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Roy's Cell: 928-300-0690
Sedona AZ Real Estate Market Conditions: Sedona luxury homes
Fierce competition among bargain hunters is commonplace at the lower end of the Sedona real estate market, but many of the most attractive buys sit quietly waiting to be invited to dance. Luxury home suitors are few and far between these days. Those fortunate few who have the where-with-all to show up at the party find that they are rewarded with extraordinary results.
The luxury home market, which has been, until recently, defined a residences selling for a million dollars and up, flew above the carnage of the rest of the market until late-2007 when it finally collided with Mount Recession and the disappearance of jumbo loans. It’s still struggling to recover from that crash.
Sales of million dollar homes have limped along in the past three years at a pace about a third of that of the previous five years. So far in 2011 only 16 sales have been in that range. That’s a significant improvement over last year’s 12, but it’s still a far cry from the average of thirty-six in the first nine months of 2004-2008. But, as we discovered in 2009, it’s not so much that million dollar homes aren’t selling; it’s just that they’re not selling for million dollars these days.
A common definition of the luxury market is the top 10% of sales. By that reckoning, so far in 2011, that translates to homes selling for $750,000 and above. Back in 2007, the entry point for the top 10% was $1,300,000. That’s a 42% drop. The median selling price of the luxury group was $1,529,000 in 2007 compared with the current median of $920,000 – a 40% drop. Finally, in the all-important price-per-square foot category, after a peak of $506 in 2006 for the top 10%, we are currently at $267 per square foot. That’s a 47% drop, bringing us back to 2003 levels.
When we look more closely at the thirty-one homes that make up the top 10% of sales as of October 1st, we find that twenty-eight of them (90%) were originally listed at over $1,000,000. Only twelve (29%), however, actually sold in that price range. Average selling prices are off original list price by roughly 36%.
So, what does that look like in personal terms? As an example of a common experience, this morning I toured a beautiful luxury southwestern home built in 2006, situated on over an acre of land backing to National Forest. Three years ago that home was listed at $2,120,000. It’s back on the market now at $1,459,000; a reduction of 31% just in the asking price.
It’s the old refrain of this prolonged Buyer’s Market; a seller’s dirge and music to the ears of prospective buyers.
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For Current Sedona Real Estate Market Statistics, Click on the the next link below:
November 2011 Sedona AZ Real Estate Stats
BACKGROUND:
Sedona real estate in Historical Perspective
Single Family Homes:
The apex of the price curve was $660,000 in the spring of 2006. And, the bottom in January 2009 was $369,000 and then $330,000 in June 2011. Currently, the median selling price for a Sedona home stands at roughly $350,000.
Sedona townhomes and condominiums are popular here since a large percentage of our buyers purchase second homes and condos are ideal for that. Currently the median selling price is roughly $200,000, down from nearly $400,000 in 2006.
Sedona vacant residential lots appreciated at an average annualized rate of 21% a year between1996 and 2006. The median price soared to over $500,000 in 2006, but that started coming back to earth in the first half of 2007. That figure stands at about $125,000 for now in 2011.
FUTURE:
The General Outlook: for Real Estate in the Sedona Area
2006 shaped up to be a year in which the pendulum began to swing back toward the Sedona real estate buyer. That continued from 2007 through 2011. Inventories of Sedona homes and land are up. And, they stay on the market longer. That makes for a golden opportunity for the Sedona real estate buyer for the moment.
Longterm, though, I think that we can expect a hyperbolic market ahead for at least another couple decades based on our local market fundamentals, very limited supply and strong demand. Prices will go sky high within this decade and stay there. Right now is probably the Sedona real estate buyer’s best opportunity to get in with the expectation of phenomenal capital gains.
So what generally drives the Sedona real estate market in the long-term? Economics 101, Supply and Demand theory in action. Sedona is an island of private land surrounded by National Forest and the supply is shrinking inevitably. Demand is being pushed by the demographics of the Baby Boom. The majority of our clients these days are Boomers in their 50s and 60′s. They’re buying land and second homes with an eye toward retirement in a few years. The “forty-somethings” are just starting to appear. This demographic phenomenon is likely to continue for another couple of decades, ultimately pushing prices to unimaginable heights as the supply of land runs out.
