I am going to go out on a limb and say that we are looking back on the bottom of the market, for single family homes in the Sedona area, which occurred in the spring of 2011. During the second quarter of 2011 there were 116 transactions, the most for any quarter in 2011, with a median sales price of $303,500. That was a 14% drop over the 1st quarter of 2011. Since that time we saw the median sales price catapult to $400,000 for the 3rd quarter of 2011 and retreat back to $339,000 for the 4th quarter, resulting in a median sales price of $350,000 for all of 2011. This gives us just a 2% drop year over year 2010 to 2011 in the overall median sales price. Having said that we are not out of the woods yet, but they are thinning a bit on several fronts.
The 1000 pound gorilla in the corner of the real estate market nationwide and the market in Sedona and the Verde Valley has been the Real Estate Owned/REO inventory of foreclosed homes. From all indications we have seen the peak of this price suppressing inventory reach our markets. In January 2012 there were 197 single-family REO active listings compared to 304 active REO active listings in September 2010, a 35% reduction!
The leading indicator of REO inventory, Notice of Trustee’s Sale filings, has reduced 36% from its dizzying heights of 4223 filings in 2009 to 2721 filings in 2011. We are pretty sure that there is still that “shadow” inventory of REO homes that have not reached the market, and we all know folks that are still in their homes after not having made a payment for many months, but you cannot deny this trend.
Since the peak in September of 2008 we have seen the number of active residential listings fall from 725 to 453 active listings, a drop of 37%, reduction in supply.
2008 gave the Sedona area its low point in numbers of transaction at 229 and since that time we have seen an 80% increase in the number of transactions in 2010 and a 69% increase over 2008 in transactions in 2011. So we have an increase in demand.
Ok, we have a decrease in supply, and an increase in demand, so why haven’t prices gone up? Too many REO properties offered over the last three years at reduced prices, providing tough competition driving all prices down with them. That may be ready to change. As the number of REO properties continues to lessen will see the downward pressure released and I expect prices to start to rebound as that happens.
With that said here are just the facts:
Numbers of transactions:
Sedona area: up 69% since the low of 2008, but down 6% from 2010
Cottonwood area: up 88% since the low of 2008, up 9% in 2011 over 2010
Camp Verde area: up 98% since the low of 2008, up 8% in 2011 over 2010
Rimrock-Lake Montezuma: up 220% since the low of 2008, and flat 2010 to 2011
Residential inventory in the Verde Valley is down 45% since the peak in October 0f 2007. So far with the large amount of foreclosed and short sale inventory on the market this reduction in inventory has not resulted in upward pressure on pricing, ultimately it will.
There continues to be a reduction in median sales prices in the last 12 months in all areas of the Verde Valley, with the Sedona are being the definite bright spot:
Sedona area: median sales prices fell 2% in the last 12 months
Cottonwood area: median sales prices fell 16% in the last 12 months
Camp Verde area: median sales prices fell 11.8% in the last 12 months
Rimrock-Lake Montezuma: median sales prices fell 16.4% in the last 12 months
The luxury marketplace in the Sedona area remained stable with 17 transactions in 2010, the same number as in 2010. In the middle of the summer it looked like the luxury market had taken off, but squabbling over the budget in Congress and the European crisis in the money market put a damper on this segment of the market for the last part of 2011.
The vacant land segment of the market remains very soft. The number of transactions went up slightly in 2011 to 95 from 93 in 2010. The median sales price continued to decline with a another 7.4% drop in 2011 from 2010, making the overall decline in median sales price from the peak of the vacant land market in 2006, 76%. Vacant land inventory is on the rise so I expect to see prices continued to suffer.
Bottom Line: Sedona is a closed market with a limited amount of real estate. They are not making any more if it and we are surrounded by national forest. If interest rates remain stable and we just get a modest amount of increased demand, we could see prices start to rebound in the existing home market. Keep your fingers crossed.
For the full 27 Page Sedona and Verde Valley 2011 Report in easy to read and understand graphs click here: 2011 Sedona and Verde Valley Real Estate Statistics.
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