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.

The cat wearing the hat

Your time spent online is yours alone, taking advantage of all the sources and distractions available. This can include reading current news stories, fake or otherwise. It could be sports scores or it could be health advice and new developments in human happiness. A cure for insomnia and relief for those with ingrown toe nails is out there also. Shopping can make you feel better sometimes. You might have to dig for a while or drill deeper than you thought at first, but sooner or later you can find almost anything you want to find on the WWW. Have dinner shipped to your doorstep. I will come by to dine with you.

If you have children and a spouse, and/or friends you connect with daily, its possible your online addiction could limit how much you have to give to those relationships. Maybe they are supporting your habit until you wise up and start participating in life with them again. Online addiction might be only surpassed by opioid addictions. Possibly the others are just as addicted and have not yet realized it; too distracted in their own way to notice your absence and fried brain and bloodshot eyes.

At times, I don’t want to look at the screen, but am willing to listen to the audio of an interview from a TV show, or a TED talk or podcast that dips into a subject of interest to me. Closing ones eyes can feel so liberating in a time of device screen paralysis. Unplugging from the short term pleasure of the skimpy rewards that being online gives you is not easy. I dropped off of Facebook months ago, after many more months of almost no activity or visits. Too many posts of kittens? Yes and too many nonsensical rants about Amurica and who has the right to believe what. I admit to getting news briefs from Twitter, in bites I can digest and at a time I want to take them in.

If I were a video or digital picture artist there are more venues than there are grains of sand. I could post a shot of each piece of toast I consume, with butter or not. I could post pix of my drive to my office, my walk from the parking lot to the office building, and my coworkers standing in my office door complaining about their current state of affairs. It might be fun to share photos of places I have been if only I were a more accomplished artist with a camera. I have photos of beautiful sandy beaches, castles on hilltops, amazing historic ruins only recently excavated, a beach wedding service, a farmers market in a foreign city, plus the selfies with me in all manner of dress and mood. How much fun can a person have?

In words it is left to the reader to paint the picture with a push and a tug from the writer. I write about real estate in this blog, touching on social issues that affect real property directly or indirectly. I occasionally rant about the things I see going on, but also realize if I rant then you are ranting too. Send me yours if it will balance things out between us. Words and numbers are the primary focus of my blog and I hope those numbers are easy to understand and useful to you. They continue to improve just a little bit each month and our residential real estate market in Santa Fe has solid footing and is almost completely finished clearing out the deadwood of foreclosures and short sales. The days of the super bargain are probably gone, even though those were not really bargains after all.

How many calls have I gotten from someone who sees a pretty photo of the front of a home that is listed at $220.000 with over 2000 square feet and 4 bedrooms plus a garage? Why is it so cheap? Well, the actual condition of the property is why. When you see a home in our MLS database that looks too good to be true, it has probably already been picked over by many people with similar ideas. How can I buy this and fix it up a little and flip it for a quick profit? An example where there was enough profit for two buyers went as follows:  First buyer purchased out of foreclosure around $120K and did minor touch up and painting. Sold it for $150K in a couple of months. Then Second buyer did more work to the home, leased it out for a couple of years and then sold it for $215K. Two parties made a few dollars on that one property. Today it is likely worth $250K and might be sold for that if the current owners wanted to sell.

So the cat with the hat is fun and entertaining. So are the Epic Fail clips. Reading Paul Krugman opinion columns online can be educational. Observing the White House roller coaster would be a hoot if it was not so disturbing. Seeing how your stocks are doing is fun as can be lately as the stock market breaks new ground almost daily. And seeing what your neighbor’s house is selling for is also interesting. Focus on what sells, not what is for sale. A for sale home priced at $500K does not inform you nearly as much as the home down the street that sold last month for $445K. Or the one around the corner that sold in May for $467K. Asking price is a suggestion. No more no less. The owner suggests your written offer to purchase should match the asking price or come as close to that number as possible in order for them to respond to the offer in a meaningful way. Ignoring an offer is also meaningful but in a different way.

