December, 2018.
What a year for Sedona real estate! As I write this on Christmas Eve morning, pretty much every statistic is pointing up – prices, unit sales, number of real estate agents in the business (now above 600 in our MLS) and of course profits for homeowners and investors, whether “paper profits” or the real thing. The only indicator that’s down is inventory, and that’s a national phenomenon.
Sedona and the VOC both had their best year since 2007 with the median residential price rising in both markets by 12% – that number is now $577,000 in Sedona and $450,000 in the VOC. The average price per square foot of a home also rose by 12% in Sedona to $278 and by 13% in VOC to $240. However, the top-performing local residential market was Camp Verde where the median price of a home went up by 16% to $244,000.
Before we take a look at the vacant land market, it’s worth thinking about what effect these price increases will have on our communities. As prices increase, it takes more and more money to live here and fewer people will be able to afford it; that will bring about demographic change. Look at what happened to Big Park School – I believe that rising prices, and therefore rents, forced many young families to relocate to more affordable towns in The Verde and this trend will continue. As a consequence, if we wish to control the direction of our future path, we must start to get involved more in local government. Whether it is serving on an HOA to write and enforce CC&Rs or giving input on proposed city and county legislation, those who speak up will be listened to, so let local voices guide that discussion.
The land market continues to underperform the residential one and for the opposite reason – too much inventory. Although land sales were up by 20% in units in Sedona, they were down in unit sales in VOC by 9% and prices were basically flat – a median priced Sedona lot will cost you $160,000 and in VOC it will set you back $125,000. These prices will only start to rise as inventory goes off the market, but it’s going to take several years. In Sedona we have a 21 month supply of lots and in VOC we have a 26 month supply – a balanced market, where neither buyer nor seller has an advantage, is considered to be a 6 month supply. Both markets favor buyers right now.
So, what will 2019 bring to us? I’m going to have to polish my crystal ball over the holidays in order to bring you an answer in my January Real Estate Review, but I will tell you that in January 2018 I forecast prices would rise by 3% because of adverse interest rate increases and other unfavorable economic winds; I undershot that one, but got the “direction” correct!
This month’s Real Estate Review was written by Andrew Brearley, managing broker at the Brewer Road office of Coldwell Banker Residential Brokerage in Sedona. Andrew can be reached for comment at andrew.brearley@azmoves.com or by phone at 928 340 5006.
