The last time I was in Sedona I met a woman who had just moved there. She said that she had watched her house for over 1 year and ended up getting it for 50% of the original asking price.
Now it probably was over priced when she first saw it, even for Sedona's standards and then owner got desperate. But at any rate, that is a remarkable deal.
The last I looked there were over 700 homes for sale in the Sedona/VOC/Cottonwood area. A realtor could give you a more accurate count but that's a lot of homes. They are saying the real estate market is still going to drop even more over the next 1 to 1.5 years. It will be 2010 before the market turns.
The VOC's prices have been hit harder because they have had to deal with the construction on HWY 179. Once that is completed and everything opens up again then the probably will get more lookers in the area.
I bet if a person can just wait it out til the market bottoms out (probably 2008-2009)then they will be able to grab up some great homes at super low prices. I intend to be in that group which is why I will rent for a year when I first get to Sedona.