Santa Fe sellers still collectively hold out a candle of hope that their home will sell quickly and for full price. But history, recent history being the only type that matters here, shows only the lower end price range homes in and around Santa Fe sell quickly and for full or almost full price. Why do other markets do things differently? In a recent referral of a listing ($280K range) in a Phoenix suburb, the broker I contacted did extensive market research and had the sellers do some work to the home before marketing it. Then the first day it was for sale was an advertised open house and 30 people came. Four offers came out of those visits and the one that won the bidding war paid about $11,000 more than asking price. The home closed on time and everyone was happy.

What is the difference between that market and ours? Here the seller and listing broker will price the home somewhere between 3% and 12% above what it will likely sell for. Then they battle to get people in the home and interested in the property. Time goes by and the broker and seller discuss a price reduction. When that hits the internet there is a flurry of activity on the home; some showings and some phone calls with questions about details of the home. But no offer comes and so after a few more months, another price reduction is entered into the system and another flurry of activity starts. Each time the new price is entered, a new group of prospects shows up online or in person. Once the asking price gets really close to the eventual sales price, then negotiations begin and serious contract preparation commences. A meeting of the minds occurs and escrow begins. Once all issues are resolved the closing can occur. And everyone is happy we hope. But maybe the seller waiting say nine months to sell and could have received the same net proceeds in two months had the first asking price been closer to the actual value. And we know that the actual value is what someone will pay for it, not what the seller has invested in it or what they hope to get. I hope to get to the top of the Eiffel Tower someday but I am OK if it does not happen. Sellers maybe should find a way to be OK with a faster sale instead of the same results after many months of anxious waiting and blaming the listing broker. It takes an honest assessment of the market and a Realtor willing to tell the truth to the seller.

Some sellers are not in a rush. Those people have alternative motivations and timelines. They might have $1,200,000 into a property and have already bitten several bullets to get the asking price down to $950K, while in everyone’s heart the final sold price will be closer to $850K. Is this normal for our market? Yes it is. Many examples are out there that are similar to the above recap. A buyer’s task is to separate out the highly motivated sellers from the ones that are just testing the market. Like the wolf going after the slow and slightly lost calf in Yellowstone, buyers will find the seller that wants to make a deal today and is not willing to wait 6 months. If you want to be that seller, that buyers surround and attack, price is your primary weapon. Price it to sell or price it to sit and look pretty. You can find your place in a magazine and wish they used different photos or you can be at the Bank depositing your sale proceeds.

When I get a cat I am going to get him a hat. Until then thanks for stopping by this blog site and feel free to use the statistics with proper attribution. You can disagree or you can do what many others do, use this information as if its your own. Then get a good nights sleep. And turn off your phone.

Mi Casa es Su Casa

Third quarter sales figures are in for the Santa Fe residential real estate market, and pardon us if they look almost exactly like the 2015 figures, because they are much the same. We are on the mesa top where it not only looks flat, it is flat. Compare one month, one quarter or an annual rolling total and you will see that our growth in sales units has leveled off to the point that there is no real growth.

Median home sale prices have inched upwards a bit. That can be good for sellers wanting a larger piece of pie leftover after the ravages of contract negotiations and objections. It can make it slightly more competitive for buyers, although that trend is not building any momentum. It is reality that flat is the new normal right now. Variations from a year ago are so small one can barely see change in progress.

But sales are still sales and we enjoyed them to the tune of more than 1950 sales in the most recent complete 12 month cycle. This reflects home sales in Santa Fe city and county. The additional areas our Realtor Association serves (Los Alamos, Espanola, Pecos, etc) includes additional sales adding about 10% to the numbers you will see in the Absorption Rate charts available within this blog site.

No such thing as termites?

In the high desert, such as in Santa Fe, NM, one can be excused for thinking that termites might not thrive, but we can be blessed with them without knowing they have invaded our homes. Yes they exist here and yes they can do serious damage to a home. The general rule is no wood building product should be in contact with the ground in a home. This is easy to say but sometimes difficult to accomplish.

The soil level may change on the exterior of a home and cracked stucco or the foundation may allow a family of termites to find access to the wood studs inside your walls, along with any other material they may like to devour. I am certain that someone told me 33 years ago when I moved here that we don’t have termites. Wrong answer.

