Sedona Real Estate Market News and Statistics January 2012
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Opportunity Beckons!
Is Sedona Poised for a Turnaround 2012?
Housing has always led America out of its recent recessions, so real estate commentators are constantly
Sedona Real Estate Market Year End 2011
2011
Vs
2010
Change +/-
Units Sold
477
510
-6%
Median Price
$305,000
$331,000
-8%
Average Price
$386,952
$404,239
-4%
Price Per SqFt
$164
$179
-8%
% of Forecloses and ShortSales Sold relative to total Units Sold is down.
36%
40%
-4%
searching for signs of recovery in the market and here are some that have caught my eye.
First, it might not sound relevant,but let's begin with the rental market. Did you know that US rents have risen 2.1% this year, as opposed to home prices which are generally reckoned to have fallen 5% in many cities?
Using the year 2000 as a normal year, home prices are 20% undervalued in relation to rental rates. The importance of the rental market is that as rents rise and prices fall, it becomes more attractive to buy than to rent, thus spurring demand. Furthermore, as investors buy homes to rent out, excess inventory is removed from the market and that puts upward pressure on house prices. While we are not seeing this yet,it will become apparent as the recovery begins.
Secondly, the inventory of distressed properties has frequently been cited as a drag on home prices.This is a statistic that I have tracked since early 2009 in Sedona and at that time there was a combined total of 85 homes that were foreclosures or short sales on the market. The combined number on October 31st, 2010 was 71, six months ago it was 68 and on Oct.31 this year it was 35 — an encouraging sign.
Here is more good news. The total number of homes for sale in town has been hovering around the 500 mark all year , down from the mid 500s last year and around 600 in 2009 -this is another trend that will ultimately translate into higher prices. In particular,inventory is noticeably lacking below $250,000. Historically, a 6 month supply of homes is considered a balanced market in any given price range and todaywe have a four month supply of homes available under $250,000 so we can expect to see prices firming up soon at the lower end . At the upper end of the market, there is still an excess of inventory and sellers have to be competitively priced to attract the few buyers who are out there.
I have also noticed a few instances of "bracket creep" recently. This is where a buyer is unable to find a home that fits their needs in a given price range and has to pay more than they originally intended.The cases I have noted have been with buyers looking in the $400,000 range but buying in the $500,000 range. Interestingly, this is where we are also seeing new "spec" homes being built , although the numbers are small as
For all your Sedona Real Estate needs, call John 928-300-0849 or email.
construction financing for "spec" homes is unobtainable and only builders with healthy cash reserves can take advantctage of the situation. Still, any pick-up in construction can only benefit our community where so many contractors have had to look for other employment.
Do all these signs mean that we are out of the woods? Probably not for a while, but I think they are leading indicators. It is never easy to spot a trend until it has been under way for a while, but I am optimistic as we approach another year. Don't expect too much too soon, but don't say you weren't told!
By Andrew Brearley, Owner and Designated Broker of Coldwell Banker First Affiliate
Home Prices Bottom Out Experts say this is the time to Buy, as they believe this is the last year we'll see prices this low coupled with interest rates at record breaking lows.
Housing outlook brightens as the economy recovers. Last month, U.S. employers added 200,000 jobs, and the unemployment rate fell to 8.5%, lowest in nearly three years. According to Jamie Dimon CEO of JP Morgan Chase, USA's largest bank, housing is near the bottom. He also says that " should employment start to grow 300,000, 400,000, 500,000 a month, you better buy that house you want really soon because it'll change in price right away. " And according to
Bloomberg News "Confidence Among U.S. Homebuilders Climbs to Highest Since 2007."
Note what Jamie Dimon says In a series of interview s during his firm's health care conference in early January 2012 regarding the state of the housing market:
JPMorgan CEO Jamie Dimon sees housing at bottom — USATODAY.com January 15, 2012
Q: What about housing in the U.S.? A: We have seen the worst. We are at the bottom. We may hug along the bottom for a while, but we are at the bottom. People think housing is terrible, but the early indicators tell you a lot about where it will be in 18 months or so. Supply and demand are rapidly coming in balance. Renting is now more expensive than buying in half of America. We're adding 3 million Americans a year. In the next 10 years, we have 30 million more Americans. Those 30 million Americans are going to need 15 million homes, or something like that. Household formation has gone so low. You had kids move back home — and, yes, by the way, it doesn't work for them, either. And household formation we think will have to go close to a million and a half. Once it goes to (that), housing construction will probably have to go up to a million and a half. Two million jobs, and all this shadow inventory stuff will be getting better, not worse. And it's the rate of change which is important, not the absolute level.
