The Sedona real estate market just had an excellent first quarter if you were a seller or an agent; the buyers however are having a tougher time in the face of historically low inventory levels and lots of other competing buyers. On the flip side, some warning lights are starting to flash on the horizon and I’ll discuss those after we run through the upside news.
Let’s begin with the Sedona and VOC residential market. All of the numbers are a very solid green with unit sales up 7% over 2017, the dollar volume of those unit sales is up 19% at a bit over $83,000,000 and the median sales price is up 18% to $489,000. The latter number probably reflects higher priced homes selling rather than an across the board rise in values, bracket creep you might call it, as buyers don’t find what they’re looking for in their anticipated price range and have to move up in price to meet their needs.
Local land sales are also enjoying their best market in years, just as our VOC manager Ron Volkman predicted in early 2017. Unit sales are up an eye-opening 60% over the same period last year, the dollar volume of those sales is up 57% at $10.1 M and the median sales price is up 39% at $150,000.
As we know, all markets suffer “corrections” and the question is – “When will Sedona see a correction?”. I don’t have the answer to that but I do know that it will come and right now I’d rather be a seller than a buyer for the following reasons: some homebuyers are starting to make offers without having seen the home they’re writing an offer on; other buyers are waiving inspections and many are offering more than list price in the really competitive market under about $800K. For those of you who have followed Sedona real estate for 12 years or more, this may all sound familiar!
On a macro level, we also have some contrary winds to navigate against. The Fed is talking of several more rate increases and that will dampen prices as a one percent rise in mortgage rates knocks ten percent off a borrower’s purchasing power. These rate increases are a typical response to rising inflation and should cool what is a hot market.
Additionally, if someone sells a home right now there is no assurance that they will find a replacement so many are staying put, thus adding to the burden of low inventory levels. There are still some buyers’ markets however, but you’ll have to want to move to Hartford, Toledo, Baton Rouge, Philadelphia or Baltimore, according to Attom Data Solutions.
Another piece of news from The Financial Times also caught my eye. Manhattan apartment sales, some of the USA’s most expensive properties, fell 25% in the first quarter compared to 2017. It appears that buyers are carefully weighing the implications of the new tax law which restricts interest deductions on loans over $750K as well as the deductibility of property taxes; with an average price of almost $1,700 a square foot for a New York luxury apartment, thoughtfulness is a good idea!
Lower sales in New York probably won’t affect us much but if it spreads to other high-end markets on the West Coast, which is a big feeder market for Sedona, we’ll see a knock-on effect. And what will happen if we get into a full-blown trade war with China? We live in interesting times!
This month’s Real Estate Review was written by Andrew Brearley …..