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.

The St. Patrick’s day shuffle

This time of the calendar year we see the start of heavy numbers of newly listed property show up. A typical day now sees 30 plus new listings and maybe 8 sold properties. At that rate the inventory climbs rapidly and the balanced market we enjoyed during the winter shifts to become a buyers market again.

The exception to that rule is in the lower price ranges. There we see absorption rates less than five months and a real shortage of quality inventory for buyers to choose from. If you are a buyer and looking under $400K, you might need to fight for your right to purchase. But do it carefully please. I would never recommend buying without getting a home inspection and the other due diligence a buyer should do is way too important to skip. There will always be that one time you see a buyer concerned about the large vacant tract across the fence and then does not investigate; later a strip mall is being built and the new homeowner is worried sick. Ask questions until you run out of things to ask about. Get answers.

The mid-range market is interesting as it’s the only segment that saw an increase in inventory and a decrease in sales units over the last 12 months. Not big sweeping changes, mind you, but a slide in what some could call the wrong direction. And speaking, as we often do here, of quality inventory and homes for sale, that mid-range has everything from a 3000 square foot one bedroom shack on a mountain to a home, guest home, casita and studio compound with privacy and top end finishes. Looking in that range is a huge challenge just to sort out the Bushmills Black Bush from the Jameson 18.

And, drum roll please; for the first time in almost ever, we have hit the mark of 120 homes sold in a 12 month period that are above $1,000,000. in sold price. Yes we know some had an asking price of $1,069,00 but if it sold below the million mark, it is not counted here. 120 – say it loud and say it proud.

When you think of Santa Fe, do you think it is a hotbed of economic growth and opportunity? Or does it feel more like a sleepy and historic village with sights and sounds befitting a retiree comfortable in jeans and ready to nap whenever the urge strikes? We lag on many fronts and in terms of job creation, we cannot even get on the list. Tourism rules, and that is not bad except the jobs are in that range of hotly discussed minimum wages. You can earn more living in Santa Fe but can you own a home? Can you have any time to enjoy the surroundings and the culture if you are working a couple of jobs and feeding a couple of people?

I have been a have and I also have been a have not. Note; I did not say has been. I said have been. Insert emoticon here. Of course I prefer to be a have instead of a have not. Who wouldn’t? What are the opportunities for someone to move up to a higher income bracket and build a net worth that will provide for their children and their grandbabies? How about real estate? Did you know you can actually buy an investment property here and have a positive cash flow? The paper value of a property does not have to equal the amount it might sell for in a few months. So real estate is not liquid. It does not fit the need for those who say Cash is King. Cash has almost always been King, but leverage is also a meaningful option at times. Debt has been the ticket to fortune for many. I cannot recommend debt in simple terms – it is too debilitating and keeps you awake at night. But sometimes its the best way to get from A to B.

Stay tuned for regular updates about the residential real estate market in the Santa Fe area. We have room to grow if we have the water. We have room for improvement if we have the product for sale. And contact me if I can help you with your real estate needs in any way.  Thank you.

Priced to sell, maybe

It is difficult to break away from the pack and go forward alone. Well, for some it is difficult while we all know others that never do things the same way as everyone else. Pricing a home when listing it for sale is an art and a science. And very few sellers want to go forward alone in their pricing. They almost all start out above what the home will sell for and then settle for a lower price later on.

Why do they do that? Not only is everyone else behaving that way, but they seem to have a tremendous fear of underselling their home; getting less than it is worth. If it is worth $400K and will sell really close to that figure, then why price it at $449K to start? Why not price it at $409K? Then when an offer below $400K comes in, counter with $407K or something. The research and comparisons with other homes is why you pay your Realtor. Find out what it should sell for and then make your offer accordingly. Same with pricing; price it maybe 1% above what it should sell for then don’t budge if a lowball offer comes in.

