Sedona and Verde Valley Real Estate 2013 in Review
It is all about inventory! In 2011 and 12, the big question was when home prices would hit bottom. With the median sales price of a single family home in the Sedona area rising 13% in 2013 and with the inventory of homes available for sale lower than they have been in the last 7 years, especially in sales prices below $500,000, we have to ask when are we going to see inventory rise and what impact this low inventory is going to have on prices for 2014. The supply of residential inventory has fallen 57% in the Verde Valley since October of 2007 and resulted in multiple offers and increasing prices. For the final piece of the housing market recovery we need to see inventory and sales in more in balance.
With the reduction in inventory over the last 6 years we finally saw prices bottom out in 2011 and 2012 and have had a strong recovery in 2013. The median sales price in the Sedona area of a single family home rose 13%.
Other areas of the Verde Valley have seen strong increases in median sales prices since the bottom of the market with prices rising 18% in the Camp Verde area, 28% in the Cottonwood and Cornville area and 35% in the Lake Montezuma and Rimrock area. Good news for homeowners in all areas of the Verde Valley.
While the numbers of transactions has remained steady over the last four years, in addition to the decrease in inventory another driving force in increased prices has been the dramatic decrease in the number of foreclosures impacting the market and this trend is going to continue.
The number of homeowners that are behind on the mortgages continues to decline as evidenced by the continued decrease in the Notice of Trustees sales recorded. Since their peak in 2009 the number of Notice of Trustees filings in Yavapai County has decreased 72% to 1167 filings in 2013, below the number in 2007 and approaching numbers for a more normal real estate market. This bodes well for a continued reduction in the number of foreclosed properties impacting the market in 2014
So what about inventory? Where is it going to come from? In addition to the normal reasons for folks wanting to sell their homes we are going to see some of the impact of pent up sellers. Sellers that have been on the sidelines waiting for prices to rise back closer to the highs at the peak of the market, but also prices to rise enough to get them above their mortgages. In addition we are going to see more lots being purchased for new homes and more existing lot owners building a home. This should help stabilize the lot market.
I think 2014 will also see the start of the recovery in new home sales. As the inventory of existing homes has been reduced, sales of new homes have been at historic lows bottoming out in 2009. Now that housing inventory has been whittled down, builders are becoming more confident about breaking ground. At the same time, household formation should improve along with the steady gains in the job market, adding to the number of home buyers in an already tight market.
Just the Facts:
Sedona area: The median price of a single family home rose 13% in 2013 over 2012. The number of transactions remains steady at around 400 single family sales per year as it has been for the last four years. Vacant land transactions for 2013 came in at 132 with a median sales price of $146,500 up 21%, the first rise in vacant land prices since 2006. Houston, we have found the bottom of land prices!
The luxury market, over $1,000,000, for 2013 had it’s best year since 2007 with 31 sales. We are seeing a solid recovery in this segment of the market, but there is still a multi-year amount of inventory, especially in prices above $1,500,000.
Cumulative days on the market saw a significant drop to 118 days, a 25% decrease over the previous 12 month period. Well priced homes coming on the market are selling and closing quickly.
The median sales price for Condos and Townhomes in the Sedona area dropped slightly to $211,500 for the last 12 month period which is 4% below the $221,000 price for 2012. The number of transactions for the last 12 month period is 96, down from 111 in 2012.
The median sales price for single family homes in the Camp Verde area for 2013 was $142,250 up 4% from 2012, and up 18% from the low in 2011. The number of transactions is down to 104 from the 117 in 2012.
Lake Montezuma and Rimrock:
The median sales price for single family homes in the Rimrock and Lake Montezuma area for 2013 was $110,750 up 11% from 2012 and 35% from 2011. The number of sales was down 3 to 80 sales in 2013. Overall a solid recovery for this area.
Cottonwood and Cornville:
The median sales price for single family homes in The Cottonwood and Camp Verde area for 2013 was $160,000 up 13% over 2012 and up 28% since 2011. The number of transactions was down about 3% to 487 sales. Overall, solid gains for the Cottonwood and Cornville areas of the Verde Valley.
The Bottom Line: Prices will increase in 2014 but not at the pace of 2013, although lower priced segments of all the markets in the Verde Valley will remain strong due to lack of inventory. Interest rates will rise slightly but getting a loan will be a little pricier and dicier due to the new Dodd/Frank rules coming into effect regarding debt to income ratios and “qualified loans”. Job growth will remain steady, adding to the number of buyers coming into the market along with increased household formation. And this will be the year that home builders “really” get back into the market and add stiffer competition to existing home sellers.
So the good news is rising home prices should motivate would-be sellers to put their homes on the market and also stimulate new construction, both of which will expand inventory, boost sales, and give house hunters more to choose from.
Overall it will be a more back to normal year for the real estate market in 2014.
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