Sedona and Verde Valley Real Estate First Quarter 2014
Once again I find that until I take a look at the numbers, it is really hard to tell what is going on in the market. We hear all the time that all markets are local. Local to specific regions and areas and even down to individual agents who each have their own markets, working in them on a day to day basis. On the surface it looks like we are on the steady sales course that we have been experiencing for the last five years. Sales continue on right at 400 single family sales per year. But that is where the steady course stops. Prices are leveling out with only a 2% year over year gain compared to the previous year over year gain of 11%. Combine the leveling off of prices with the 22% increase in residential inventory in the first quarter of 2014 and we have the beginnings of a headwind blowing in our market, sellers beware.
Residential inventory has risen in just 3 months to its highest level in 2 years and at this point has all the indications that it will continue its climb in the second quarter of 2014. This rise in inventory is the result of increased prices and pent up demand from owners of real estate that have been waiting for prices to rise and now they are making their move. For the last six years many sellers have been biding their time waiting for prices to rise and they are hitting the market at full speed ahead.
So one quarter does not make a market. We are a small market, we may think it is a big deal, but come on we only have 400 single family home sales a year in the Sedona area and just over 1,400 total residential sales in the entire Verde Valley in 2013. With these small numbers it is hard to predict a trend in just one quarterr. With that said take a look at the single family sales in the first quarter of 2014 compared to the last several years. I am not going to say that the sky is falling, but just think about what happens when demand slows and inventory rises, 1 plus 1 equals 2. This bears keeping a close eye on.
We are going to need some buyers to pick up this increase in inventory and I am hopeful that by this this summer and fall we will be seeing them. With the pent up demand created over the last 6 years of the down market plus the record setting winter and the increase in prices over the last two years, I think we are going to be seeing buyers pouring out of the upper Midwest, and we will have the inventory of homes on the market to satisfy this demand. If we don’t see those buyers from the upper Midwest, prices could soften in the last two quarters of 2014.
Just the Facts:
The median price of a single family home rose just 2% year over year in the last 12 months. The number of transactions remains steady at around 400 single family sales per year as it has been for the last five years. I think that is rather astounding. Inventory is on the rise in the entire Verde Valley with a 22% increase in the Sedona area in the first quarter of 2014 and 21% for the Verde Valley. In the Sedona area inventory in the $500,000 to $750,000 price range rose 46%. With 15 sales in this price range in the first quarter and 93 properties available that is a 18 month supply, 6 months is normal. Vacant land transactions for the last 12 months are up 26% over the previous 12 month period with the median sales price rising to $165,700 up 38%, definitely finding some traction.
After it’s blistering pace in 2013 the luxury market, over $1,000,000, has slowed slightly with 25 sales in the last 12 months compared to 28 in the previous 12 month period. First quarter of 2014 only saw 4 sales in this price range, keep your eye out on this segment.
Cumulative days on the market saw a significant drop to 115 days for the last 12 months compared to 153 for the previous 12 month period, a 25% decrease over the previous 12 month period. Keep your eye on this too as an indicator of a market change.
The median sales price for Condos and Townhomes in the Sedona area rose slightly year over year to $214,750 for a 2% gain over the previous 12 month period. The number of transactions for the last 12 month period is steady at 98 sales compared to 96 for the previous 12 months.
The median sales price for single family homes in the Camp Verde area for the last 12 months rose just under 8% to $149,950, its highest point in 5 years, while the number of sales dropped to 102 over the previous 12 month period of 115.
Lake Montezuma and Rimrock:
The median sales price for single family homes in the Rimrock and Lake Montezuma area for the last 12 months rose 32% to $128,500 for the largest gain in the Verde Valley, good news for homeowners in the hardest hit area of the Verde Valley. The number of sales was up to 84, the most of any 12 month period since 2005-06.
Cottonwood and Cornville:
The median sales price for single family homes in The Cottonwood and Cornville area for the last 12 months rose 18% to $170,000. A real surprise for this area is the median sales price for the first quarter of 2014 was $207,000 a 45% increase over the first quarter of 2013. Buyers like the Cottonwood area and is reflected in the increase in sales price. The number of transactions was down about 4% to 470 sales. The Cottonwood and Cornville area continues to lead the Verde Valley in number of sales, reflecting the real value buyers see in these areas.
The Bottom Line:
Keep your eyes out for change. With the increase in the number of homes for sale and without an increase in demand we could see prices soften in the last two quarters of 2014. Look for buyers coming out of the upper Midwest to bolster demand and keep prices at their current levels. Sellers in the prices ranges over $500,000 have to have their homes priced right to get on the sold side of the ledger with an over two year supply of homes in this price range. The vacant land market has found it’s bottom and with prices at their current levels are still a good buy compared to 2005 and 06. Be aware of your surroundings and on the lookout for change!