The vibrant market gets hotter

Which month you choose to buy a home might make a sliver of difference in terms of what is available and how many other potential buyers you are competing with. But overall it does not seem to matter very much. Homes sell quickly 12 months a year in Santa Fe and there is no reason to wait when you are ready to make that purchase. It is not as if there will be some extra inventory next winter and sellers will be so motivated they will slash prices to sell.

Someone you can identify as a seller today will have already sold that home by next winter. You would have to try really hard not to sell a home you have listed; something like no bathrooms or extensive black mold or dream up something else that would turn off every possible buyer. Just because it needs to be remodeled does not mean it will not sell. Look at home sales over the last couple years and those that needed an updated kitchen or bathrooms sold anyway, albeit for a bit less that those that had been updated.

The lower the price range you are looking in the more you must be ready to move quickly in order to secure a home you want to buy. There are so many other buyers out there looking for the same thing that hesitating will not serve you well. Once you get into the mid ranges of prices in residential real estate in the Santa Fe area, the lack of inventory is still an issue, though not quite as severe. But a good quality home that presents well, anywhere from $400K to $750K will likely be sold in a matter of two months or less. My number for that phenomena is the Absorption Rate as published in the market stats available to you on this blog. Take a look when you get the urge and factor that into your plans to buy or sell a home in the near future.

Next year could be different but I doubt much can change in 12 months or so. Any large build out of new homes is already on the radar and those homes are already being built; mostly they are north and south of I-25 off of Richards or in the scattered developments off NM 599 and Airport Road. And those only partially satisfy the demand for housing.

Thank you for stopping by to update your informational needs about Santa Fe real estate. I wish all of you a prosperous and peaceful summer season in the City Different.

New stats posted thru April 2019

Read and copy or print if you like; newly calculated statistics are now available on the site for Santa Fe residential real estate sales thru the end of April 2019. Sales continue to be strong and there is a small increase in inventory which should be absorbed fairly quickly. Even the $1 million plus price range is seeing homes sell, on average, in less than one year. This is uncharted territory. Lets check back later in the year to see how things are going in that and all price ranges.

Thank you

The lies keep on coming

Just when you thought our Dear Leader might run out of ways to misrepresent the facts of any given topic, he comes up with new and unique ways to tell lies. And some of them just seem to be told so he can stay consistent in his lying. But when you hear some of them, you have to wonder what his motivation is for lying when telling the truth would be easier and would appeal to more people. After all , he adores attention and wants the largest audience and Twitter followers of all time (even though half of his might be bots and fake accounts).

It’s a bit like someone I know said of another famous liar: She would rather walk up 12 fights of stairs to tell a lie from the rooftop than tell the truth in front of you on the sidewalk. It seems even worse than the disorder known as being a pathological liar. Maybe there are degrees or levels of dishonesty. Little white lies might be lazy; someone did not take the time to research or ask questions – so they spout some lies to act as if they know what they are saying. Bigger lies can actually cause harm or injury (or death) which is many times more serious and destructive than those little white lies. Are lies important? Does it matter if one person with a high profile and undue influence over millions of people tells lies? Is that worse than you or I telling lies (for whatever sick reason) with frequency.

Since there are plenty of sources to feast on the huge bounty of lies told by our President, I will not repeat or attempt to recount them here. But if you do not accept that he is continually lying and do not believe his critics who claim he is dishonest, what is your problem? Do you lack a critical part of your hearing mechanism? Are you blinded by his orange skin and hair? Were you so afraid of women and/or blacks with some semblance of power that you were willing to vote for a corrupt, racist, abusive child of a man?

Once you were asked if you would choose to have health insurance or a white male in the White House and you chose no health insurance so you could have your while male. When that black President, Barak Hussien Obama, produced a flawed but effective health care system that added many millions into coverage that had none before, you called him a Muslim and wanted to wash that stain from our history and heritage. You support the wholesale removal of health and safety restrictions on polluting industries and are OK with unlimited drilling for oil and gas near the sacred site of Chaco Cultural Center or above the Arctic Circle. You might believe your Dear Leader is above the law and should not have to answer to the other two branches of government, even though there is confirmed evidence that he accepted help in getting elected and is probably literally an illegitimate President.