Land:
“Buy land. God ain’t makin’ anymore of it.“
Will Rogers’ famous quotation is especially true in the Sedona real estate market.
Back in 1996, the median selling price of a Sedona residential lot was $86,250. As noted above, it’s now about $160,000 – back to 1990′s levels after having hit $500,000 in 2006. The current flat market is, in my opinion, merely a short-term pause in an eventual massive move up. Many local and national observers see Sedona’s real estate situation as akin to Aspen’s twenty or thirty years ago as we anticipate a virtual sell out of Sedona’s vacant land within a decade or so, once the market recovers.
Many of our clients are buying property now as a hedge against what they know will be a dramatic run up in prices over the next few years. Some are buying second homes that they can use for vacations or rent out with long term leases or as short term vacation rentals. Others are opting to simply buy land to build on later. There is a longstanding debate over the virtues and hassles of building a home, but many people are willing to persevere to customize a home to their own tastes and there are several outstanding builders and architects in Sedona that I am happy to recommend.
At the moment, though, a luxury building site, which may be a small envelope at Casa Contenta or a little under an acre at Back O’ Beyond, or one acre plus at Cathedral Rock Ranch or two acres bordering National Forest at Cross Creek Ranch start at about $250,000 and can range up to well over two million dollars. What you can expect from them are stupendous views, gated privacy, and multi-million dollar homes in the neighborhood.
In any case, there remains, for the moment, an excellent, but finite, supply of land in Sedona and prices have plummeted.
Properties Outside of Sedona -The Verde Valley & Flagstaff Real Estate:
In areas such as Lake Montezuma , Oak Creek Valley , Camp Verde , Cornville, and Cottonwood , home prices are significantly lower and $150,000 (the median price of a home there is $120,000) will still buy a fairly nice house. The median sales price of a single family house in the rest of the Verde Valley is far less than half of that in Sedona. Of course, you sacrifice the dramatic red rock views and ambiance of Sedona, but it does make economic sense and there are some spots with dramatic settings of their own, all within twenty or thirty minutes of Sedona. Many people, understandably, prefer some of the delightfully green hidden valley spots along Oak Creek or the Verde River with their big trees and sounds of gurgling water although water-front property can also get very expensive.
In fact, a housing construction boom occurred in the Verde Valley in the first half of the decade with so many people wanting the beauty, climate, and lifestyle here without the Sedona prices. A good example of this is the rather large, but tasteful, development called Verde Santa Fe being built around the new golf course near Cornville between Sedona and Cottonwood . From there it’s about a 15 to 20 minute drive A modern southwestern style house or townhome with great views of the mountains can be purchased or built to your specifications on or near the golf course at a cost ranging from way less than $200,000 to the $300,000s. Presently there is a huge over-abundance of supply there with both resales and new construction. I think they’re a good value. Remember that it is just as important for you to have buyer broker representation at new home developments and with “spec house” builders as it is on home re-sales.
27 miles to the north of Sedona is Flagstaff. In spite of its proximity, it’s a world away; as different from Sedona as is Phoenix on the opposite extreme. At 7,000 feet, it’s an alpine climate with real winter and a decent ski area. The median price of a home there is about $300,000, so there’s more bang for your buck and lots of pine trees if you don’t mind snow.
If you’d like to explore that option, visit our Flagstaff real estate site at: www.FlagstaffBuyerBrokers.com. Or, call us at the toll free number:
(800) 282-2959.
For clients interested in these alternatives, we can find you the best buys, in the nicest locations throughout the Verde Valley and Flagstaff.. Give us a call at (800) 282-2959 or email us at: Roy@SedonaRealEstate.com We will send you full reports and be your guide to the Verde Valley and/or Flagstaff.
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