About Alan Ball

Over 30 years in real estate and related business in Santa Fe, NM.

Careful what you wish for

You had plenty to be worried about over the last 10 years including ‘will my home ever sell’ or ‘will I ever see my 401-K regain the level it was at before the storm’. You didn’t know if you’d ever get what you paid for when you finally sold that house. You would have loved to have sold in 2011. Or 2009 or 2012 or last year. And now in 2018 you may be able to sell it fairly quickly, but for enough to get back what you lost to the economic recession that wiped out your life savings and stock portfolio?

We have always wished for a full recovery from the real estate crash and we might finally be able to say with utmost confidence that we have achieved that. And you might also be thinking this sure doesn’t feel as good as you wanted it to feel. Now that you cannot blame impossible mortgage loan requirements and scarce money, plus the plethora of foreclosures clogging up the market, what is the problem exactly?

In a textbook example to illustrate, M/M HomeOwner paid $475,000 for their dream home in 2006, with the help of an 85% mortgage. The payments were pretty high, more than double their rent costs, but they had a bright outlook for the future and wanted the big and rambling home. After several years it turned out not to be their dream home for a list of reasons. So they tried to sell it in 2009 and their Realtor told them they MIGHT be able to get $350,000. Something had gone horribly wrong in the real estate market, and in fact the entire economy was flatlining. Well, their mortgage balance back then was $405,000 which scared the bejesus out of them and they “held on” to the home, making payments to stay out of foreclosure and the ruin of their credit. They did not replace the carpet or upgrade the master bath as funds were tight with payments and all.

Gradually things got a little better and in 2012 their favorite Realtor told them the home MIGHT sell for $400,000 and their balance by then had dropped to the same amount $400,000. But they knew the home was not going to show well with that heavily worn carpet and broken down fridge and dishwasher and stained countertops plus all the stucco cracks. They were told the cost of sale would represent about seven percent of the final sales price. They were not ready to take that hit and sell it on terms that would require them to bring so much money to closing. They barely had two months of living expenses saved up what with college for the kids and his car that he needed to commute in. So they stayed and kept making payments. They were not happy but they had a roof over their heads.

And then, the magical year of 2015 arrived and they finally started to think this was going to be their year to sell. The economy was much better and economic pundits told them the real estate crisis was over. Appreciation had started to become a reality again (in the lowest price ranges) and they were very optimistic about selling and walking away with a little cash. So that Realtor, who had moved to a new virtual brokerage by then, was asked to do another market analysis. The conclusion was a selling price range of $450,000 to $470,000, almost as much as what they paid in 2006. But homes were still taking almost a year to sell and the homes in great condition usually sold first. They had to figure out how much they could put into their home to bring it up to date and make it show so well that a buyer could not ignore it. By this time, since they had neglected almost everything about the upkeep of the home in their nine years of living there. They got some bids together and found out they would have to spend some $50,000 to make it shine and hopefully be irresistible to a buyer. It could actually run up to $80,000 if they went crazy and did everything. With their mortgage payoff at $390,000 plus the $50,000, their sales price would have to be north of $475,000 to close without having to bring cash to closing. That was above the range their trusty Realtor provided, but they were ready and hoped they could find the right buyer at $475,000.

IF THEY COULD find a buyer at $475,000 with minimal further reduction in price for items found in the inspections (remember they were going to spend $50,000 to upgrade), their seven percent cost of sale would drop the net, prior to payoff, to a bit over $440,000. They also had to payoff those credit cards for $50,000 from spending to upgrade the home. Payoff of $390,000…? Yes it could actually work. So they listed the home at $495,000 hoping to get a buyer to buy for at least $475,000. Professional photos were posted online after they decluttered and made the home look as close to a “model” home as possible. It did show well, but that effort and expense just put them in the middle of the pack of existing and new inventory. The absorption rate hit a plateau and many others in similar situations also had put their homes on the market. Since there were only so many buyers, their home did not sell right away. It was only shown six times in the first month and after 60 days they met with their Realtor to discuss lowering the price.