You seem to buy the BS that he is the best negotiator and a very successful businessman although his list of failed businesses is longer than can fit on a single page. You wanted Trump Casinos, Trump Airlines, Trump University degrees and Trump Steaks to hold onto. Where are they now?

My amateur writing skills do not do justice to the faults and shortcomings of that man. He is so vile and crooked that he cannot distinguish between right and wrong. He cannot see beyond himself such that any question becomes framed as how does this or that affect him? No matter that he is in a position of power and could help millions of people out of poverty, malnutrition, failing educational systems and a drug crisis that is killing thousands. What has he done about regulating gun sales? You must have a license to cut hair, drive a car or sell a house. But you do not need any such thing to own a gun in America. That is something he could fix tomorrow. Does he even know how little he would have to do in order to become a good guy to millions of Americans? They would forgive him his shortcomings if he would just fix one thing they want him to fix. Democrats would even vote for honest and helpful Executive Branch policy efforts that were humane and good for the common man. But that would not support his need to have enemies and keep tilting at windmills.

You did not come to this Santa Fe residential real estate blog to read my rantings about Trump did you? No apology. You can stop any time you want to. Nobody is going to tell you what to do or think here. My usual recommendation is to gather all the facts and allow the facts to help you arrive at a direction or a decision. Those facts allow you to feel strong in your convictions and stand tall against the winds of bullshit blowing around.

Same song, different verse

Take a quick look at the most recently updated statistics on this blog site and tell me, honestly, if you think sales units would be down if there was a selection of homes for buyers looking under $500,000. Go ahead, I’ll wait.

It is not pleasant to report that sales are down, but they are. They are down because there are precious few homes for sale for qualified buyers under that half million price point. That happens to be the price range threshold I use to set up my reports: Under 500K, then 500K to 1.0 million etc… If one wanted to search more narrowly, say between 300K and 400K, the numbers could be striking and actually sad.

There are plenty of market forces at work in Santa Fe residential real estate, including the dimensional shift into higher priced homes. Take for example the First Quarter Sales report attached and available for you to view by clicking in the margin. In the 15 years of reporting, home sales above $1 million have risen from single digits for the quarter, to five and six times that lately. This shows the effect of appreciation and the ever-increasing average and median home sales prices. Another way to view the shift is comparing the average sales price for a home in Santa Fe city and county for the two years 2001 and 2018… $295,674 then and $493,715 for 2018.

This is graphic evidence that the increasing average prices continue to hurt the first time home buyer and lay waste to reasonable market conditions in that lowest price range of under $500K.

How about comparing the # of months of inventory, on average, that our market offers to potential buyers, say as recently as 2009 compared to 2019. Then it was in excess of 13 months to sell a home; now it is barely over 2 months. do you think we could sell another 100 homes a year in that lower price range? How about another 250 homes? I suspect yes we could as there seems to be demand sufficient to accomplish that increase.

All is not lost for home buyers in Santa Fe. Their choices are limited and some say the quality inventory is gone in a flash, so one must be ready to move quickly with a solid written offer and be prepared to compete with other buyers.

I remember a time when a buyer customer I was showing homes to was upset because a new listing popped up overnight and I did not know about it to arrange for her to see it. Never mind that the market was much more saturated then and it would likely have been on the market for several months. It was not even a finished home so a large portion of the buyers eligible or interested would not have been able to secure a mortgage on an unfinished home. This buyer could due to the family trust having the ability to set him/her up with mortgage debt he/she automatically qualified for due to last name, DNA and being in good standing with the estate attorney in charge. Lucky me I was able to help with the sale. Lucky buyer that the home could be shown the first day it was on the market. We were the first to see it and of course the first to submit an offer.

Your favorite blogger will return soon with more analysis of what is going on in Santa Fe real estate. Stay woke!

How can it be so thin?

Just how can the capital city of New Mexico, with somewhere above 75,000 residents plus a bunch of part timers, be so short of inventory in homes available for sale? What do buyers do when they want to buy a home in Santa Fe? First, they watch to learn how the market is behaving. They pay attention to listings, studying how long they stay available before they are grabbed up by a motivated and qualified buyer. All of the widely used web sites that show residential listings – Realtor.com – Zillow – Trulia – and many more – show accurate listing data and when those homes go under contract, they often drop off the web site. That is your clue that home is no longer for sale (provided the contract holds up and it goes to closing).