Instead of perpetuating the myth that they do not exist here, why not find out? If you are real estate professional and are working with a seller or a buyer, a termite (or “pest”) inspection should be a normal part of your conversation with your customer, just the same as if there is a water well and the buyer wants it tested and inspected. Last I heard, a termite inspection was pretty affordable compared to the cost of remediation. Somewhere between $75 and $150 maybe? Now, the treatment can cost more, of course. If the professional pest person finds evidence of termites, treating and exterminating them must be done right away. It is no different that repairing a leaky roof. The longer the invasion continues, the more damage might be done, and the cost of repairs will only go up.

Stacks of firewood leaning against a home are a good example of something to avoid, the wood in contact with the ground below is enough to foster a termite colony. And leaning against the home? That seems like a gold-plated invitation to invade the home for the little critters. Why make it easy? Move the wood.

If you leave a piece of lumber laying in the dirt near your home, you will find that it might be riddled with termite damage in a matter of a few weeks, or possibly a month or two. Your home sits there all day every day and looks delicious for those bugs. Don’t let them in. They don’t know when to stop and will just breed and damage more of your home if you let them.

As a homeowner planning to sell, get a pre-listing professional inspection of your property and fix what needs fixing. Then make that report available to buyer prospects and show them the receipts for the repairs you had done. This removes some of the major hurdles to buyers following through with their intent to purchase your home. And get a pest inspection too. Having it to show a buyer may give everyone confidence that all investigation and testing is being done such that the buyer gets the home they want, not the home they are sorry to have purchased.

It’s a horse race, someone said

The race is on and the unpopular candidates have less than 60 days remaining to garner the required votes to move into the White House in January. Where will you be in January? Possibly enjoying a ski run or watching NFL playoff games cheering on the Clevelands? Or maybe escaping the winter cold and eating seafood on the beach in Mexico? Most of us will be working to provide a safe and warm home for our loved ones and wondering what the next POTUS will be like. Entertaining or scary? Stable or confused? Traditional or innovative? Seems like we really should vote so we can have a say in it.

Our local contest is to see if we can surpass 2015 in residential sales when the wrap is complete on 2016. So far, we can brag about the best single month (August) of unit sales in over 10 years. That is layered on top of zero change, year over year, for the first six months, giving us a splash of confidence with a few more months of results to come…

The monthly residential sales total of 222 units is the most in any single month since July 2006. We averaged 233 a month for the entire year of 2005, so our 2016 monthly average of units sold year to date seems pale when you realize it is only 165. One good month does not boost us enough to counter the flat year we are experiencing, but it is still fun to report we had our best month in over 10 years.

As about 75% of sales are concentrated below $500K, our average sales price has been hovering around $420K to $450K for the last 8 years. 2015 average sold price ($425,331) was still below 8 of the last 12 years.

None of this should be news to anyone paying attention. The trend lines have slowly evolved from an overheated real estate industry ten years ago (with aggressive liar loans and adjustable rates the norm) through a deep trough of pain and foreclosures to now a more stable yet still recovering market. We are not in Denver or Dallas, where sales are fast and sellers are happy. Santa Fe does not always follow national trends and while many experts will tell you home prices are going up and the rate of homeownership is on the rise, it is hard to reveal that exact status here, without facts in support. Yes, the lower price ranges are doing fairly well and they include most sales; so maybe we should be happy? Fact is, we saw the crash last decade as a correction of a real estate industry that was out of control; people buying homes that did not have verifiable incomes and/or a track record of credit. And they put very little money down, so when the going got tough, they had no real equity to work to protect. Today’s market has underlying strength. Nobody can get a loan if they don’t pass the test.

