April 2009

You may be reading this newsletter because you are looking for information about residential real estate sales in Santa Fe, New Mexico. Get out your handkerchiefs. I am certain you have them handy since it is allergy season. Odd, we don’t really have spring here. We have all four seasons, but they are known to many locals as Allergies, Tourists, Harvest and Time of Little Daylight (Spring,Summer,Fall&Winter). Those are the seasons many of us observe… So with your handkerchief at the ready, feel free to review the data included. The usual –absorption rates- is an attachment and I’ve added a new chart below: historical quarterly sales results dating back to 2001. In the future, I will present quarterly sales totals at the end of each period. Even that distant year of 2001 had more residential sales in its first three months than we had in the current period. Just how can we notate any progress if the numbers don’t show improvement? Please share your ideas.

First, inventory of homes listed for sale always seems to go up during Allergies. Sellers have survived the Time of Little Daylight and are now hoping to snare a Buyer that will jump at their offering of a home for sale. The usual peak time for inventory is Tourists and that is still a few months away, so expect inventory to grow as Allergies passes. (Where else could you read a sentence like that?) Yes, inventory did go down late last year, but that was due to Sellers taking their homes off the market for a period of time. Now they want to sell again. The attached absorption rate chart shows the imbalance between sales and inventory. In a healthy market, absorption rate should be less than 10 months, if not 6. The one who knows nothing (that would be me) said in prior newsletters that the “recovery” had begun and the worst was over. I may have missed it by a couple months, but please remember that it takes at least as long to correct as it took to go wrong in the first place.

SALES – Residential Homes –  Santa Fe, NM County and City – First Quarter of each year

YEAR

ALL PRICES

UP TO $500,000

$500,000-$1MILLION

OVER $1MILLION

# of units

# of units

# of units

# of units

2009

205

142

50

13

2008

306

211

76

19

2007

423

273

114

36

2006

599

424

143

32

2005

523

418

90

15

2004

494

415

70

9

2003

473

425

36

12

2002

432

387

39

6

2001

392

348

39

5

Statistics are from the Santa Fe Association of Realtors and are deemed reliable but are not guaranteed. Some transactions are not included.

The previous chart shows a historical comparison of sales for the First Quarter of this year plus the previous eight. Please note: the sample shown above is limited to single family detached, condos and townhomes. The figures have an obvious point toward lower numbers of units sold. While the mood around the real estate sales and lending offices has improved lately, with many hoping to document increased sales activity, true and measureable increases are still off into the future. Meanwhile, we have lots of work to do just to regain the level of sales we enjoyed 8 or 9 years ago. The peak year of 2006 saw a sales volume we may not enjoy again during our lifetimes.

This past two years has been a time of major change for all of us. If you have anything to do with real estate, or retail, or new ventures of any kind, you surely are in a place you have never visited before. And while all the pundits and smart people try to predict the future, they simply cannot. So what is in store for us? Maybe the more we worry and think, the less we really know. Or some might say: the more positive your attitude, the better your results. I know some who decline to read the negative economic news these days. On the positive side, all of us are patiently awaiting our very own personal bailout checks and we are dreaming about what we’ll do with the money. What? You had not heard about the individual bailout checks being mailed to every taxpayer in the US? Maybe I got the news wrong! I know I read it somewhere, but now I can’t recall. I guess I’ll find out and get back to you.

Let’s assume for a moment that there will be checks for everyone. Then the question is: Spend or Save? Spending the entire check amount (estimates range from $1800 to $6400) seems crazy, doesn’t it? Yet that is just what our sick economy needs; all of us should spend like there is no tomorrow. Hmmmm. Yet saving feels like the right thing to do, with so much doubt about the future and many of us not sure we will be employed in a month or a year. After so many years of Americans living beyond their means, now we are becoming a society that saves a good percentage of our earned income. We are becoming fiscally conservative overnight. Ok, so there won’t be any checks. It was a nice idea. And it probably would have cost our children a lot less than the bailouts and borrowing from the future we are practicing now.

One more subject for consideration today: what has become of the concept of justice for evildoers and punishment for the truly dishonest? Have you seen news coverage of many Europeans reacting to job losses and government benefit cuts? Citizens are angry, staging large demonstrations in public spaces all over Europe. Why are our citizens behaving so well, despite the government’s growing deficit and the growing numbers of unemployed?  There is some anger out there, to be sure, and some are shouting about the mess we’re in. It’s just not very many and they are not visible. Some say it is because we have a calm leader and that is the example we follow. Or maybe instead of finding Banks or AIG or people to blame, we are searching for answers and working on solutions that will actually help people now.

Are you mad as hell and not going to take it anymore? Have you contacted your Congressperson to say how you feel? Why not? It’s very simple to find their email addresses and send them a message. Or you can call toll free. Have you asked about why they are making a very large problem even worse? Or are you just going about your business and doing your job (you have a job!) and not making any noise since they must know what’s best. Many have been quick to blame others (not themselves, certainly!) for the mess we are in and what we need to do to get out of this quicksand of an economy. But I’ve read almost nothing about legal efforts to enforce laws and prosecute those that notoriously broke them. I don’t know why it’s not more of an issue in the media. Maybe you have some thoughts?

Beyond the Madoff affair, certain proof that truth is stranger than fiction, who is really going to jail? Who is being prosecuted for the white collar crimes of the last 10 years? Why is it that the collective population is not more upset about their severe loss of personal net worth, between stocks shrinking and the equity in the family home evaporating? My theory is not well developed, but I compare it to the ancient saying (paraphrased) ‘those who have not sinned should cast the first stone.’ Maybe those that took all the equity out of their homes already know they have nobody else to blame. Possibly most do not understand what is going on with the big money movers and that culture. I read another explanation – (paraphrased) if you are worried and confused, you have to resolve the confusion first. Then you can stop worrying.

So as we sneeze our way through Allergies, my least favorite of the four seasons, we can look forward to quietly cursing the tourists (who have a season named after them!) as they drive around town wondering where to turn to get to the Plaza. Please don’t honk at them, but bless them and thank them, for they bring money and plastic. With a little good fortune, they might spend some (in whatever form) in our fair city. Many experts have explained how much of a dollar spent here actually stays here. It is a substantial percentage, and the comparison between shopping locally and shopping at a national chain or brand name store is very enlightening.  Bless the upcoming Tourist season! Then we’ll have to get ready for Harvest so we can stock up for the Time of Little Daylight.

Thanks for everything and please shop locally!  Take the train for the scenery or to commute.


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