So its fairly easy to track homes for sale if you are not ready and able to drive around town all day checking on for sale signs. What do you learn when you are shopping for a home below $500,000? (that is the low range in my posted and updated charts and spreadsheets available on the left margin). You see that there are many more homes sold in a year than there are available at any moment. This means that the absorption rate for homes under $500,000 is well below 12 months, on average. By the way, 6 months is considered a “balanced” market, between sellers and buyers. The calculation at the beginning of March was a mere 268 homes listed in Santa Fe city and county, while the current rate of sales is about 131 homes sold per month. That means in barely over two months, the entire existing inventory of homes will be sold.

It does not pay to be picky if you are a buyer ready to buy in this price range. Be prepared to act quickly and have a Realtor on call that can have your offer submitted in an hour or two.

Another point we might see more of is that listing brokers with Seller support may price a home knowing it will generate multiple offers and the status might change to pending on the listing in the first few days. Maybe the days of pricing a home a little above what it is likely to sell for are gone. Maybe better in this market to put a price on a home that is a “best guess” of what it will sell for and let the buyer’s brokers fight over whose customer is the most motivated to buy that home.

An issue with that approach is that Sellers must have put priority status on any repairs and cosmetic improvements. The new pending price has a better chance of surviving through the escrow period, when Buyers are trying to whittle down the price due to inspection issues. Sellers are well advised to get a pre-listing inspection and actually deal with the problems that report might identify.

And so, with thin inventory at critical low levels in the lowest price ranges, Santa Fe, the city different, extends its reputation as being unaffordable for most people. Money to put down? Good credit? You also need luck and excellent timing to buy a home in Santa Fe. Residential real estate deals are for the willing and the able.

2018 in review = part two

Enjoying the drama in Washington, along the southern US border, on social media, in cafes and locker rooms everywhere? There are unusual times in America. On the local scene, we have unusually low levels of inventory after years of buyers taking what they can find and very few builders providing new production for sale. Now that we have pretty much scraped the barrel clean, it will be quite interesting to see what happens to prices.

For example, the inventory turnover is, on average, less than 3 months for homes under $500K in price. That means the entire inventory of homes listed for sale under that price will be sold in 90 days or less. But why, you ask, will some homes still be around longer? New listings come along almost as fast as the current ones sell, so there is rapid turnover, but not all homes sell in 90 days. The ones that sell first are in the best condition, are priced to sell (not obviously overpriced) and are suitable for investors or for buyers to get financing.

Between $500K and $1 million, homes take a bit longer to sell, but still go fairly quickly using historical measuring trends. The Absorption Rate chart provided by this blogger (see left margin for access to view or download or print) indicates four and a half months for homes to sell, on average, between $500K and $1 million. That is well below what is generally defined as a balanced market period of time = 6 months.

Even homes above $1 million are selling in less than a year, again provided they are in good condition and are not too weird such that they don’t appeal to the average buyer. Just putting a million plus price tag on a home does not mean it will sell in a year. It might be a crazy floor plan, poorly decorated, near a major highway or just not built very well.

2019 will be a watershed year for our residential real estate market in the City Different. Based on our MLS stats, there shouldn’t be any homes left for sale by the end of the year. Watch carefully to see where the new listings come from. Some may be newly built homes, though not enough; some owners might decide its time to downsize or move on to greener pastures, some families will be going through changes, such as job loss or severe illness or death, or divorce can create a situation where a home becomes for sale.

Stay tuned if you want to follow these numbers. You can sign up to be notified when new posts are published, or just check back about the 10th of each month.

Thanks for visiting and for your support over the years. Contact me if you have a real estate issue that would benefit from consultation.

2018 in review = part one

Actually in the rear view mirror, we’ll now look at 2018 for statistics relevant to Santa Fe residential real estate. I’ll point out a few things available for you to see on the spreadsheets and charts I have posted (see left margin for access to same).