In the data available this morning in our MLS system, there are 22 solds reported. 19 of them saw price reductions between their first day on the market and the eventual closing date. 1 was a new home with a few upgrades so it went for a little higher than asking price. Another shows it went for one hundred dollars above asking price (a foreclosure that someone really wanted) and the third may or may not have included some personal property and furnishings in the price. It was a Cash deal so that is quite likely.

But very few of them seemed to have started out very close at all to the eventual sales price. Times are changing however and the gap between asking price and sold price seems to be narrowing. That will serve to lower the average days on market (a number our MLS deemed meaningless several years ago) since buyers will not be as likely to sit on the fence waiting for a price to drop. Some do that, you know? They have a home or two in mind for themselves, then do nothing while waiting for the price to come down. When it does then they are ready to move. And correctly so because until the seller lowered the price, they were not emotionally (or financially) ready to accept the lower price.

Many say “if a buyer wants my home they should just make an offer”. If it is overpriced by more than, say 5%, they must might not make that offer. They may wait until you come to your senses and come down a few more percentage points; then they will be ready to write that offer.

Time and again we see listings priced well above what the market says they should be at. And just who is this market person anyway? They are the ultimate authority. They are the ones that deliver buyers to your door. The market is the final decision maker in real estate. Yes, there still are occasional sales that defy the market facts; buyers that pay more than they really have to for a house they love. Then they put more money into it insuring they may never get their money back out of that home in their lifetimes.

So tracking sold properties can be interesting. It can also be maddening because an active Realtor has seen many of the homes on the list. Then they see that home finally sold for $XYZ dollars; almost exactly what they guessed it would sell for when they saw it on tour six months ago. Back then it was listed for 12 percent above $XYZ dollars. It had to come down before a serious buyer would take a shot at purchasing it.

Condos are hot right now. Anything in town and fairly close to the Plaza is going to get lots of showings. Those units fit the bill for 2nd homes, investors and empty nesters that might be ready to downsize and get rid of couch #3 and dining room table #2, plus that second fridge and deep freeze in the garage. How about those old LPs? Are you saving those for a big vinyl comeback? You just might get the last laugh. My favorite thing I still have is a canoe rack system for hauling a canoe on top of a car. I have not owned a canoe in about 10 years. but I still have the rack system. Free to a good home! Time to downsize. After all, I am almost 65 now!

Have you noticed the growth in popularity of homes with a high walkability score? If you can live somewhere and walk to a grocery store, breakfast or dinner, a pharmacy and a yoga place, plus throw in some mass transportation facilities nearby and you have a winner. Just remember to price it right!


Always glad to be of service to you. Please reach out to me anytime!

Show me YOUR double digits and I’ll show you mine

If Santa Fe residential real estate gets any hotter, we are going to have to jump in the pool. At this point year-to-date we are 11.5% ahead of last year’s unit sales pace. Through July 31, 2015, 1139 sales had been reported while the same period in 2014 saw 1022 sold. That fact alone should make your day or your week. It might make it a memorable year if the upswing continues.

Funny how these things work. 2014 total unit sales was almost identical to 2007. And maybe possible there is a good chance that 2015 will see us break the 2000 unit sales barrier, which we used to be camped in from 2002 to 2006. To arrive at 2000 sold units for this year, we would need the annual increase to be at least 9% and we are running at 11.5%. Your hunch looks good right now.

What about average or median sales price? That continues to climb somewhat consistently. Using 15 years of data from the spreadsheet Monthly Residential Sales (available on this blog) our average sales price has been at $295K in 2001 and as high as $521K in 2008, with each year since then in the low to mid $400’s. That puts us in a fairly high tax bracket when compared to many other cities in our region. Denver recently was ranked #2 overall hottest market for home sales in the USA (behind perennial champ San Francisco). Santa Fe is not even on the radar being a somewhat small town, but I will take a 11.5% year over year increase in unit sales any day!