It's still terrible, by the way. But we think it's going to get better over time. And then hopefully, maybe, we'll have some rational policies around housing which will make it better. So housing is near the bottom. Once you see employment start to grow 300,000, 400,000, 500,000 a month, you better buy that house you want really soon because it'll change in price right away.
Q: Are interest rates going to go up in 2012? A: Rates are going to go up. The faster things improve, the sooner you get higher rates. So the first part of higher rates is a good thing. Going back to a normal (yield) curve would be a great thing if this was accompanied by growth and not high inflation. There's some people who are afraid you're going to have too much inflation when this all turns around. That's a legitimate concern, too.
Source: usatoday.com JPMorgan CEO Jamie Dimon sees housing at bottom — USATODAY.com by Maria Bartiromo, Special for USA TODAY, One on One Updated • Jan. 15, 2012
Housing outlook is more upbeat byJulie Schmit, USA TODAY January 16, 2012 • •
Optimism is building that the housing industry is nearing a bottom — finally.
Home sales and home building are forecast to rise this year after sliding steeply the past five years in housing's worst downturn since the Great Depression.
Recovery is expected to be slow, and home prices are widely expected to fall this year. But investors are betting on the start of an upturn, bidding up home builder stocks and causing them to outperform the broader stock market.
Chief executives are more positive. JPMorgan Chase's Jamie Dimon said last week that housing is near its bottom but could stay there a year. Stuart Miller, CEO of home builder Lennar, said the market has started to stabilize because of low prices and record low interest rates.
Market researcher RBC Capital Markets has also turned from a "bearish" view on housing to saying that 2012 "will mark a step in the right direction."
Many economists expect home prices to fall more this year because of foreclosures and other properties sold at very low prices.
As foreclosures pick up this year, "prices will drop," says Stan Humphries, Zillow chief economist. He says home prices won't bottom until later in 2012 or next year.
On average, prices have fallen by about a third since 2006.
"This year will feel a lot better to builders, investors and real estate agents than to consumers," says Jed Kolko, economist for real estate website Trulia.
Housing's outlook is brightening with signs of a better economy. Last month, U.S. employers added 200,000 jobs, and the unemployment rate fell to 8.5%, lowest in nearly three years.
While an economic shock could derail progress, "there's now more evidence of improvement in the economy, and housing will follow the economy," says David Crowe, chief economist at the National Association of Home Builders. More improvement is expected for:
•Sales. Existing home sales will rise 12% this year after a 2% increase last year, and new home sales, coming off a horrid year, will jump 74% this year, Moody's Analytics predicts.
November's existing home sales hit their highest mark in 10 months, and new home sales were the year's second best, IHS Global Insight says.
•Construction. Single-family housing starts will rise 37% this year, Moody's predicts, after falling 9% last year.
Home builder stocks are on a run. The S&P 1500 Homebuilding Index is up 38% since mid-October, vs. 7% for the S&P 500. ********************************************************************************************
John R. Talbott, previously a Goldman Sachs investment banker, is a bestselling author and economic consultant. When it comes to the housing market he is also a prophet. When housing prices started to skyrocket in 2003, he published The Coming Crash in the Housing Market correctly warning us that a real estate bubble was forming. Then in January 2006, he called the absolute peak of home prices in the US by releasing a new book, Sell Now! The End of the Housing Bubble.
Mr. Talbott, the person who accurately predicted the housing bubble and its bust, now has a new prediction — IT IS THE TIME TO BUY A HOME! In a recent article, Homes — Buy Now!, Talbott simply explains:
"I have been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home or refinance your existing home with thirty-year fixed rate mortgage debt."
He goes on to explain that his conclusion is based on four different metrics, all of which favor buying today:
§Home Prices Relative to Peak Prices During the Bubble
§Home Prices Relative to Construction Costs or Replacement Costs
§Home Prices Relative to Incomes and Rents
§Home Prices in Real Terms, Not US Dollar Terms
Bottom Line: If the person who called the real estate bubble and its bust says now is the time to buy, we believe it is time to buy.
Source: Linda Rogers, Sr. Loan Officer Primary Residential Mortgage, Inc. Phone: 928-203-0695 x 3
For all your Sedona Real Estate needs, call John 928-300-0849 or email.