So they lowered it to $479,500, still hoping to get really close to $475,000. But after it was passed over by buyers looking to spend about $450,000, they had lost out on a good portion of the peak season and were still a bit overpriced. They thought if someone wants our home they can make an offer. That kind of thinking can lead one into belief that their home is priced to sell. But it did not sell. They had one buyer on the hook, but his mortgage was declined so another 30 plus days were wasted. Desperation was looming as they had really wanted to sell six years earlier and now they had planned to move out this very year. But they gave up trying (living in a home listed for sale can be stressful and restrictive) and they terminated their listing and fired their Realtor, blaming everyone in the process. It was almost Thanksgiving and they assumed home sales stopped in the wintertime.

AND NOW a new day has come. 2018 has arrived and they are damned sure going to sell this time for the amount they want and finally get beyond this ugly chapter in their lives. Their marriage has been severely strained, they have had to deal with illness and career goal disappointments, but there was finally a way out. The new Realtor they contacted, who had been in the business about 12 months, but was best friends with his mother, took the listing at a price of $540,000. This would be great, finally, they thought. The mortgage was lower, they owed less on those credit cards and the market was heating up to the point their new Realtor said they could sell it in 90 days with some good fortune and the right buyer.

And they did sell it in 90 days this year, getting a net bottom line enough to pay the mortgage and credit card balances in full and walk away with some cash. They celebrated by taking a trip to Italy and Greece and renewed their marriage vows in the process. They held off buying another home while the burn scars of owning the prior home were still healing. Renting was fine with them. Their credit was just good and they had an empty nest situation as the kids were grown and gone. They never spoke to the first Realtor, but that old veteran was used to failure and rejection. She could always find a way to put on a smile and speak positively, even with the down side of her business.

Is this a happy ending? Would they have ever chosen to write this script to live out in real-time with the goal of having a happy ending? How much did they worry and stress during the 12 years they owned that last home? Their kids saw them arguing and fighting on a regular basis. They did not take vacations and did not take good care of themselves during that time of worry and despair. His mother-in-law scolded him incessantly. Her father-in-law, after a serious stroke, seemed to not have the same fondness for her as before when they were younger and happy.

What else could have happened? They could have decided to walk away from the home in 2009 or 2010, when they owed more than it was worth. They could have mailed in the keys and likely been stuck for a deficiency balance for the amount between what the bank sold it for a year later versus their outstanding debt. That or all of the other burdens and mistakes could have placed them in bankruptcy anywhere along the timeline. As it turns out they did not ever declare bankruptcy and these days are wondering why they thought it was the wrong thing to do back then.

They might have sold it in 2013 with an agreement from their lender for a carry over debt to cover the short sale net amount that their did not get at closing. They might even have been able to negotiate a complete forgiveness of the short fall on the payoff.

Maybe they should have just stopped making payments and lived in the home for free (except utilities) while they fought foreclosure. This might have stretched on for 2 years or so. Of course if they were going to do that, they really should have put aside at least $3000 a month toward their future lives and a future home for themselves, but most people are not that disciplined.

What does it mean to have a foreclosure on your credit record? And a bankruptcy on top of that? After enough years have passed it might mean nothing. But back in 2009, they never imagined it would be nine more years before they would see a sale. Very few people predicted the long and painful recovery process that took basically ten years (in the Santa Fe area anyway).

Sometimes I go back and read the archives of what real estate counsel I was sharing from ten years ago and it was not pretty then. It was honest and negative; mostly gloom and doom. I was critical of most every part of the process of doing real estate business. Mostly I feel the largest mistake made by us all (and it would have been almost a miracle for it to turn out differently) was to not take the problem of millions of homes in foreclosure and millions more underwater and make federal laws that mandated a faster and equitable recovery for all of the people involved and all of the banks holding the notes. What did happen cost the federal government (and all of us taxpayers) a great deal of money, but they paid it to the banks that made the “bad” mortgages instead of actually paying down the mortgages allowing people to stay in their homes. The upheaval make a mess of many lives of Middle Class Americans. This subject has been the focus of many a book and article. What did we do wrong? And what did we not do right?

