Carolyn Huggins. Please visit her site at: carolynhuggins.com.

Real Talk

A monthly column on Sedona's real estate market by long time resident and local real estate agent Carolyn Huggins.

SEDONA, AZ - Dec 7, 2008 - Real estate has been my full time profession since 1990 and I have seen many, many changes in the Sedona real estate market over those years. Lots of realtors have come and gone and many large and small parcels have been developed into residential lots over the last 20 years; but never have I seen our market in the state it is today.

I saw the lows of the 1990’s and the glut of vacant land, from the new subdivisions of Jordan Park, Casa Contenta and Mystic Hills, which slowed the market. At that time, we did not see a significant decline in property value only an increase in the “days on the market.”

As I have told many a buyer and seller: “People move to Sedona because they want to. They make a conscious decision to pay more for the quality of life that Sedona brings.” Until recently I was also able to tell buyers that “Sedona was not necessarily a place to make a fast “flip” and to look at Sedona as a blue chip investment. Hold on to your home at least 3 years and you can recover your seller’s closing costs and show a profit margin with the appreciation that 3-5 years would bring. This was especially true with vacant land. Many came to Sedona, saw and bought their part of the red rock dream.

These lots were a perfect “nest egg” until retirement. Then lot owners could sell their home in Michigan, California, New Jersey or Chicago, and with those proceeds build their “dream home” here in Sedona. Those dreams change and I saw many pieces of land sell over and over; one reason why we have a variety of homes of differing ages in many of our subdivisions.

Foreclosures in Sedona were few and far between before this summer. Short sales, (a means of negotiating with your bank to sell your home for less than the current mortgage amount) are a new “reality of our market” due to the decline in the value of properties. Many buyers acquired mortgages that were based on property values continuing to appreciate. Obviously, that has turned into a bust.

So what to do? 2005 is past and gone. 2008 has been shocking and many owners/sellers are still in denial about the value of their properties.

If you are a seller:

1. If you want to sell your home in this market consider waiting.
2. If you need to sell your home find an experienced realtor and have them run a “CMA.” A 'comparable market analysis' tells you what is active (for sale), what has sold and how long these properties took to sell (DOM; or days on market) of comparable homes in your area. Be honest with your realtor, talk about the loan you have and how much you owe on your property.
3. If you want to sell vacant land, there are very few banks lending. If you can, consider a seller carry back (you let the borrower owe you a portion of the sale price). Your realtor can help explain.
4. If you need to sell your home and your mortgage is equal to or greater than the value of your property call your banker and see if you can adjust your payment and try and wait out the market. You may need to negotiate with the bank on a short sale. A short sale takes place when the bank is willing to accept less money than your mortgage to sell the property. That prevents the bank from foreclosing. Your realtor can help explain how this is done, help you negotiate with your bank and explain what the ramifications are.
5. After seeing the CMA, price your home or land no higher in price than what sold (including short sales and foreclosures) within the last 6 month.

If you are a buyer:

1. The fear of buying today stems from the million dollar question: has the market hit bottom or not?  The crystal ball is dim on this one. Interest rates are low and if you have good credit buying now can off set the prediction that interest rates will rise in 2009.
2. Today we have a wonderful selection of properties on the market and in 2009 the inventory will probably begin to drop. Selection is at its peak and negotiation is the name of the game.
3. Cash is king. If you have cash and can close quickly you are in the driver’s seat.
4. If you are buying a home as an investment, that you eventually want to move into, rentals are going to be more in demand as loans are harder to get. Remember, people still want to live in Sedona.
5. Some real estate experts not only expect a rise in interest rates but a spike so buy now and lock in a low rate. That will save you money in the long run.

Some Predictions in 2009

1. We will see little or no appreciation in the value of our properties as the market bottoms out. Sedona may be close but that will be determined by the amount of new foreclosures.

2. We will see more foreclosures as the loans that were made in 2005 and 2006 turn sour and owners can’t make the payments on the second homes they purchased.

3. There will be fewer quality homes and properties on the market as owners that do not need to sell will wait out the market.

Next month I will give you the year end statistics and we will talk about creative ways to sell and market your home or land.

Remember to be thankful that we live in this wonderful place, be thankful for your friends and family and have a wonderful holiday season.

If you have any questions about this article please feel free to e-mail me at carolynh@esedona.net. Or visit my website at carolynhuggins.com.

Carolyn Huggins is a thirty year resident of Sedona and has been a real estate professional for 20 years. She is a realtor with Russ Lyon Sotheby’s International Realty.

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