The Santa Fe residential real estate market is steady and predictable and that may be a good thing. Yes we have holes in our bucket and yet we have numerous reasons to think its a wonderful place to live. Many want to build a wall to keep it from growing further, while others readily admit their claim on the area is as tenuous as the wind and scarce as the rain. When you hear “born here all my life” do you chuckle at the grammar or recall that you might have changed someone else’s hometown in a way they do not appreciate? A newcomer makes it her town too. There is room for all of us and hopefully enough water. Now if we can get some victory gardens growing and balance our governmental budgets without such a high dependency on oil and gas, we can be said to be making progress. I am pretty sure the sun shines here almost every day. Or is progress something to fear and distrust? Should we move forward or return to another time when we were great? I can recall that I was great when I won a few swimming races as a child, and aced a few school tests in my teens. And I have progressed since then. Now I have a blog.

You don’t say

What is the background for putting a positive spin on things, even when the facts don’t indicate “things” are all that positive? Is it “the glass is half full” versus “the glass is half empty”? Possibly some folks keep beating the drum that everything is going up and growing and improving knowing they will be counterbalanced by someone else that counts the numbers and puts out a statistical report that shows an objective view. As you likely already know I am of the second school; putting numbers together that tell the story in facts and statistics instead of moods, desires and emotions. And yes I desire a growth in sales as much as anyone else. But wishing and hoping does not make it so. Maybe I could manifest progress by focusing my energy on having healthy shiny white teeth? Or channeling catching a huge fish next time.

We desire to see improvement, we want to get better, but what is going on? Why are sales numbers down in July of 2016 when we have had years of steady and solid growth coming out of the deep economic recession that began almost 10 years ago? July 2016 reports show 30 fewer home sales compared to the same month in 2015. The rolling 12 month count of home sales in all price ranges hit its lowest level in over 18 months. What is your take on the plateau we are on right now? Many blame the lack of inventory for the slower sales numbers. But how can we have 15 months of inventory in the 500K to 1 million segment and say there is a lack of inventory? Three out of four price range reports I publish here show a decrease in unit sales. And the inventory numbers since the 2012 year have been basically level, with slight variations up and down. We have almost exactly the same count of homes for sale in that price range now as we did in 2012 and 2013. Back then you will recall everyone said there was too much inventory. Now apparently their standards have changed and the same number now counts as too little.

The say what? …you don’t say aspect is: who is going to speak up when the market turns flat or turns downward? It is not the typical Realtor style to say the market is changing and slowing down. The usual gig is spouting a sales pitch that says things are getting better and you should get your house on the market now to take advantage. Or you should buy now before all the good homes are gone. Really? 368 listings in Sep 2013 and 371 listings now in August 2016? (between 500K and 1 million)…That is not even a 1% change per year for three years. What are people really saying when they say there is a lack of inventory? One of the first things I hear is it’s all old, shopworn and dated inventory that nobody wants to buy. That is not quite the same as saying there is a lack of inventory. You may be putting your own spin on things to claim the homes for sale are not worthy of your money; a subjective judgment about currently available homes.

What may be most rare is the correctly priced home that someone can afford to purchase & remodel with their final cost coming out fairly close to the newly created value, after the work was done and improvements were made. Plenty of examples exist of homes that are for sale and by most estimates, need substantial work to bring them into the 21st Century. Most buyers will not throw money at a home only to have it worth less than they put into it. For many years one could create equity by buying and remodeling, assuming it was done well and the improvements enhanced the home’s appeal and value. Maybe that is not that common in Santa Fe these days.

Does it matter what anyone says? What most matters is what people with money to spend on housing are doing. They are being quite selective and negotiating prices below asking price, for the most part. Buyers still have the balance of power on their side, except for the rare offering that is a beautiful home that is priced to sell from day one. How does one arrive at a price that fits that definition? “Priced to sell” is a groovy phrase with a good beat and you can dance to it. But where is the hit factory that comes up with these prices? Most Realtors can tell you the right dollar figure, but what is hard to understand is how they can take a hard look at today’s market and state with confidence that inventory is in short supply.

Is MAGIC or VOODOO required to know how to price a home? Not magic, but maybe a sober look at comparable sales with all subjective opinions left out of the formula. Can a seller truly think their home is the best one on the block only to have the proof show up in the resounding lack of interest when it’s listed for sale? Should a seller listen to their Realtor when they discuss the price? Maybe. Maybe not. Ask me for my designation of the two most comparable sales to your home and then tell me why yours is better. We can place a side bet on how the final sales price will be arrived at and what it will be.