Do you want to pass judgment on the last 10-12 years of Santa Fe residential real estate? Feel free. My take on the single largest factor in our local scene is the thousands of mortgages made to borrowers who were not even close to qualifying for a mortgage, using conventional underwriting standards. Even allowing for payment of MPI and the VA/FHA programs that OK a small down payment, far too many loans were made to people who did not qualify. And then values plummeted and stayed down for years making certain that anyone who was vulnerable to that reality got a chance to suffer financially.

Hindsight is wonderful, si? no?

Praying for rain in Santa Fe…

Recent results remind us of the old days

When you are shopping for a home under $350,000, where do you look? Would you be happy with a 900 square foot 2/1 condo near downtown with one off-street parking place? How about new construction on the fringe of the metro Santa Fe area, with a small yard and a garage, with new appliances of a lower quality? What else is there? Maybe a fixer upper off of West Zia or the near Westside near St. Anne’s? Maybe a tract home in Tierra Contenta will be your ticket, with neighbors everywhere and a long commute to Meow Wolf or the Fiesta events?

Find me the great deals and values and watch while they will sell quickly. Whatever the new home volume is in this market, it still cannot keep up with demand for the lowest price ranges that homeowners are seeking. That drives the minimum prices up and builds a floor on the prices that indicate starter home ranges.

Improving market conditions are usually welcome, but why does Santa Fe not find success in dealing with its “affordable home” problem? For many years the answer has been for people to buy a double wide trailer on a foundation within 45 minutes of town. A lot without restrictions that allows you to do that in La Cienega, at least 20 minutes from downtown, costs over $100,000 and that’s without the home (manufactured or mobile).

In-fill is a popular concept, but within the last 3 years the city powers that be rejected certain in-fill projects because the neighbors made too much noise, or had a close connection to those decision makers. If you drive around the southwestern parts of town, off of Airport, Agua Fria, Alameda and northwest of the bypass highway, there are plenty of tracts of vacant land. Those would not be in-fill really as they are still on the edge of the city. But will all of those parcels get developed into single family, town home and multi-family dwelling units in the next 10-12 years? YES and still we will be short of inventory, primarily in the lower end of the price ranges.

Do we have enough water for all these new homes that are going to be built around here? And they ARE going to be built by someone. When you can get $225 a foot retail for a new tract home, someone is going to build those. Does it matter that we are in a serious drought – AGAIN? Lack of snow melt means the rivers and streams are lower and/or intermittent while the general water table below our city keeps dropping. What can you do?

Maybe one little place to start, and it will take a large majority of property owners to participate to make a difference, is the immediate removal of the Siberian Elm trees everywhere. They are popularly called Chinese Elm trees too, but no matter. They are thick and they grow like weeds even in drought conditions. The only redeeming value they offer is a little shade over a patio or parking place here and there. More often they just grow like crazy anywhere they can get a foothold, such as a fenceline or a wall. I recall a home right on St. Francis that had so many volunteer elm trees growing hard against the foundation, on all 4 sides of the home, that there was no economic value in trying to remove them. Tearing down the home, which was a complete mess anyway, was the logical thing to do. Bring in a bulldozer, and so they did.

I am not an expert on botany or growing things, but I am willing to bet: if 80% of all the Siberian Elms in and around Santa Fe were removed, our water table would start to rebound and our obvious water shortage would be somewhat less of a crisis.

Tree huggers, including me, think of cutting down a tree as a heresy and a sin. It is so dry that seeing anything grow is inspirational, but please not the Siberian Elm. Besides sucking up all of the ground moisture, they invade plumbing pipes and buckle sidewalks and streets. And send their seeds far and wide to pile up like snow drifts. And the branches can break and fall without the need for a major wind gust. They are a non-native species that should be removed. If they cannot be removed, they should be controlled much more than they are being controlled now.

My proposal would be to allow each property owner to keep one mature tree per 10,000 square feet of land. And as the new ones come along, they must be removed before they can sink their water seeking roots deep into the ground. Make it a nanny state battle. The government is telling me I must cut down trees on my property? They can go to hell. At least the City and the County can start on their parcels. Maybe some phase-in time frame makes sense, like 10 years to get into compliance. You tell me how else you can put a stop to the dropping water table and keep us from having to drink from our cisterns (if it ever does rain).

