1st Quarter 2009 Sedona/Verde Valley Real Estate Market Update
River Ranch Estates in Camp Verde, Arizona
1st Quarter 2009 Sedona/Verde Valley Real Estate Market Update
Volatile, chaotic, spasmodic and full of mixed messages. These are just a few term that characterize our real estate markets current state. Sellers, this is a good thing– I’ll explain in a few moments.
The 1st Quarter closed with the fewest number of sales we have seen in our 3 year long downturn, despite an obvious increase in buyer traffic. Here is how the past few quarters breakdown:
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
We have just experienced our worst quarter ever in terms of the number of sales, but this bleak news is coupled with some excellent news.
Pending contracts are up– WAY up ......and inventory has dropped a full 10% off the highs we have been experiencing. As of April 10th, we have 214 pending contracts in the Verde Valley- we have been averaging around 130 for well over a year.
Some micro markets are actually experiencing shortages of inventory- For example, If you have site built home with horse privileges that would sell for under 190K, your property would be in high demand. Site built homes in the Cottonwood area under 150K continue to move at a rapid pace- many selling under 60 days.
A full 50% of the sales that occurred in the 1st quarter were foreclosure sales, even though foreclosures represent less than 10 % of the overall inventory for sale in the Verde Valley at this time. Foreclosures also represent 50% of the areas currently pending contracts.
The foreclosure market is beginning to get competitive- bad for buyers, but great for sellers. Multiple offers and bidding wars are beginning to occur with greater frequency– Well priced foreclosures are selling for full price and are beginning to be bid up over the asking price….At least 2 foreclosures in Cottonwood sold for 20% OVER the asking price!
Price spreads can be very dramatic in some neighborhoods as the market finds its bottom. Recently, condos in the same neighborhood that were extremely similar in size and features sold within 30 days of each other with price spreads from 70K-130K... talk about volatility! These are all excellent signs of the market beginning to firm up, and take a foothold firmly on the bottom.
The land market is not enjoying the rebound residential sales are currently seeing. Land sales in Sedona and the Verde Valley continue to be comparable to cold molasses. Out of the 180 sales in the first quarter, only 11 of those sales were vacant land. Demand for land can be expected to be extremely anemic as financing for vacant land has all but dried up and homes can currently be purchased for far less than they cost to build. Builders tend to drive our local land market- right now, they are out of gas.
Portions of the Obama administration stimulus plan for housing appears to be finally having some effect. First time home buyers are beginning to enter the market in healthy numbers in our area, as median incomes are finally matching affordability once again. Since average household incomes are around 50,500 in Yavapai County, 150K is about the max the average household in the area can afford. These buyers are absolutely crucial to the health of a local real estate market, as their purchases tend to have a “trickle up” effect into higher price ranges. A move up buyer can buy a 250K house, because an entry level buyer just bought their 150K house, and so on…..These buyers are beginning to turn the spiral upwards once again.
So how do you compete against a foreclosure as a real estate seller?
1. Make it an easy deal. Banks sometimes have horrible terms and conditions that turn off many buyers. Whatever you can do to make it easier for a buyer to get into your home, do it!
2. Make sure your home is in great condition. Many foreclosures are sold as is and are in need of numerous repairs. Look around your home through Martha Stewart’s eyes– clean out the clutter and make sure everything is sparkling clean and in great condition.
3. Consider having your home pre-inspected and complete necessary repairs. Foreclosures are sold AS-IS, and buyers inherit many of their problems. Human nature dictates when there is a choice, we will choose the path of least resistance. Make your home the one with the least amount of hassles.
4. Get creative. Does the buyer need a fenced backyard or want new carpet? Consider allowances for upgrades of their choice ( Be sure to ask the buyers lender how to structure the deal before writing the contract). Offer to pay the HOA dues for 1 year or two.
Foreclosures may be inexpensive, but the deal sometimes comes with significant hassles many buyers just wont tolerate. Following a few of these tips just might be the ticket to a successful sale!
Holly Grigaitis-Svercl
Ken Svercl
Mingus Mountain Real Estate
928-300-5228
928-301-9334
holly@verdevalleyrealestate.com
ken@verdevalleyrealestate.com