Santa Fe residential real estate is a wonderful hobby, and for some a career with great potential. Many place themselves squarely in the forefront of knowledge and experience in terms of knowing our market. Some stand out and others muddle through. Get good, reliable and true information; ask your questions over and over. You don’t get to say if you don’t remember to ask.

A testimony to the numbers

Who goes there? Is that another home listed and sold in our MLS system I see reported today? In the last 24 hours, 16 homes have been reported as Sold in our database. 15 of them had some sort of price reduction during the listing term, or sold below asking price. Only one sold at the asking price, a home in Los Alamos that was below $125 per sq foot and likely did not need to go down any further. But the others showed a consistent trend of pricing strategy that has been the norm here for a long time.

First, a home is listed and the price is usually above what the seller and listing broker expect it to sell for. After a period of time on the market (anywhere from 3 weeks to maybe 3 months) a price reduction is often entered, increasing the pool of buyers. On occasion a second (or even a third) price reduction is entered before interest swells and offers start showing up. And then there may be the renegotiation from the inspection results, where the buyer attempts to get an even lower price based on itemized repairs and deferred maintenance issues.

In some of the 16 reported sold, the asking price remained static, but the final reported sales price was lower, meaning an offer was below asking and was eventually accepted, or the inspections (or other issues) led to an agreement to lower the price. Some may have required several counter offers to arrive at an agreement on price and terms.

If you are a buyer, or their broker, do you automatically see an asking price and know it will have to come down by the time it sells? Is it the norm to see price reductions and prices negotiated lower during the flurry of activity when a buyer wants to tie up a home and the seller wants to sell? Why is the original asking price almost always higher than the final sold price? Would it be prudent to put a home on the market at the price the seller wants to get instead of some price above the one they would settle for in a contract?

What is to be gained or lost by beginning the pricing at the most likely dollar value (what it will sell for) instead of padding the number so buyers can extract some small victory by getting a seller to agree to come down? Do most buyers expect to pay below asking price? I would say yes. Is that because their broker educates them to expect to get a price below asking when they are looking at inventory?  Probably true.

How will this change? Should it change? There are occasionally homes listed that draw immediate attention with multiple offers written and presented in the first week. Those are the exception. And that seems to be because sellers still have high hopes about what their home may sell for, combined with brokers unwillingness to stand firm on their pricing advice. The result may be a longer period of time on the market before a seller gets their net proceeds. And does the seller end up with more money? That is unlikely. It may mean the market is still shy about aggressive marketing and pricing; starting with prices IN the market instead of just going ON the market.

Is this even a problem? Not necessarily, but seller’s do want to sell and today is better than tomorrow. How do we find a way to recalculate our pricing strategies?

Would you want us to emulate Denver, for example, where anecdotal info about 15 offers on a newly listed property are the norm? Are they pricing their homes too low? Maybe. Or is their inventory truly a very tiny portion of the demand for housing. Some buyers in Denver have been trying to buy for a year or more, with no success. They may be careful not to overpay, want inspections and perform due diligence when trying to purchase; so the pushy buyers get in front of them and again they lose out.

I for one would not want our market to look like that. The problem with an overheated market is that it has nowhere to go but down (to cool off). A balanced and steady market, while possibly unremarkable, is preferable because there is time to examine all the details and make wise decisions rather than rushing into something without knowing what you are buying. Could our market improve? Does YES seem like the right answer to that question?

And until we have some more sawdust flying and more building permits requested, there is very little new inventory to pressure resale sellers into pricing their home to sell. The day may arrive soon where one can build a new home and be in the same range of size and quality that they could find in the resale market. Everyone says there is no inventory, or a shortage of inventory. My reply to that is that there is plenty of inventory, but quality product is limited and the mostly average and dated offerings get passed over by so many buyer prospects, they end up saying “there is nothing to buy in my price range”.

