Investment Strategies

Are You Ready to Bottom Fish?

Like most other parts of the country, the Sedona real estate market has fallen from the gravity-defying heights of financial exhilaration into what can only be described as a valley of unprecedented disappointment. In 2006 single family home sales declined 66% from the previous year. The trend continued into 2007 with a further drop of 36%, and in 2008 another 11%. During this precipitous period, the median selling price went from $660,000 to $480,000. Sure, it wasn't as drastic as Las Vegas, Miami and Phoenix, but remember, the Sedona market consists mostly of custom-built homes, not miles upon miles of look-alike boxes. In January of this year the median selling price dropped to $341,500, a level not seen since 2003. It would not be unreasonable to assume that the Sedona market bubble has finally deflated back to a more normal level.

So is it time to bottom fish, and if so, where are the best places to make an investment?

One interesting area that is often overlooked is vacant land. Purchasing vacant land is not predicated on the immediate need to have a roof over one's head. It is an investment in the future, with the obvious potential to reap a significant financial gain (especially at today's prices) at some future date.

Consider this scenario. In 2006 the median price for vacant land was $520,000. In 2007 it slipped to $357,000 and by the end of 2008 leveled off at $300,000. That's a 42% decrease in just two years.

How long these current prices will last, no one can say, but for an astute investor knowing that Sedona is entirely surrounded by two million acres of Coconino National Forest, and has no room to expand, putting a pencil to paper at this time might not be a bad idea.

Looming large on the demographic horizon is a sizeable wave of Baby Boomers already mapping out their retirement plans. It is a wave that will not easily subside because a decade later, an even larger contingent of Baby Boomers, presently in their early fifties, will find themselves forced to bid up land prices even further in the face of a diminished supply at that time.

It is unlikely that we will see vacant land prices this low again in our lifetime. With a new administration in place, and hundreds of billions of dollars flowing into real estate, Sedona's unique market will be out in front of the demand trend. This year, as sales gain momentum, Buyers are sure to take action and prices will rise accordingly. A window of opportunity is now wide open for anyone wishing to invest in Sedona's supply of unique (and scenic) prime land.

To find out more about Sedona land values, please feel free to contact me, Lee Congdon. I will be only too happy to review your individual situation without any obligation on your part.

You can reach me at 928-300-5050 or E-mail me at Lee@LeeCongdon.com. I would love to hear from you.