Do you want me to gather some expert opinions about these matters? Why is nobody making noise about this (well maybe someone is)? Why is this the elephant in the room that we are all ignoring? Thanks for reading and hope you can find your dream home soon. I want you to be a happy real estate owner.

Glad to report the news

What a year, what a year! It was easily the best in at least the past 10 years and the foundation for continued growth and prosperity in the real estate sector is solid. The breakdown in price ranges tells the tale in more detail, but you can guess the variations if you have been a student of the Santa Fe NM residential marketplace over the years.

The lower price range (under $500K) is the strongest; big demand and not enough inventory. At least in this lower range there are new homes popping up in several locations around the metro area. The demand is so strong they are selling quickly. An exhaustive search has not been performed to see if ALL the new homes are showing up in the Santa Fe Association of Realtors database. Likely not, so my stats, based on that same database, will be only part of the story. The mid range ($500K to $1M) is not far behind with a good steady absorption rate and almost no new homes showing up for sale. Home buyers looking in this range report back that there is very little quality inventory. Homes that are in top condition with lots of upgrades and amenities sell in three to six months. The rest take longer. And they still must be priced in line with the competition. Nobody is paying “too much”.

The top range, above $1 million, is the strongest it has been in many years as we have a wide range of product located from the hills to the valleys ranging from 100 year old adobes with masterful remodeling to sprawling McMansions on acreage all over the hills. Some have character and charm while others are just plain big. True in any measure, the art is in the eye of the beholder.

Savor the good news now that we are in a balanced and stable market. It has been a long and crazy climb out of the mess from 10 years ago and we hope never to revisit that painful experience. I’d like to propose a toast to a heavy snowpack and a flourishing 2018!

We are working on it

Sorry about the site appearance and apparent lack of current data. Various things have happened to keep me from updating the site on a regular (monthly) basis and there was even a long stretch of time when the site was completely unavailable. Maybe GoDaddy had something to do with it, but they deny doing anything untoward. Despite the problems and difficulties, it should be up and running again very soon…

 

Blogger:  Alan Ball

This was the year we got healthy

That header is not a new year’s resolution, but a market condition statement, saying we “got healthy” in terms of numbers of sold homes and the ever decreasing inventory…So we are supposedly healthy now? We have made up nearly all of the ground lost over the last 10 years and it feels like we are starting over now. Consistently we are seeing home sales per month in excess of 200 units. The grand total dollar sales for the year will easily exceed 1 billion, which has not happened in over 12 years.

Everyone is talking about how low inventory is. In case it’s not clear to you what that means, it means sellers might have the confidence to wait for the right buyer knowing those buyers have fewer homes to choose from. It does not mean that the junk, the extremely dated (can you say mid-century modern?) and the horrible floor plans will all of a sudden start selling. You still have to compete with clean and tasteful product to get a home sold. It might mean more buyers will have to settle for a home they can remodel to suit their needs if they can’t find one they really like as is.

Take some time to review the year-end statistics when they are posted by yours truly about January 10th and you will see unit sales growth in excess of 12% from 2016 to 2017. You will see an increase is sales count in each and every price range (unless it’s the lowest which is held back by that same lack of inventory). You will see Absorption Rates at their lowest (average months to sell all available inventory) in many years.

It is time to send out your thank you cards and start by sending one to each of your customers and to each of your fellow professionals that helped you succeed. And then plan for an even better year next year. I am going to take a bit of time off to travel so the blog posts will be strictly updates on statistics over the next couple months (each month about the 10th) and not so much trend analysis or political musing. You can get that anywhere from almost anyone.

People say a salesperson should not take sides in a political debate so as not to offend or run off the customers that disagree with them. But I tell you a guy that is 67 that is going to remain silent about what is going on in the world today is not someone I would respect anyway. So if you want to hear what I have to say about current events, stick around. You will get more than a lump of coal.