How to explain an Absorption Rate of over nine months (the average amount of time it will take to sell all existing inventory in all price ranges)? Does that seem like a shortage of inventory? It is over 27 months for the $1 million plus homes. If you cannot find a home you love within those numbers, building a new home might be the answer you are looking for. What is the definition of a seller’s market? And of a buyer’s market? Based on commonly accepted numbers, a 6 month Absorption Rate is a “balanced” market. Since we are in excess of nine months, that seems like it’s a buyer’s market still, after years of improvement and recovery. It is still the buyer that has the upper hand in negotiations due to the choices they have. The exception may be only in the lower price ranges where a buyer has less to choose from (and the rate of absorption for under $500K is around six months. It is even less below $300K.

We have entered the peak season for our market and now welcome many thousands of visitors to The City Different, some of whom will shop for homes. Let us hope August and September show the results of hard work and pricing that will attract offers and buyers. Then we might end the year with some improvement and keep the momentum of getting stronger. I’m all for that.

We should be so lucky

The best references to luck seem to always include references to hard work, and being in the right place at the right time. If I get lucky in my real estate career, it is likely because I prepared and put in the hours of work plus got my ass off the couch. Yes, I could get lucky on my couch, but that is not the kind of luck that has anything to do with careers or real estate, or business. If I am lucky, I can grab a short nap some afternoon when I am a bit tired. That would be my luck, away from real estate.

We all got lucky when New Mexico became a state, as did 49 other states and a couple of territories such as Washington DC and Puerto Rico. There may be others that I don’t recall. But we are quite fortunate to be able to be residents of the already great United States of America. We get to vote (our state’s primary was yesterday) and pay taxes (you might have to disclose how much you make if you want to be President). We can travel freely all over the place (unless you want to use commercial air travel in which case plan on some waiting and frisking). Our National Park system is a fantastic asset and resource and I keep fining new ways to visit Parks I have not seen before. How about the ease of finding goods and services? Can you ever say you could not find a loaf of bread anywhere, or emergency medical care, or a new smart phone?

Cost of those goods or services might be higher than you would prefer to pay, but better to at least have access than be told there is no bread, no medical care, no new smart phones to pick from.

How about real estate? The cost of real estate in the Santa Fe market area is a big pill to swallow for some folks in other parts of the state, or those considering relocating from other areas of the country. The average sales price in our market (Santa Fe city and county) over the last year was $432,000 while the median price was below $340,000. Some people relocate here and downsize (kids are grown and gone) but end up paying more for their home here than the larger and maybe newer one they lived in prior to moving to Santa Fe. And also despite the cries of low inventory, there are plenty of homes to choose from. Imagine there being no inventory. Rental and leasing inventories are shockingly low, but homes, condos and townhouses are plentiful. Whenever I show homes to potential buyers, there are many homes to look at prior to the list being narrowed to the ones that most interest them. Is inventory down? Yes. Is it so low that a buyer cannot find a home to buy? No. Is inventory so low that our market is heating up? Take a look and tell me what you think. Sales totals are not climbing, so how can it be a hotter market than last year?

What about sales? You know there are detailed spreadsheets available for your review listed on the left side of this site’s home page. You may be able to scroll to see them now, or take a look after reading this post, but the facts are presented and I trust they are easy to comprehend. The one word answer to your question about home sales is FLAT. Home sales are virtually flat for this first 5 months of this year versus the same period last year. In fact there were 17 fewer homes sold so far this year compared to 2015. What those spreadsheets will show you is the overall average of time it takes for all homes listed for sale to actually sell if in excess of 8 months. It was over 9 months last year this time. The rate of sales is quite similar but the inventory came down a little bit. Therefore the change in calculation.

We celebrate the many years of hard work that got us to today. When you look back at 2008, the absorption rate for all homes was in excess of 15 months! Times have changed and for the better. But if we want to get lucky, we might have to work even harder, and get off the couch! If you would like my professional and honest assistance in your real estate business dealings, please feel free to contact me anytime. The market is so much better than 8 years ago, but we still have plenty of room for improvement. And you can be the beneficiary of my many years of experience and accumulated knowledge.

