Compared to other parts of the country and prior years here, the Sedona property market is doing comparatively well and gaining traction. Sales numbers for Single Family Homes are powerful, prices hit a new bottom and are quickly heading back up, and repos have slowed seriously.
For comparative purposes, the bench mark year for the market is 2006, when it started its ecstatic state. Though the Average Recorded Sales Price (MRSP) continued climbing well above 600,000 dollars, sales dropped 34 percent from 2005′s five hundred and eighty-two Single Family Homes sold for the year, to 386 in 2006. Retrospectively, gloomy as it looked at the time, 2006 was a rather good year especially seen from the point of view of the market’s nadir in 2008 when five hundred and seventeen Single family Homes were on the market and only two hundred and twenty-seven sold. And, it is a terrific year if you were selling a luxury home. Sales and prices in that sector continued to boom before sliding off the cliff in late 2007.
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That brings us to the now. By July first, 2011 sales were off Mid-Year 2010′s by 5% (two hundred seven vs . two hundred nineteen) and the MRSP was down 14 percent (three hundred and thirty thousand dollars vs. three hundred and eighty-five thousand dollars) for a new Price Bottom. By the late Julynevertheless, 2011 sales numbers have embroiled to 2010′s. In reality with 232 sales in late July, we’ve excelled 2008′s full year total of two hundred and twenty-seven. And, prices have surged with a MRSP of 460,000 dollars so far for the month. That’s pulled the mean for the year up about 10,000 dollars.
Sales in 2010 slowed considerably over the summer, whereas 2011′s sales appear to be inflating. Hence I predict a robust finish for 2011 from that viewpoint. As for prices, based on current healthy Outstanding Sales projections and a Median List Price of four hundred and forty-nine thousand dollars, 449,000 dollars, I believe that we’ll experience further upswings.
Some of that might be because of a new trend we’ve seen this year in troubled properties. In the past two years, the number of foreclosures / REO’s …”Real Estate Owned by a Bank”… on the market at any specified time has averaged approximately twenty-five to 30. Now that figure is 11 a huge drop. Among short-sales or pre-foreclosures, we’re down slightly to fourteen. Often we’d see about 20. Therefore there are dramatically less REO’s for sale and it’s been that way for some time.
Accordingly, there are less sales of them. At Mid-year 2010, 71 REO’s had sold. This year there were 54. That’s drop of 24 percent. Interestingly enough, but perhaps not too surprising, short-sales have increased from twenty-three, last year to twenty-nine, this year. Banks are being a bit more cooperative with short-sales than they have in the past, maybe to lower the number of REO’s.
As the price-dampening presence of REO’s reduces, the good ol’ Law of Demand and Supply will increasingly exert its influence. Until now the “hidden hand of the market” appears to have suspended operations. Demand in the shape of increasing numbers of prepared, prepared and able customers has been comparatively powerful in the past two years. Conversely, supply has dropped precipitously. Currently there are three hundred and eight Single Family Homes on the market. At Mid-year in 2006, before things went adrift, there were three hundred and twenty-two. In 2008, there were five hundred and seventeen.
According to the supposedly immutable Law of Demand and Supply, when demand goes up and supply goes down, prices must go up. They have not because, as we’ve observed in the past 3 years, REO’s offered at well below standard market valuations, have given grim competition to drag all prices down. As that eases, prices will respond swiftly.
Perhaps, as the REO crisis subsides, mortgage underwriters will relax a bit and banks will essentially allow mortal human beings to obtain mortgages. Once that pendulum starts swinging back to center, stored up demand for a bit of the red rocks will explode proportionately. And, so will prices. Once home prices accelerate, expect to see the land market come to life once again especially as potential property owners notice that the provision of empty land is finite and non-renewable.
In the meantime, purchasers have a window of opportunity to scoop up homes and land at cheap prices with purchases that will appear brilliant calls in years yet to come.
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