Sedona, Arizona real estate market changes. Things are getting crazy.

[Chad McMahan]

It's been interesting to witness the real estate market recently change, while I've been consistently neck-deep in the market as an investor, an investment specialized real estate agent, and a real estate fund manager. In November 2022, most vocal active investors and soon-to-be investors were warning that we should NOT be buying, based on concerns with the general economy, interest rate increases, political and other concerns. I began encouraging the opposite- that we should be buying, along with predicting a significant increase in property values in 2023, based on experiencing a subtle but noticeable increase in buyer activity, including more buyers, in general, more cash buyers, and more courage from buyers. This unpopular prediction yielded a bit of negativity, especially early on. Recently I've been seeing more mention of higher prices and more activity in more market areas.

I'd like to modify my prediction. In Sedona, specifically, the appreciation will actually be greater than 10% by the end of 2023. I expected a significant increase in activity this year, but the current activity is greatly surpassing what I predicted.

For example, when I search for "Coming Soon" + active/available Short Term Rental friendly single family homes in the greater Sedona area there are 26 available on the market. However, based on closely watching many of these, and submitting offers on several of them in the last 2 days, I know that of these 26 listings, only 18 are truly available, and the other 8 just got into contract, many of which had 5+ offers (several had over 10 offers) with at least 3+ cash offers, and several has escalation clauses and non-refundable earnest deposits. Agents are so buys right now, they are not changing the status of the listings for 1-2 days, as they are focusing efforts on responding to offers, their clients, etc.

Right now, this increased activity is most impacting 2 categories of homes for sale:

1) The hot potatoes- the properties that really stand out as the best STR opportunities- and the the most attractive or generally best view homes. The very special real estate opportunities.

2) Attractive and desirable homes *just* below the level of the hot potatoes.

These listing are almost all gone, and then we will see a larger percentage of the other less desirable homes go pending, as well.

My point is, activity is way up, and most people in my area do not yet realize that inventory is way down. The bidding wars are already pushing up the prices. As a result, within 1-2 months, we will more commonly see real estate climb terms become required- such as waived appraisal contingencies or appraisal shortfalls, shorter inspection periods, larger earnest, and more.

I have horse blinders on, when it comes to looking at other markets- I am focused on my own area. I'm not claiming whether this is nation-wide. But it is certainly happening here.