The supply of single family homes in Sedona is getting very tight. As of the end of July, inventory of listed homes was 7.5% lower than the previous month and 25% lower than a year ago. Home Inventory is back at 2004 levels when prices were gaining momentum.
The
number of new construction permits issued for single family detached homes in
Sedona is at its highest since 2007. Home buyers increasingly opt to build a
brand new home instead of buying one that often requires remodeling or if they
cannot find the home that is just right for them.
Meanwhile,
prices for sold vacant land in July stood at a median of $176,250 compared to
$139,250 a year ago, a price increase of 26.5%. Land prices are now where they
stood in 2004, before an unprecedented run up that saw median prices nearly
triple in three years. This is not to say this scenario is likely to repeat
itself any time soon, but the stage is set for a healthier price point for land
in the near and medium term.
For
vacant lots above 0.25 acres with red rock views in Sedona prices now ranges
between $80,000 and $300,000. In addition the cost of borrowing and mortgage rates have declined in the last 2
years, making a compelling case for new construction – see graph below
illustrating the number of permits issued by the city (up to June 2013) versus
the mortgage rates since 2005 in Sedona.
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Lot
owners building custom homes and local builders and developers building spec
homes are breaking ground all over Sedona. A new community called Rimstone, off
of Hwy 89A in West Sedona is under development, and new homes are being built
on Whippet Way and Hozoni Dr, a reflection of renewed activity in vacant land
sales.
The
cost of building new is now beginning to compete with the cost of buying an
existing home.
Prices
of new homes ranging between $380,000 and $750,000 depending on size and
finishes, have an average price per sqft of $260. By comparison, existing homes
are listed at an average of $200/sqft.
The economic case for building new versus buying an existing home
becomes more compelling at the high end of the market as it commands higher
prices per square foot.
View graph below showing the interest rates versus the number of permits issued by the city of Sedona.
