Verde Valley sees record spike in house prices, linked to COVID exodus and cost of construction – JournalAZ.com
Four times a year Randy Crewse of Arizona Prime Real Estate conducts an analysis of the state of the real estate market in and around Sedona, taking into account house prices, the number of units in the market and the location. speed. houses are bought once they are on the market.
His reports full of statistics and charts aren’t known for their dramatic language, but in April he began his report with a warning.
“We, by that I mean the whole country, but not Sedona and the Verde Valley, are in a real estate market that is unmatched by anything I have seen or experienced in my 46+ years in the real estate industry, ”Crewse wrote. “The dire shortage of inventory is putting extraordinary upward pressure on selling prices.
“The median selling price of single-family homes in the Sedona area for the first quarter of 2021 was $ 827,550, up 44% from the first quarter of 2020.”
Across the Verde Valley, real estate agents are seeing an unprecedented surge in house prices, as the reduction in construction from a pandemic year turns into increased demand that has been squeezed from that year of pandemic.
“For some reason with COVID-19 it has basically increased. Everyone wanted to be out of the cities, ”said William Hamburg, Sedona branch manager for Realty One Group. “Their employers let them work virtually, and why wouldn’t you want to work virtually in Sedona? Lots of people move out and keep their jobs so they have that big city salary so Sedona seems affordable. “
Crewse data shows that there are only 44 homes currently for sale and not under contract in Sedona, and with a median sale price of $ 1.275 million. Only 18 homes are for sale for less than $ 1 million and three for less than $ 600,000.
“If you make $ 15 an hour in this town, you can’t afford anything in Verde Valley. That’s the real story, ”Crewse said. “It’s sad. It rips the fabric of our community.
According to several realtors, a significant portion of buyers coming to Sedona are from California, where the cost of living and a housing shortage have driven many homeowners out of the state. Many engage in 1,031 exchanges, where capital gains taxes are deferred by transferring to a similar investment, most often by selling one house and using the money from the sale to buy another.
As a result, older Californians buy homes quickly, and often above asking price, always well below the price of the home they sold in California.
“You transfer that money from a house in California to a house here,” Hamburg said. “People have to spend money or pay taxes. People take over asking [price], all in cash, so they don’t pay taxes on their 1031 exchange.
Sedona properties have been expensive for a while, but with the supply of homes among the Red Rocks unable to keep up with demand, the housing market fire has spread to surrounding communities as well.
“The Verde Valley has been discovered,” said Dan Mabery of Coldwell Banker in Cottonwood. “We have declining enrollment in schools everywhere but especially in Sedona because families cannot afford to live there. Now it’s moving to Cottonwood, then Camp Verde, then Rimrock and Lake Montezuma.
“They sell single-wide for over $ 100,000, and single-wide that are crumbling – full of mold, nothing but crap,” said Bridget Bowers of Camp Verde Realty. “The prices are so high.”
In addition to the influx of people settling in the area, construction of housing in the area has been delayed, due to a combination of pandemic difficulties, high costs of construction materials and difficulties in making approve development projects due to neighborhood opposition.
Over the past year, the price of lumber has increased 377%, which has also increased the cost of building new homes.
Hamburg said it had also tried to build new housing in the area, but struggled to gain approval in Sedona, moving to try and build developments at Cottonwood or Camp Verde instead.
“The people and the city need to be more open-minded about how we can develop in a sustainable way,” said Hamburg. “We can’t stop this, but we can do it in a sustainable way.”
The supply of housing is further constrained by the increase in short-term vacation rentals, which estate agents say take up a significant portion of the housing stock. In 2016, Arizona Gov. Doug Ducey signed Senate Bill 1350, banning municipalities from banning short-term rentals like those advertised on Airbnb, Vrbo, and Craigslist, which Sedona had attempted to do. In the years since, the area has seen a surge in the number of homes used primarily for tourism, instead of long-term rentals, which Sedona officials estimate at around 15%, possibly more.
“People buy what would be residential housing and use it for Airbnbs, which drives the market up,” Mabery said.
“Nobody has a place to go,” Bowers said. “Even if you are selling your home at the highest level ever in this market, you have to buy in this market.
With the high price of homes in the region extending to rental prices as well, the pressure is felt most acutely by middle and working class residents of the area, many of whom can no longer find affordable housing to live there. live. as local restaurants have complained about the ability to find workers, in part related to the difficulty for low-income people to find affordable living in the area.
“The real challenge is that there is no housing for the workforce in the Verde Valley, so we cannot bring in workers because there is no housing,” he said. said Mary Chicoine, executive director of the Verde Valley Regional Economic Organization. “We are seeing businesses closing or reducing their hours of operation because they cannot find employees.”
Even before the peak of 2021, VVREO had commissioned a study on affordable housing in the Verde Valley with the help of some local municipal governments, which is nearing completion and is expected to be presented to some of the local leaders on the 17th. may.
Chicoine fears that beyond the repercussions on businesses, the housing crisis will change the very nature of the population of the Verde Valley, making the region increasingly biased towards the rich to the detriment of the poor inhabitants and the middle class.
“These people need affordable housing. Unfortunately, there are none left, ”said Chicoine. “Healthy communities are diverse communities. With the cost of housing rising so dramatically. It has changed the diversity of our community. We say it’s labor, but it’s families and things like that that don’t come to the valley because they can’t afford it.
The Verde Valley is no stranger to soaring house prices, like the one that preceded the Great Recession in 2008.