Thank you for your support and encouragement over the years. It is certainly nice to be able to report on positive trends and increasingly healthy sales results in our special market. Who knows, we might see more pastureland turned into ranchitos and mcmansions in the future. We might see a stronger backbone for city infill by the powers that determine who gets water and sewer hookups at what price. Everyone loves open space, but if its weeds and some junk autos and blowing trash, is that the highest and best use by some definition?

Happy new year and best wishes for a prosperous 2018.

JUST LOOK

Just look at these numbers!  We have not seen numbers like this in well over 10 years. The unit sales are up and as we approach the end of the year I believe everything will be up over last year and actually over any other year in the last 10. Granted we are wrapping up the busiest season and some economic signs are very positive these days (do you own some of the big tech stocks?)

Go anywhere in the “pages” section of this blog, where the reports you may want to look at are available on the left margin. Compare the last 12 months with any other recent period and be prepared to let out a cheer. I feel as if the wicked witch is dead.

Things are good enough that we are getting into dangerous territory in the lowest price ranges. The length of time on the market for a home under $300K is well below 6 months, meaning sellers are getting away with selling quickly without as much caution on the buyers side. Many other price ranges are healthy and certain neighborhoods are thriving, but why not? It is about damn time, right?

Enjoy the reports and get ready for a rocking and rolling 2018!!

Thanks

Strong, stronger, strongest

We can cheer and smile just a bit as we continue to build on a strong year, the strongest in many years, and stronger than we have had the pleasure to brag about for some time… The unit sales numbers for Santa Fe residential real estate are running at or above a 10% increase over last years unit sales numbers. That’s some news you can smile about.

Various spreadsheets and charts are available for your review if you enjoy digging into the historical trends and current versus prior tallies. Look on the left margin and select the report(s) you are interested in. Try the Third Quarter chart and note the increases in the 1 Million plus price range, 2016 and then 2017. That is a 42% increase. The entire Quarter, including all homes in the sample, went up 13.6% this year compared to last year.

Inventory is actually pretty low in the more affordable price ranges, with barely over 4 months of product  (using my absorption rate formula), while the overall market inventory to be absorbed, using the current rate of sales, is only 7 months. That is within shouting distance of a “balanced market” and based on recorded history in Santa Fe residential real estate, it IS now a balanced market here. While we have lagged other cities in our part of the US, we are healthy and solid in our growth lines without wild fluctuations that later could result in another bubble bursting… I can almost make a prediction, but I will not because I am careful not to, that we will not see prices and home values going down anytime soon.

But will they go up? Now that we are in balance and not very many new homes are being built to meet the demand for the smell of fresh sawdust, we are likely to start seeing actual price appreciation by mid 2018. It could come sooner but we are entering the cooler months and our winter time sales are usually slower; not as robust as summer and fall. Are you looking for a promise that homes will go up in value next year? That’s what you want? Anyone who promises anything like that is certifiable crazy but it very well could happen. I would be delighted to see some consistent across the board appreciation finally.

Get your deals while it’s still 2017 if you know what I mean. Next year could see the sellers tighten up and be less flexible on price and terms, knowing their home is one of only a few available with the quality and location everyone wants. The beautiful adobe in the more distant hills may not notice the market changes as those homes are less compliant with popular buyer location desires. Sellers, plan now to begin your marketing for next year. Buyers, get your pencils sharpened for the deal you want before next spring brings highly optimistic sellers to the dance. Or just buy or sell when you are ready to pull the trigger. Deciding when to do something based on market trends is not always profitable. Better to do things that work for your lifestyle and schedule than following what the masses are trying to do.

The eyes have it

Just look at yourself and ask if you are the person you wanted to be when you got this age. Is this the paradise you wanted to live in, the rapture you thought you would achieve, the absolute happiness you planned for? What might be missing? Do you think its your health? Do you suspect its your bank account? What about your living conditions? Now that is something we can help with. If you are in a tired old flat with no view and 1960’s decor, you can change that in a matter of weeks.

Changing your health might take months and months, and changing your bank account might take years, but you can buy a home and get settled in about 6 weeks if you have good credit and some money to put down. There are even programs for those will little or no down payment, but the point is you can change that part of your world fairly quickly. Have you looked at what is available? Some say our inventory is low and its hurting sales. Take a look and see what you can find. If you can’t find a home that you would be comfortable in, maybe you are already in the right place.

