Looking back on the past Covid fueled years of market growth it seems we hit a deflection point in early May 2022. Quick research is still turning up sales with healthy levels, but activity has dropped off considerably. A well priced home that hit the open market in Spring would have a half dozen or more offers… and that same home now is getting few showings and no offers. It’s time to ramp back expectations by 10-15% in an attempt to capture the buyers that are waiting in the wings. Time will tell how the market reacts to this speedbump…
With the inventory of existing homes available for sale in Sedona at historic lows, it is no surprise that sales of vacant land are on the rise. In fact, the number of lots sold in 2020 increased by 35% over the prior year, and the median sales price went up by 18%. The good news is that land is still a relative bargain. Even with the increase, median sales prices are still 40% less than they were in 2007.
Many people who call us about vacant land start with two questions. First, does it have good views, and are they unblockable? Of course, that is to be expected. The second most popular question is whether the property is in a Homeowners Association. Some buyers do not want to be bound by architectural restrictions, or by limitations on their ability to rent the home. And while these may be important considerations, there is much more to be concerned about.
As with a home, the purchase contract guarantees a due diligence period that will allow the buyer to fully inspect the property before closing on it, to make sure that there are no defects or other conditions that are unacceptable. What may seem counter intuitive, however, is that in the Arizona Purchase Agreement, the default inspection period for a home is ten days, and for vacant land, it is thirty days. But that is because problems with land are often less apparent. Here is a short list of other questions to ask:
- What utilities available and how expensive will it be to get them to the lot?
- How buildable is the lot?
- What are the setbacks or building envelope?
- If sewer is not available, will it perc for septic or require an alternative wastewater system?
- Are there easements or encroachments?
- Are there zoning restrictions?
- Are there deed restrictions?
- Is it in the city limits or unincorporated county?
- Is access to the lot publicly or privately maintained?
- Is it in a flood plain?
There are more, but I think you get the idea. If you are in the market for a place to build your dream home, be sure to work with an agent that can help you answer these questions.
Is our Real Estate Housing Market in Sedona Heading for A Crash? Thoughts from Kris Anderson– -eXp Realty
Lately, I have had a few buyers (and a few real estate agents) give me their media spin on our real estate future: we are heading for a real estate crash. We all have heard it actually: “This 10.5 years of price increases cannot continue”…”Feels like 2005 all over again”… “Uncertainty is going to impede the market”…
Here are 5 Reasons WHY WE ARE NOT GOING TO CRASH:
- LOW Supply. Sedona is at its lowest residential supply ever! In Sedona right now ( 8/27/20) there are currently 118 single family homes/condos/ townhomes. Compare that to last year around the same time and our inventory was 255 single family homes/condos/townhomes.
- DEMAND is High! With the COVID19 Pandemic, buyers are flocking to Sedona from California, Scottsdale, New York, Washington, New Jersey, Illinois. Heck, if you no longer have to work in a building, you can live anywhere…Why not move to the Red Rock Haven with outstanding climate and people! Even Short Term Rentals and Long Term Rentals shows demand. According to local Short Term Rental Management company Sedona.Org , “All 50 of their current Short term rentals are rented.” And in July they quoted a 96% occupancy rate.
- Interest Rates are SO LOW! Stop the car. You can borrow money ( all pending credit score, employment, income,etc) in the low 3’s ( yes 3%)… When folks say to me that 2020 is just like 2005, I bring up this fact: In 2005, people were getting 5.5% and all they had to do was state their income and provide no assets. Today’s lending standards are scrupulous compared to 2005- just ask anyone who has recently closed on a home or went through the hoops for a refinance.
- Notice of Trustee Sales at an All time Low. The last thing folks who own a home want to do is default on their shelter. In Maricopa County, there have been only 84 Notice of Trustee Sales. In Sedona, there are no foreclosures nor short sales right now. To put this in perspective, in June of 2005, 1,469 Notice of Trustee Sales were filed in Maricopa County. People are not defaulting to the rate the media has hyped.
- Population is Rising! Did you know close to 90,000 people are moving to Arizona annually? I call it “Shovel In the Sunshine vs. Shoveling Snow” Syndrome. Live in a beautiful place that offers Vitamin D year round. In Sedona, there has been a 2.69% increase in population since 2010 according the most recent 2020 Census. It just makes sense: higher number of people more need for housing.
Some things to ponder moving forward into 2021.
- Commercial Space will convert to Residential. If people no longer need to work from a commercial building, I truly believe there will be an increase in zoning from commercial to residential housing. Take a look at CamelbackOne in Phoenix. It was old commercial and now will provide luxury condo living.
- The only way a CRASH happens is when there is too much supply! How would we increase supply?
- Rising prices would create supply. If I have been in my home for over 20 years and the prices continue to rise, why not sell?
- New builds would create supply. In July 2020, there were 3 residential permit applications with the City of Sedona. The other 60 were for room additions, pools, signs, electrical or fencing. In June of 2020, only 2 residential permits… At this rate with the census increase of 2.69% for a population growth, we are far from huge supply.
COVID19 has made our business very essential and the market is super strong. From where I sit, we are in for a very strong 2021 based on the economic indicators. Here’s to the glass half full!