Lately, I have had a few buyers (and a few real estate agents) give me their media spin on our real estate future: we are heading for a real estate crash. We all have heard it actually: “This 10.5 years of price increases cannot continue”…”Feels like 2005 all over again”… “Uncertainty is going to impede the market”…
Here are 5 Reasons WHY WE ARE NOT GOING TO CRASH:
- LOW Supply. Sedona is at its lowest residential supply ever! In Sedona right now ( 8/27/20) there are currently 118 single family homes/condos/ townhomes. Compare that to last year around the same time and our inventory was 255 single family homes/condos/townhomes.
- DEMAND is High! With the COVID19 Pandemic, buyers are flocking to Sedona from California, Scottsdale, New York, Washington, New Jersey, Illinois. Heck, if you no longer have to work in a building, you can live anywhere…Why not move to the Red Rock Haven with outstanding climate and people! Even Short Term Rentals and Long Term Rentals shows demand. According to local Short Term Rental Management company Sedona.Org , “All 50 of their current Short term rentals are rented.” And in July they quoted a 96% occupancy rate.
- Interest Rates are SO LOW! Stop the car. You can borrow money ( all pending credit score, employment, income,etc) in the low 3’s ( yes 3%)… When folks say to me that 2020 is just like 2005, I bring up this fact: In 2005, people were getting 5.5% and all they had to do was state their income and provide no assets. Today’s lending standards are scrupulous compared to 2005- just ask anyone who has recently closed on a home or went through the hoops for a refinance.
- Notice of Trustee Sales at an All time Low. The last thing folks who own a home want to do is default on their shelter. In Maricopa County, there have been only 84 Notice of Trustee Sales. In Sedona, there are no foreclosures nor short sales right now. To put this in perspective, in June of 2005, 1,469 Notice of Trustee Sales were filed in Maricopa County. People are not defaulting to the rate the media has hyped.
- Population is Rising! Did you know close to 90,000 people are moving to Arizona annually? I call it “Shovel In the Sunshine vs. Shoveling Snow” Syndrome. Live in a beautiful place that offers Vitamin D year round. In Sedona, there has been a 2.69% increase in population since 2010 according the most recent 2020 Census. It just makes sense: higher number of people more need for housing.
Some things to ponder moving forward into 2021.
- Commercial Space will convert to Residential. If people no longer need to work from a commercial building, I truly believe there will be an increase in zoning from commercial to residential housing. Take a look at CamelbackOne in Phoenix. It was old commercial and now will provide luxury condo living.
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The only way a CRASH happens is when there is too much supply! How would we increase supply?
- Rising prices would create supply. If I have been in my home for over 20 years and the prices continue to rise, why not sell?
- New builds would create supply. In July 2020, there were 3 residential permit applications with the City of Sedona. The other 60 were for room additions, pools, signs, electrical or fencing. In June of 2020, only 2 residential permits… At this rate with the census increase of 2.69% for a population growth, we are far from huge supply.
COVID19 has made our business very essential and the market is super strong. From where I sit, we are in for a very strong 2021 based on the economic indicators. Here’s to the glass half full!
Kris Anderson is a Guild Member with the Institute for Marketing Luxury Homes, Team Leader for ILoveSedonaRealEstate in Sedona, AZ and YourPremierTeam in Scottsdale, AZ- eXp Realty LLC. Cell phone 480-567-2103. [email protected]/ ILoveSedonaRealEstate.Com