Now that we have solid and consistent growth in sales units, it is inevitable that there may seem to be a shortage in what someone can buy. Some national and local builders are trying to fill the void with new spec homes and new build opportunities that will prove very attractive to some future home buyers. For most of the last 10 years it made more sense to remodel what you already had than to consider upgrading by moving to a home you would prefer for its size, location or quality. But things are changing and a person’s confidence in their own future can be the reason to move to a home they would be happier living in.

You can shop for almost everything (except happiness) online these days and that includes homes. If you find the one you like does not have good photos, ask for better photos, or make a call to a Realtor to arrange a viewing. Is the information that is published helpful in understanding what the home consists of? Are all the usual categories spelled out (type of heat, types of floor covering, number of interior steps, garage yes or no) so you can get a feel for what the home is like?

And how is your credit these days? Would you be able to qualify for a mortgage (if you require one) or do you need to work on that for another year or two? The usual categories apply: stability and length of time in the job you have now – level of income that can be verified – how reliable are you in paying your bills –  have you filed for bankruptcy in the last few years? Getting your act together is vital to making an offer on a home. If you need a mortgage, you should have already visited with a mortgage lender about what you can afford.

Do you need to sell the home you are in now to buy another one? If yes, should you wait to look for a new home until you sell your old one? Not really because when that day comes you may not find the right home and only have a month or so to look. I would suggest better to be shopping for the new place and as soon as you are comfortable with the home inventory available, then put your current home on the market. You can do both the sale and the purchase at the same time, but do get professional help from a licensed Realtor who knows their way around the process for both transactions.

My Keller Williams website has a reliable and easy to use search site if you want to take a look. Look for the link in the red box in the top right margin and have some fun. I will be happy to help you with whatever you find.

The day of the week of the month of the year

The charts and spreadsheets available to you on this blog site are now updated to include sales and inventory as of the end of August 2017. Eight months into the 2017 books and we are running a nice and tidy 12.3% above last years numbers in unit sales for Santa Fe city and county. That is music to many ears. To finally have consistent growth and improvement in our market is a welcome milestone. Remember all real estate is local and each home and neighborhood have distinct characteristics.

Nobody said it would be easy and it has not been easy to climb out of the deep hole that the economic crisis put all of us into. But we have succeeded and are not planning to fall back in anytime soon. There was a place and time (maybe around 2009 and 2010) when I firmly believed that residential real estate could lead us out of the real estate downturn, the tremendous loss of personal financial wealth and “loss of savings in the form of home equity” that we experienced.

It would have taken a mea culpa from the big banks (the ones too big to fail) accepting the millions of bad loans they had on their books as truly bad loans. It would have taken them swallowing a huge pill of write-offs, effectively lowering the principal balance of millions of home loans by tens of thousands of dollars. And all for what? To be done with the depression years sooner? They got bailed out (at least the ones that did not close up shop) so what did they care? The personal health and well-being of the CEOs and stockholders of those big banks would have had to admit to stupidity and white-collar crime, but it would have gotten things upright in a much faster timeframe.

No it did not happen. They took the bailout terms and never admitted guilt. They foreclosed on millions of Americans who were lied to when they bought homes they could not afford. The big banks profited when the loans were made and got insurance on most of the loans that failed to payoff in full. Those consumers that were innocent and actually qualified for the home loans they took out still suffered because of all the other junk and debris around them. Homes were sold for $400K that were worth $325K. When the home buyer moved in, the appraiser said it was worth $400K. But after the 3rd year of fixed payments, when the monthly debt service doubled or tripled, then the owner had a home worth more like $300K or $325K so if they owed $350K, what were they supposed to do?

I know of many that lived through the storm and did not abandon their homes and declare bankruptcy and/or sign a deed in lieu of foreclosure. They kept paying every month and yes, sooner or later the balance came down enough that they no longer owed more than the home was worth. It took ten years or possibly longer. And the entire time they had no increase in net worth and spent every cent they made keeping the payments up and not taking vacations.