Fresh numbers that show we are working on it

That may be a lame title…we are working on it? You may decide how lame, but the point is that if your head is buried in something like sand, or paperwork, or personal problems, or worldly problems such as our POTUS election cycle and the sick drama it features, you might not know that we continue to climb the charts and continue to improve on our real estate market numbers. That’s a long sentence, but it says we are doing well enough to write about, just not as well as our neighboring states and what our bankers and creditors would want to see.

We still are selling foreclosures, pre-foreclosures, short sales and homes that are selling below what the owner paid years ago (underwater defines homes where the debt is greater than the value). Who knew that some nine years after the bubble started to burst that we would be still up to our necks in problems? If you knew then, what would you have done differently?

Asset managers still have a death grip on humorless communication as they try to unload stuff they should never have made loans on in the first place. Whether you blame the lenders for the mess we are still repairing, or blame the “political system” for the agenda and candidates facing off this November, we made the world we live in. Investors and stockholders wanted higher returns from those banks and mortgage companies (to support lavish lifestyles maybe) so they pressed for more loans to be made, more creatively and more more more such that every American could be a homeowner. Never mind that many had no nickel to rub against a second nickel, to coin a phrase. Many should not have been home owners since they had no reliable or steady income, no track record of responsible financial behavior, no savings in case of illness or a layoff. Yet we loaned them the money anyway.

Try selling a home in Chimayo or Pecos or La Mesilla or Madrid that has a debt well above the home’s value today. What do you do? Give it away? Discount it in a short sale and leave the lender with a deficit? Back to the election, what do you do when your choices are thin? Do you go with a third-party? Do you bite your hand when you pull the voting lever and pray that our America does not crumble as so many on all sides would have us believe? Do you start shopping for a home in Canada? Probably the best answer to these and similar questions is that you get to work. Yes you. Get busy fixing the world you live in. Get busy fixing the economy and the real estate market. If you want to super charge our relatively flat real estate market conditions, try bringing an additional 15 home buyers into the picture each month. But make sure they have income and good credit and maybe a years worth of payments in the bank. Try selling that 30 year old home that is priced as if the floors are gold leaf and the cabinetry is silver plated. The point is to sell homes to people who will nest there, keep them in good shape and build memories and lives in that home. The point is not to make some bankers and lenders extra money so they can buy another car and take an island vacation while we wait for trickle down. How was your trickle down?

Whats up with our market today? True that inventory is way down, keeps going down in fact, although we are now entering the typical spring season run-up of new inventory. It’s not “new”, by the way. These are older homes that did not sell last year. They are homes the owner stayed in or leased out after realizing they could not sell them a few years ago. Many people said to me and said to themselves back in 2008 thru 2012 that they would wait for the market to improve. They would wait for the market to catch up to their home’s true value and then sell it when they could get all of their money back. There is a special place at the back of the diploma line for those folks. Realistic expectations never landed in their laps and the market did not magically return to those days of liar loans and no doc packages that put people into homes they had no business owning, or living in. We learned that lesson. Why would someone wait for our market to return to the days of home sales that was completely unsupported by facts and real numbers?

We have seen about 10 homes a month sell in the One Million plus range for many months now. Let us home we can see that number grow in the next year or two since we have several hundred plus homes listed publicly for sale in that higher price range. A great target would be 12 or 13 a month! At the other end, below $500K and even more so below $300K, homes sell quickly and without much fuss. Buyers in those price ranges usually want and need to buy and would love to get settled soon; while sellers usually have little choice but to sell; the opposite of the high-end transactions. Try talking a seller of a $1.8 million dollar home into selling at a deep discount when their other two homes are in different time zones and are highly sought after prizes. It’s difficult to accept that their beautiful Northern NM gem is not worth what they paid for it a decade years ago.

Help yourself to the numbers in the various spreadsheets and charts available on this website and blog. They are for your enjoyment and education. They are not perfect, nor is the blogger, but we try to be fair and even-handed, never playing favorites or grinding our own axe when its yours that needs sharpening.

So sharpen away and feel free to share this information with real estate players in all price ranges. There is always something to be gained by reading and understanding.

If you need assistance, I know someone that can help you buy or sell. Or both. Contact the author.

Thank you.