Where is the increase coming from? First, we must acknowledge that price creep, the gradual increase in average sales price, moves the meter in the upper ranges. A home that might have sold for $780K in 2003 may now be worth $1,100,000 without any major addition or remodel. On the other hand, a home that sold for $1,100,000 in 2009 may now still be worth only about $900K due to the backsliding we have endured since the bubble burst and the bankers took the profits and split. Yes, it was such a slow motion scam and larcenous event that many of us did not realize how we were losing our net worth and our life savings while super sized bonuses were being paid to financial players in New York and in other money centers. Those that knew were unable to get our attention and those that were stealing effectively hid it from plain sight. I heard one of the candidates for POTUS is claiming Dodd-Frank must be repealed. I guess NO reform of financial regulation is needed according to him. Free markets mean free to steal. Nobody goes to jail in that system.

Back to our little corner of the universe: sales are most robust in the lowest price ranges. I measure and report of brackets you can easily review in the spreadsheets available for you on this blog. Under $500K is the healthiest part of our market compared to $500K to $1 million and above that. Within the $500 and below range, the lower the price the faster it sells. Try finding a single family detached home here under $200K and then tell me how much work it needs or how close it is to a major street. Quality always costs more. If you can do some fix-up you can create equity while if you want a major remodel candidate, then be prepared to pay over $150 per foot for the mess you have to start with to do your magic upgrades.

The middle range of $500K to $1 million has become lethargic. Inventory has leveled off and sales are a bit flat. That segment was red-hot about 2 years ago, but now maybe many homeowners recognized the lack of quality product (reported on in prior posts on this blog) and put their homes on the market.

The $1 million plus range has grown in both inventory and unit sales but still hovered around the 30 months to absorb range since the end of 2012. We are now consistently above 100 homes a year selling in that range but there are more homes for sale, so no dramatic market trends are in play.

Rentals in Santa Fe continue to be strong for landlords and property managers. As the City fathers declined approval for a new 399 unit development of apartments between Agua Fria and the Santa Fe River, the lack of rental properties will just get worse until the demand forces more people to commute from out-of-town or rent from friends or family to be able to live here and ride the bus to the movies. No opinion is given here about that project, but where are the new rental units coming from? The developments near the WalMart SuperCenter or the newest one near the Airport? Something tells me that includes the extension of City services to outlying areas; water, sewer, trash pickup, bus lines, police and fire squads, Uber drivers, animal control, sign compliance ordinance. And private services too; Realtors, window washers, landscape artists, baby sitters, legal beagles…  What really did happen to the logic of infill in Santa Fe? Political pressure? Logic be damned sometimes.

Visitors continue to discover Santa Fe and aren’t we all in agreement that’s a good thing? As long as they don’t bring crime and punishment for us locals, bring ’em on, I say! Remember that Mayor that implied many visitors should just get back on the bus they came in on? For all his current troubles with recent votes and decisions, I like our Mayor and hope he can successfully navigate the choppy waters of Santa Fe NM. Would you want to be Mayor of this town? (see prior post on Pleasing Everyone)

So lets take our double digits and raise them high signaling our approval of a healthier real estate market. If you want to ponder, a healthy real estate market is a high tide raising all boats. The ripple from increased home sales (and other real estate segments) has a lifting affect on many trades and professions. You are in it or very close to someone who is in this rising tide. Raise your double digits!

Thank you




A moment of balance

Librans like to focus on balance and harmony. There is a time when balance in the real estate market can be found and its right about now. This is the time we change over from cool to warm when taking the temperature of our market. We’ve had enough of tepid. What happened in June is quickly washed away by the increase in activity and showings in July and after. It would be easy to be pessimistic in early and mid June because that wave of buyers has not returned quite yet.

