Good news, Sedona real estate market continues to enjoy its day in the sun…

Good news, the local real estate market continues to enjoy its day in the sun but before I talk about that I have two opportunities for you and then a traffic suggestion.
Over the years, I have come to realize that there are two good times to be a buyer in Sedona and one of them is right now! During the hot summer months, we see a recurring decline in our visitor numbers because of our high temperatures and simultaneously we see lots of locals leaving town and heading for cooler climes. These two groups, visitors and locals, make up the majority of our buyer pool and therefore now is a good time to be looking to buy a home or land – fewer buyers means less competition for the limited inventory we have, which in turn means softer prices, and properties stay on the market a little longer than they do in the Spring and Fall, thus giving buyers more choice.
The second time that favors buyers is year’s end, December and January. The same reasoning applies regarding fewer people in town, plus we have the Holidays which generally means home-buyers put their plans temporarily on hold.
The second opportunity is buying a piece of vacant land. While unit sales of vacant land have continued to recover well, the recovery has not yet had much impact on prices because of our high inventory levels. This market resurgence is being driven by a chronic shortage of resale homes on the market and that leaves building a new home as the only option. The one caveat about speculating on vacant land is that cash purchases are the way to go as there is no income generated by land, only tax and HOA expenses, therefore the power of leverage (debt) can be a double-edged sword if the market slows; excess debt is what sank many property owners 10 years ago and we all want to avoid a repeat of that.
Now for a quick market update. Land in the 86336 zip code has a year to date median sales price of $150,000, about the same as last year, but the months’ supply of inventory is down 32% for the same time period; in the 86351 zip code, the median price YTD is $120,000, up 4%, and the months’ supply of inventory has fallen 38% – these large drops are a lead indicator for upcoming price increases in my opinion.
Regarding single-family residences, the median sales price of a home in 86336 is now $560,000, up 8% since last year, and the average price per square foot of livable space is up 6% at $267. In 86351, the median price is up 10% at $461,000 since 2017 and the price per square foot is up 8% at $238.
One way to sustain these values would be to find a solution to heavy traffic in our community. While the City’s solutions as outlined in the new plan are a creative and valiant stab, I do wonder about the limited impact they may have on the ground, especially at the “Y”. I personally think that the best solution lies outside The City on The Red Rock Loop Road and I’m glad that people are starting to discuss this option again. We could move to build a low-profile red rock bridge or how about “The Sedona Tunnel”? Either way, it could be funded as a public-private partnership with tolls covering the cost and also mitigating traffic impact; locals could get a discounted annual pass, rather like The Red Rock Pass.
This month’s Real Estate Review was written by Andrew Brearley….