2009 2nd QTR Sedona/Verde Valley Real Estate Market Update
Wow- What a busy couple of months, especially in comparison to what we have seen over the last several quarters. Sales during the second quarter were up 80% over the first quarter of this year- and that makes for a very healthy bounce off the bottom! Still, this HUGE jump in activity is not significant enough to say that the local real estate market is back in business, but we appear to be nearly ready to move the market out of the ICU, and upgrade its condition from critical to serious. Here is how the past several quarters have broke down.
1st quarter 2006 567 closed sales
2nd quarter 2006 570 closed sales
3rd quarter 2006 561 closed sales
4th quarter 2006 358 closed sales
1st quarter 2007 314 closed sales
2nd quarter 2007 406 closed sales
3rd quarter 2007 304 closed sales
4th quarter 2007 234 closed sales
1st quarter 2008 203 closed sales
2nd quarter 2008 280 closed sales
3rd quarter 2008 242 closed sales
4th quarter 2008 222 closed sales
1st quarter 2009 180 closed sales
2nd quarter 2009 333 closed sales
Note that were need to go back to 2007, to find a similar number of sales in a given quarter. That's VERY nice to see! We still need to see between 400-500 sales per quarter before our market feels normal once again, however, the area is approaching the level of sales activity we saw as the stock market took its first huge hit in late summer of 2006, when investors 1st became aware that maybe their mortgage backed securities, weren't the safe haven investments they thought them to be. The fear that has paralyzed the market for the past 2 years appears to be finally waning, as bargain properties in the valley, simply become irresistible to buyers who have been sitting on the sidelines.
How about a flat as a pancake lot in Lake Montezuma for 4,750$... Or maybe a 1300 sq ft SITE BUILT house for 42,000? Maybe a home in Sedona for about 100$/PSF? A new home with granite countertops in Mountain Gate for less than 43$/PSF, you say? This is a small sample of what we have seen.
Some of the deals out there are absolutely amazing!
It appears as if the market will continue to gain steam in the third quarter as well. As of 7/24, we had 253 pending contracts in Sedona and the Verde Valley. Inventory in the local MLS has also dropped a full 20% off the highs we've been experiencing.
Some local markets /segments of markets are showing strong signs of price stabilization, while others are continuing to decline. Foreclosure sales continue to be the main culprit for the declining values in home sales, while lack of sales continues to be the culprit for falling land values.
Currently, there are about 1300 land listings on the market, and 56 pending contracts. But wait, it gets worse. Out of those contracts, 42 are part of a bulk sale of a Sedona Subdivision- only 14 lots are currently pending escrow right now in the Verde Valley- A little over 1% of the available inventory, Yep, land owners currently have about a 1 in 100 chance of seeing a sale right now. A grand total of 53 parcels sold in the first six months of 2009, 11 parcels sold during the 1st quarter, and 42 parcels during the second quarter. While this represents a near quadrupling of sales quarter to quarter, the activity is still amazingly anemic. A 17 acre parcel off Bill Gray Road in Sedona, is currently offered for less than 19K per acre, a far cry from what it sold for a few short years ago....And no one has bought it after 3 weeks on the market! A few parcels of irrigated land have sold for around 60k an acre, when it used to go for 120-150k an acre.
The huge lack of activity in the land market is largely due to builders, who are no longer in the mode of acquiring inventory for spec homes and the great lack of available banks willing to lend on it. Many builders have little to no motivation to build homes right now, as many of the foreclosures are selling for less than they cost to build. There is no motivation to build if there is no profit, and therefore, there is little demand to buy land.
Out of the 288 homes that sold during the second quarter, 118 were foreclosed homes- a little over 40%. An additional 20 sales, or 7 % of the sales during the second quarter were short sales. A market where nearly 50% of the sales are distress sales. makes for a very tough, and extremely competitive market for traditional real estate sellers, and this is likely to be the case for the next 12-24 months in the area, as foreclosure inventory is absorbed by first time homebuyers and new residents to the area.
Luckily, there are some great incentives for buyers to enter the market. The $8,000 tax credit for first time homebuyers ( anyone who has not owned a home in the last 3 years) has done much to stimulate our local market. It is schedule to expire 11/30/09 ( though I would not be surprised at all if there was a last minute extension), and buyers are standing up and taking notice. This has a trickle up effect, and allows move up buyers to buy, and so on. Finally, government got something right!
If we can be of any assistant helping you intelligently buy or sell during these crazy times, please do hesitate to get in contact with us