 2011. That price range made up 10% of the sales in 2015 and only 6% of the sales in 2016. The bottom of the market is going up.
In 2011, listings below $200,000 represented 10% of the inventory, 7% in 2015 and just 5% in 2016. You can definitely get a sense that it will not be long before there will not be any listings in the Sedona area below $200,000.
Take a look at the $500,000 to $750,000 price range. In 2016 that was the range that had the most sales, where they made up 24% of the total, compared to 22% in 2015 and 14% in 2011. The number of sales in this price range almost doubled during this time frame.
All of the price ranges except the $200,000 to $300,000 have increased sales numbers in 2016 compared to 2011. It is interesting to note however in the $200,000 to $300,000 price range, in 2011 there were 86 listings at the start of 2012 compared to 24 at the start of 2017. Residential properties below $300,000 are getting harder and harder to find. As of this writing there were only TWO single family homes active on the market, not under contract in the Sedona area under $300,000!
So what about those price increases? In the Sedona area, the median sale price increased in 2016 for the fourth straight year with a 9.4% increase over 2015. This makes the total increase since the bottom of the market in 2012, 37%, an average of 9.25% per year for the last 4 years, quite remarkable.
Broad stroke influences on the real estate market for 2017
Interest Rates: Mortgage rates might have lost the momentum of their recent upward rise. Between November and December 2016 interest rates jumped .75% to two year highs. A loan of $250,000 costs $110 per month more than it did prior to early November. Many analysts believe that they may already be at their peak for 2017, let’s just hope so. The consensus interest rate for 2017 looks to be in the 4% to 4.25 % range. 2017 should still prove to be an excellent time to shop for a mortgage especially in the light of the 50 year average of 8.25%. With the continued rise in home values buyers need all the help that they can get.
Household Formation: Household formation will be in the 1.25 million new households created per year range for the next several years, up from about 900,000 per year for the last five years. Increased household formation continues to impact vacancy rates as households are created, gotta have a place for these new families to live. First time homebuyers accounted for over 30% of home sales in 2016. This does not directly impact the Verde Valley market as much as most markets due to it being a retirement market, but it does impact our retirement buyers as in many cases they had to sell a home somewhere else to buy one here. An interesting Bureau of Labor Statistics fact to note: there are three times as many baby boomers leaving the job market as there are 25 to 34 year olds entering it.
Sales and Prices: Favorable interest rates and scarcity of inventory will continue to be the basis for upward pressure on prices. Verde Valley residential inventory is down about 17% from where it was at the start of 2016. All areas of the Verde Valley experienced an increase in median sales price in 2016, with all areas in double digits in 2016 except for Sedona coming in at a 9.8% increase. Camp Verde led the pack at 14.7%, followed by Rimrock/Lake Montezuma and Cottonwood at 12.3% and 10.8% respectively. Nationwide, economists do not expect to see as much increase in median sales price in 2017 as there was in 2016.
Just the Facts:
Sedona area: The median price of a single family home rose 9.8% in 2016 over 2015. The number of transactions showed a slight rise at 423 closed sales compared to 409 in 2015. Not much of a change over the last seven years.
Vacant land transactions for 2016 came in at 114 with a median sales price of $130,000 down 6.5% from 2015. Vacant land prices have been fallen off in the last 2 years from the jump up in 2013 and 2014, and have just been bumping along for the last eight years. I think 2017 might be the year to start the land value recovery in the Sedona area.
The luxury market, over $1,000,000, remained steady in 2016 with 25 sales. Inventory of homes for sale in the price range is down significantly from a year ago with only 53 homes for sale over $1,000,000 compared to 65 at the start of 2016. The price range between $1,000,000 and $2,000,000 had a good showing with 20 of the 25 sales.
Cumulative days on the market saw a significant drop to 104 days. This is the lowest time on market in the last 11 years and is indicative of the amount of inventory on the market. Well priced homes are selling fast.
The median sales price for Condos and Townhomes in the Sedona area was off slightly to $259,000 for 2016 a 4% decrease over 2015. The number of transactions for the last 12 month period is 95, down from 99 in 2015.
The median price for mobile homes took a 15% increase in 2016 over 2015, to a price of $207,000, the highest median sales price for mobile homes since 2007. In spite of the increase in sales price, numbers of transaction were down to just 27.
The median sales price for single family homes in the Camp Verde area for 2016 was $211,000 up 14.7% from 2015, the highest price since 2008. The number of transactions was steady at 94.
Lake Montezuma and Rimrock:
The median sales price for single family homes in the Rimrock and Lake Montezuma area for 2016 was $164,000 up 12.3% from 2015. The number of sales was down 17.6% to 56 sales in 2016 from 68 in 2015. The median sales price in Rimrock/Lake Montezuma has more than doubled in the last five years. WOW!
Cottonwood and Cornville:
The median sales price for single family homes in the Cottonwood and Cornville area for 2016 was $225,000 up 10.8%. This is the highest median sales price in this area since 2007. The number of transactions was significantly unchanged at 500 sales in 2016 from 509 sales in 2015.
The Bottom Line: Inventory is very low, but we normally see an inventory increase in the first quarter so that should alleviate some pressure there. Interest rates are still really good. The economy, in spite of what some people say, is running on all cylinders should provide us buyers from our feeder markets in the upper Midwest and California. So… buyers, plus cheap money and low inventory will equal higher prices and a solid market for Sedona and the Verde Valley for 2017.
For the complete 2016 Sedona and Verde Valley Real Estate review:https://randycrewse.com/wp-content/uploads/2017/01/Market-Statistics-2016-with-observations-3.pdf