MARKET BOTTOM?

Roy E. Grimm, PhD.

Yes! It hit here in January and we've stabilized at a Median Record Sales Price (for single family homes) that is roughly 35% less than it was at the peak of the market - even though inventory is down 30% from last year and the # of sales is up 42%. .62% if we compare 3rd Quarter of this year with 2008.

Prices have risen from the bottom MRSP of $341,500, but they're now holding steady in the low-$400K's as it has been since February.
Lots of market activity. 134% more pending sales than last year. Over five times as many as in the begining of January.

So, even with a lot more buyers in the market, they still have the upper hand and we'll see a raging Buyer's Market at least until the end of 2009. As we reach that point, expect some stiffening on the part of sellers.

Nationally it probably will take a year or even two to sort out the subprime credit crisis. That certainly has had a serious impact on the real estate market, particularly beyond the boundaries of Sedona. It'll certainly take that long for the massive over-supply of inventory to be absorbed nationally.

The fundamentals of the market in Sedona, however, are markedly different from those across the country and even across the county. Yes, we have a relatively large inventory of available homes (happily for our buyers) - probably a year's backlog or so. But, that's minuscule compared with, say, Phoenix. The big difference is that, hemmed in by National Forest, there is no more raw land left for new development except very small isolated pockets. The finite supply that is left WILL be completely gone in a decade - probably far less.

As for demand, Sedona still is a magnet for retiring Boomers and that will accelerate even in the short run. Those buyers have largely been postponing their purchases here, trying to time the market, but that latent demand is building and will burst forth sooner rather than later.

In the long term, prices will rise dramatically and this is the time to take advantage of the lull before the storm.
I see buyers who have been waiting on the sidelines for the past two or three years are starting make their move and swoop in to pick up bargains while they can.

We're seeing much more bargaining leverage for our buyers and lots of reductions of list prices. The market has been hit as hard as it's ever been. Much more inventory is back on the market - four times the number of homes and vacant lots. The Law of Supply and Demand in working to keep things banced.

This opens an excellent window of opportunity for buyers. Now is the time to come a strike a good deal.

Land prices plateaued early in 2006. They have recently hit lows we haven't seen in several years and are now resuming their upward trend since the supply is diminishing rapidly and can't be expanded - we're surrounded by National Forest.

In the past three years our market has flipped a lot. Much more home inventory in the $350K to $650K range. Luxury home inventories are up, too, but coming off the peaks we saw in 2008.

We're in best Buyer's Market we've ever seen in Sedona - for the time being. Buyer do appear to be returning. Over the long haul, the up-trend will accelerate sharply in the coming years.

The median selling price of homes (not inclusive of condos and mobiles) in the Spring of 2006 was $660,000. Now it's $425,000. Averages aside, there are four times as many homes available now than there were in the spring of 2005, especially in the $450-650,000 range.
30% more in the luxury market.

Home and land prices in the rest of the Verde Valley within 15-30 minutes of Sedona, by the way, are generally less than half of Sedona's.

The current median selling price of lots is now $200,000 under the $500,000+ set in 2006. This is indicative of a temporary increase in lot inventories and a slow-down in sales. That's a great buying opportunity,

Sedona is an island of private land surrounded by National Forest and 98% of that private land has already been built on. This indicates that Sedona is right on the verge of a dramatic price run-up as the Baby Boom demographic continues to hit town in full force over the next decade or two.