Orange hair and First Quarter results

We all get a kick out of other people on occasion; their words, their appearance, their car driving blunders, etc. But rarely do we get to focus on their character and true being, as that is not often available for us to see. We can chuckle and we can criticize knowing that we do not really know what makes that person tick or what their motivation is for doing what they are doing.

So we watch and listen, sometimes in shock and at times in awe of their talent or lack thereof. You Tube has some funny clips in the style of Funny Home Videos if you are bored. But how can you be bored when our serious news outlets show the childish behavior of literally all of our POTUS candidates (except for your favorite who is TOTALLY above the fray), quoting the sounds and words of their desperate efforts to win over voters while the truth be damned!

You would think becoming Prez of the great US of A is a windfall of money and fame, a lifetime salary and health insurance second to none and a free ticket to every symphony concert and rock festival forever. Which it kind of is. Lets not even factor in the “speaking” fees paid to former Presidents. That money will take you anywhere you want to travel with plenty left over for sushi or Chateaubriand.

First Quarter residential sales and inventory numbers are posted in the Absorption Rates charts accessible in the margin of this blog site. This information is being published 48 hours earlier than usual, to get the information off my desk and to get it into your next listing presentation. Sales are barely keeping pace with the same period last year. Home sales have felt a bit softer of late and these results prove it. Another source some try to measure is pending contracts, which our local Association says are much lower than this same period last year. Second Quarter better or worse?

It is not the increase in inventory that is making our progress look flat; it is the lack of sales. Lack of new and quality inventory will continue that trend of slower sales as people will not want to spend their hard-earned money on average or below quality homes in less than average locations. Many industry folks are calling for more spec homes to give buyers something to choose from. That product line is growing, but not very fast. Years of buyers skimming the available homes for amazing bargains have depleted the number that can be bought for well below appraisal or well below replacement cost. About the time our typical, average, median home sells for replacement cost, we will see new homes built in larger numbers and inventory will improve for buyers. Meanwhile we work with what we have.

When I meet with a seller prospect, they are often disappointed that they still cannot get more for their home than they paid in years past. Will that change anytime soon?

Rates are still quite attractive. Maybe all the real buyers have already bought something and we are awaiting another busload of customers to show up from other states where money is flowing and jobs are growing? Ten years ago we created buyers out of nothing. They did not know they could afford to buy a home until it was shown to them that anyone could get a mortgage. And they really could NOT afford to buy a home even though many did, with the help of some fast talking professionals, many of whom are now long gone.

How many people can buy a second home? Not everyone, certainly. An economist I follow (Dr. Ted Jones) shows that second home purchases have fallen off. Santa Fe depends on those transactions to grow its real estate numbers. If we did not have second home buyers, we would not have much of a real estate market above $500K. What if we had a real estate market that refused to grow? Where would you be?

After years of steady and boring and slow growth while we solidify our recovery here, sooner or later we had to plateau and maybe that time has come. Maybe 2016 will be a flat year? Sales do pick up in summer and fall, but can we match the growth year over year? Tune in next month for another chapter in the continuing saga of the Santa Fe residential real estate recovery mini-series. Starring that person over there as the seller and old whats his name as the buyer, with a cast of thousands hanging on every signature on every contract.

Early April is not the time to bemoan the type of year we will have because we simply do not know what is to come. It would be a good idea to take a deep breath and get to work to do your own part so the year turns out the way you want it to. Each of us has to put our shoulder to the wheel, as some have eloquently said.

The other day I went to Facebook for an update of what is happening in the world. I landed some great and easy recipes and some funny videos of cats, plus some inspirational words and some trash talk about politics and how the other guy is an idiot. Business as usual it seems. Then to Twitter for a quick flash of news: Merle Haggard, Patty Duke, a bombing in a Syrian neighborhood, the Fukushima half-life of hell, the guy that broke up the Beatles, Hulk Hogan in tears, etc. What a wonderful world we live in. Sometimes it feels great to be away from the leading edge of societal changes here in our little towns and villages of Northern New Mexico. Don’t forget to VOTE in the NM primary and again this November in the big one!! We will know what kind of year it is in residential real estate by then.