You know the ones I am talking about. Buyers who have looked at homes off and on for several years might be coming back for real this year. Buyers who have waited to time the market (good luck on that one) might figure out that this year it is finally time to buy, while we see the creep up of higher interest rates and the shrinking of quality inventory. At any time, such as 2 months or 2 years ago, one could make the case that now (I mean then) was not quite the time to buy. If that even entered your thoughts or affected your actions or planning, allow me tell you that time has passed. There is no better time than now (or in the next 120 days) to buy a home in Santa Fe. Not yesterday or 2010, but now.

Why would I say that? Think of the past 8 or 9 years with not only zero appreciation of home values, but actual documented lower prices and values. That might finally have run its course. MAYBE we will start to see appreciation later this year and next. Interest rates? Yes, that is a direct factor for about half of home buyers in our market. Every quarter point increase in rates will knock out a percentage of buyers, or at least force them to buy a less expensive home based on their qualifications. The inventory of homes available is smaller than at any time in recent memory and almost no new homes are being built that are not already pre-sold to a buyer. The exceptions are worth a look. So the new inventory is coming from where, exactly? From homeowners that are ready to pull out and ready to sell, whether the home pays off all of their debt or not. There still are short sales coming up and there is a mini wave of defaults also coming, as a large number of HELOC loans convert to amortization from interest only terms. An example: an old friend’s HELOC (home equity line of credit, usually a 2nd mortgage) payment went from $180 a month to $650. He is not sure he can afford that and may have to default. It is not news that many people, even owners of homes, live paycheck to paycheck and a change throws off their ability to have that tooth crowned or set up that family doctor appointment. Never mind the trip to Alaska…thats out of the question.

To balance your checkbook is one thing, but its another thing entirely to achieve balance in a real estate market. As we shift to more of a seller’s market (we are not there yet, but steadily moving that direction) that tipping point when sellers and buyers are on level ground will exist, if only for a month or two. I have no idea how long we will be in balance, but lets enjoy it while we can. Librans really know how to talk about balance. I hope I have come close.

Another example of viewing balance in a real estate market is comparing new listings to sold listings. There are always more listings than there are solds. Some go on the market and never sell. Other listings expire after 6 or 12 months and then a new listing might take its place. That’s at least two listings for one sold, if it does in fact sell during the 2nd listing term. Over the last 15 days, per our MLS database, there have been 245 new listings and 175 sold listings. Thats about as close to balance as we could design and invent. Compare to early spring when new listings outnumbered solds by 5 to 1 or even more at times.

So where exactly are we? Of sold homes reported to our MLS, something like 90+ percent, had at least one price reduction since first listed. Clever and sly Realtors and homeowners can scheme to hide the truth of how long a home was on the market. Ask if it matters to you. There is a magic number/price for listing a property. Most all listings start above that number and then settle for the true market price. That true price is literally what someone will pay, and does pay for it. Santa Fe residential real estate buyers expect to get a price below the asking price, while the market is still favoring buyers. Once the shift kicks in and we enter the seller’s market we are heading into, that might eventually change. Except maybe not. By then, sellers will expect to get a higher price instead of putting it out there at a price that will bring immediate offers. So who can blame a buyer for making a low offer? A seller has the right to be insulted by a low offer. But insults don’t write checks and show up at closing, so bully for your right to feel that way. Get over it and counter with a number you like and start the negotiations.

Buyers almost never start with their best offer. A most recent example: the first offer came in at about 12% below asking price. During the back and forth of negotiations, another buyer stepped up and made a strong offer. The seller decided to ask both buyers for their best new offer and both responded. The first buyer ended up paying a price about 1% above asking price. What will that 13% additional net proceeds mean to that seller? Why did that happen? The seller not only did not have to lower the price; the seller got more than asking price. The starting price was such that immediate interest and offers within a day or two showed up. Every home has its magic price. If timing is everything and you don’t want to be sitting on that home in November, unsold and shopworn, find that number and run with it. What is the advantage of having your home on the market for 6 or 12 months when you likely will not get your asking price anyway? Remember the situation we are in today; over 90% of homes that sell had at least one price reduction during the listing period. One might say that price reduction is why it finally sold.

