It’s the season to be joyful as well as thankful and most people who work in the Sedona real estate market are just that. The year might have started out slowly but it got better as the months drifted by and there are now signs of some dormant market sectors coming awake just in time for the New Year.
There’s no doubt what the outstanding market segment was in 2016 – The Village of Oakcreek residential resale market. This segment saw a huge 20% increase in its median sales price over 2015 as buyers hoovered up the more affordable homes that can be found dotted around The Village. Don’t expect to see a repeat of that in 2017 however as inventory levels have fallen to a long-term low so the pickings are slim for prospective buyers and there’s no sign of sellers rushing to put their homes on the market; this will dampen buyer activity. Equally important, prices in the VOC are now approaching the price of a similar home in The City of Sedona and this will remove a major selling point for the VOC; the year to date median sales price in Sedona is $450,000 and $428,500 in The Village.
The most disappointing market was in vacant land sales. A big problem here is a huge over-hang of inventory - a three year supply of lots is available in Sedona and an 8 year supply in The Village. This caused prices to slip a few points in 2016 and for contrarian buyers it represents a great opportunity. The 2016 median sales price in The Village was $112,000 and $137,500 in Sedona.
So what can we expect in the coming year? Ron Volkman, the manager of the Village Coldwell Banker office went out on a limb at our joint December sales meeting today and spoke of a potential turn-around in the vacant land market in 2017. His reasoning was sound – there is a shortage of homes on the market and if people can’t find what they want then building is their only other option. Ron spoke of some contractors who can build a home starting around $150 a sq. ft.
My prediction is that the luxury market will improve significantly in the New Year. We have seen a real jump in buyer activity in this segment, starting in September of this year, and have already sold more luxury homes in the first 11 months than we did in the whole of 2015. There are some very attractive buys out there as a large volume of inventory has kept a lid on prices, but expect this to change as sales pick up.
One final comment. The Federal Reserve has signaled 3 potential rate rises in 2017 and this will feed through to higher mortgage interest rates. This time last year, you could get a 30 year mortgage with an interest rate beginning with a 3; now rates are about 4.375% and could well end up at 5% by year’s end if The Fed. follows through with its forward signaling. A 1% rate increase reduces your borrowing power by 10%! Act now before everyone else figures this out and forces prices up.
This month’s Real Estate Review was written by Andrew Brearley, manager of Coldwell Banker Residential Brokerage at 195, West State Route 89A in Sedona……
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