What is your recollection? Here is mine. I am a little bitter about the dishonesty at the top of the money pyramid, and also a bit proud that I did not cave in and deed my home to the bank when it was worth less than I owed against it. Now that its finally worth what I paid for it in 2001, I am selling it. Maybe the money I spent on a new roof, new stucco and other necessary things is offset by the deduction of mortgage interest? I sincerely doubt it, but will do the math if it will help me accept 16 years of ownership and upkeep just to have nothing to show for it now.

The lesson that a home is not an ATM is not that difficult to learn. I never treated my home like an ATM. I used equity to pay for roof and stucco and other things the property required. The tough love that homes do not always go up in value is something I still see people struggle with. They expect their home to be worth more in the years after they purchased it. But in Santa Fe residential real estate, is that a reasonable expectation? Ask your friendly Realtor to help you arrive at a market value. No rules apply evenly to all property.

Remembering the tragic events of Sept 11, 2001 brings humility and respect to front of mind. We only are handed this one life and we should live it to the fullest every day. With hurricanes bringing pain and suffering to so many millions, being thankful for what we have is an everyday event. And if we can help others we are better people for taking action. We all have so much to share.

Every dog has his day

…said someone, once upon a time. I am not going to research the origination of that saying, but it sounds like something Mark Twain or Will Rogers would have said. Or possibly Richard Nixon. And so we find ourselves in the third quarter of the year with continued improvement in sales results and still very reasonable interest rates. The town is heaving with visitors and activity, although most Realtors I know want more showings on their listings. I guess I do also, because homes need to be viewed before they will be purchased. Where to begin? When Amazon starts selling homes from their website, then we will know this dog had his day.

Look at the numbers in the spreadsheets available on the left side of these pages. In all price ranges, the average months to sell has dropped from 9.68 to 7.38 in just the last year. In the popular one half to one million range, the drop was more dramatic, going from 15.46 months on average a year ago to 10.56 months on average now. The absorption rate, which is what we call that calculation, is faster when inventory is lower and sales are up; both of which have happened just since last year. This is a trend line that I have consistently been tracking since we found ourselves in the gutter after the bubble burst. You know that bubble? The bubble that had many believing homes never go down in value and often go up by double digits every year. Everyone was wrong. Competition existed on who saw the crash coming first, but nobody escaped without serious damage. Some are still in recovery. Just now we can say we have almost reached the level of activity we saw prior to the crash and that bursting bubble. Only this time we are on a solid foundation as to value instead of seeing high appreciation unsupported by the large majority of sales. If you spend $750,000 on a home today, it is not likely to go down in value in the near future, unless we are in a nuclear war with seas rising a foot a year and anarchy is the law of the streets. Will it go up in value? Maybe someday, but that depends on you the owner.

Fears of overspending on a home should be all but erased, although it’s still possible to pay too much. No question there are plenty of homes listed for sale where the asking price exceeds the likely final sales price. But buyers have become extremely price aware that price has to be resolved first, then the other issues (location, condition, style) can fall quickly into place. All the sayings about there being a home for every buyer and a seat for every butt will be tested as we move forward with less inventory and a fairly strong influx of buyers. Some buyers become disenchanted once they examine our metropolis and others feel the prices are not justified. But some just have to have it as their own. And we can accommodate those newcomers. Changes happen slowly in an area with such long history. Affordable housing has been a headline seeking a response since I came here in the early 1980s. And likely before that. We still have that problem; witness all the manufactured and mobile homes in every rural quadrant of Santa Fe County and beyond. Last I heard, about 50% of all homes in New Mexico were not site built, but were moved onto the site on a trailer.

This market is healthy, wealthy and wise, to coin another phrase. Or like an old boss of mine (while I lived in Denver) said of himself, “fat, dumb and happy”. Those are things one could aspire to, I suppose.

Get your house while you can, while there is an inventory to choose from. The builders we need to build homes are trying hard to risk speculative home starts and I hope they are amply rewarded. We need more of those in all price ranges. In the meantime, learn your dog some new tricks.