Does any of this make sense? I try to write in a conversational manner that I hope makes it easy to follow and comes across as logical. We can make this complicated or we can keep it simple. As we move into balance, be prepared to take action accordingly. A buyer maybe should act soon. A seller maybe should rethink their asking price if they want success this summer. Now that wasn’t too complicated, was it?

I am always ready to discuss your own real estate situation and goals with you. Knowing what is going on is of great importance. My strength is getting you through the negotiations and to the closing table feeling good about the process. Anyone can crunch numbers. Making sense of them can be a challenge.

Housing matters

Now and again I post a link to an article that seems more informative than most I see related to real estate. And the MacArthur Foundation has posted an article that puts the national mood into perspective on the housing market and the importance of people’s confidence in the recovery.

It is worth reading if you have about 6 minutes or half that if you are fast. But in summary, there is still plenty of concern about home ownership with as many as 20% of those surveyed believing the worst is yet to come. I personally don’t think that is true but I also recognize that we have lots of work yet to do before we get completely clear of the challenges we face in housing and home ownership.

A very recent post of mine said that the worst was over, that we are in the clear and the recovery was far enough along that I did not believe we could slide backwards again. Nationally, while Denver is red hot, other markets are still soft and overall its still a time of caution and concern.

Here is the link:



Hope you feel this is worth reading. There are lots of articles about real estate out there and I usually just post original material, but this one struck me as important.



Auld Lang Syne (in June?)

A song of goodbye and farewell, of happy trails, sayonara, adios, ciao… a song marking the end of a time and the grand hopes of the beginning of another time… Thank you Robert Burns. We have arrived at the end, the bitter end, of the deep and dark recession that has buried Santa Fe residential real estate under a mountain of confusion and blame. The economy is still mixed and other real estate markets are booming, but as of about noon today, the Santa Fe residential real estate market has passed the point of no return along the long and tedious road to recovery.

Whom are you blaming for the loss of hundreds of thousands of (on paper) equity you had in your home? Who is to blame for the nearly 10 years this excruciating period of business failures and personal losses has carried on?

Let us sing a song of farewell and goodbye to the bad old days and if we have to, lets sing it several times over and again to make sure we are rid of the negativity. For you intellectuals out there, here is the link to the Wikipedia entry: http://en.wikipedia.org/wiki/Auld_Lang_Syne

And what will the future hold? Will it be better next time? Will people stay safe and sane and not use their homes as ATMs and overextend with debt this time? Will mortgage loan sources keep their front offices in step with regulation and quality underwriting, or will the days of free money to anyone with a pulse return? Will contractors steeped in the Santa Fe customs and styles find a way to start building spec homes again (beyond the very short list of those now available under $500K)?

Seems hard to believe that a typical person could lose nearly their entire adult life’s worth of savings and investing because they had too much invested in real estate and not enough in government bonds. Bonds were always safe but boring; lower returns but more reliable. With everyone around making double-digit annual returns on their speculative ventures, it was quite difficult to stick with triple A rated and tax free securities. And so we didn’t. We bought rental property to expand our financial empire, we bought residential lots in popular subdivisions where growth was seemingly guaranteed, we took out a line of credit on the equity in our primary home to pay for an RV, a trip to Antarctica and a new SUV. Oh, and that dental surgery was not  exactly free either.

In early July when the data from the first six months of this year is in and calculated, we will gladly confirm that the worst is over. There is still somewhat of a mess to clean up, still many homes “underwater” and even a few more foreclosures showing up to keep a lid on appreciation in the immediate surroundings. But thankfully we have survived and can now start scheming to prosper again instead of patching holes in our best plans.

The latest statistics have been posted on this blog and I welcome your taking the time to read them and understand them. The comment section has been disabled due to all the spam I was getting, but if you would like to comment, you can find me by email; look at the info on the home page.

Happy summer!