An annual posting known as Fourth Quarter Sales shows the serious effect of the lack of overall inventory with the most pronounced shortage in the “low end” of homes sold below $500K. Yes, I know what you are thinking; that a home selling for $495K should not be considered “low end”. But this is Santa Fe we are reviewing where the average sales price in 2018 (Santa Fe county and city) was $493.715. This is out of an overall sample size of 2429 homes. In that report, the total sales for 4th Qtr 2018 were less than 4th Qtr 2017 and the obvious shortfall came in the under $500K range. All other categories went up. I would venture to say that if there were more homes available for sale, at least another 70 to 90 homes would have sold in that price range. And maybe they did sell; just not reported to the SF Realtors Association MLS database.

The next report I will suggest you look at is called Residential Lot Sales (again, from the list on your left). This annual report shows a still muted activity for lot sales in SF county and city. Why is that? Several reasons come to mind. First, the old saying that is still true… “get lots while you are young”. And another popular saying is “they aren’t making any more land so buy now”. And yet another possible reason is that the real estate crash that has devastated many individual nest eggs over the last ten plus years saw lot sales drop (again see chart) from annual units of in excess of 600 to just 257 units sold in 2018. And yes, there could have been plenty of sales not reported to the SF MLS database. I know Realtors try to report sales to help make the data more useful, but sales between friends, family, associates and sales without a Realtor involvement are not going to show up in these figures.

Did 350 sales just disappear? Yes, quite so. When a lot in Las Campanas sold for $210K and years later sold again for $85K, something tells me that investors are going to stay away from residential lots as solid investments. That is just one example, but those exist all over the place, if you can find the data. Average sales price now is similar to what is was in 2002 and 2003. While it went above $200K in subsequent years, it went back down and has not been above $200K since 2008. The transition from ’08 to ’09 shows a decline of 63% in unit sales and a drop of more than 25% in average sales price. You could say that was the day the music died. Who was left holding land and lots with a fairly high amount of debt? We all know at least a couple people like that. Did they survive financially? No, they almost all had to deed lots back to their lenders or face expensive and drawn out foreclosure action that might also have included bankruptcy. Lot sales are not a fond memory lately.

I will continue this review next week after I get in some alpine skiing and some much appreciated rest. At my age I am a more careful skier and a more fitful sleeper. Naps are glorious.

Apology accepted

Went to the computer this AM to post a bunch of updated reports and spreadsheets about Santa Fe residential real estate sales and inventory. But Uncle WordPress had chosen to request a simple update of the software used in my and many other blogs.

Little did I know this 68 year old would have to learn a new posting system and a bunch of new icons and keystrokes to do what I was trying to do. For example I have yet to find the check spelling button. But hey! It’s the best version out there, they said. Reminds me of that saying some POTUS idiot said “I have the best words” or ” I hire the best people”

We know now that those were the first wave of a series of lies. Let us try to stay honest here and now that I am getting over the unexpected learning session with my blog postings, real estate in Santa Fe is getting scary, don’t you know? There is so little inventory in the lower end the only solution, assuming new homes don’t start showing up in large numbers, is a tighter rental market, more mobile and manufactured homes sales up to an hour from Santa Fe, and an increase in multi-generational households. Oh and the prices of homes in the lowest price ranges, where inventory is so lean, will have to go up because buyers will choose to pay more to get the basic home they feel they must have.

So after not budgeting for that extra 90 minutes of old guy computer learning, a painful sight indeed, I will be posting my narrative and exceptionally witty opinions about the state of our market in the next couple days when I get back to this screen. Meanwhile, read the reports, download and print them if you wish. Please provide appropriate author credit and attribution instead of claiming you designed and built this trove of historical data. Its free to use for your legal and moral purposes.

Happy New Year!!!

Don’t bother me!

… because I am busy trying to figure out where the homes are going to come from that buyers will be looking to buy next year. We have precious little to choose from making our market a lopsided seller’s market. That means buyers are not going to be in a strong bargaining position with sellers. One could say they could take it or leave it. And if they leave it they can figure someone else will come along and buy that home that they were not willing to pay for.

You see, these days a buyer actually has to pay back their mortgage and cannot count on lenders being forgiving and soft on repayment terms. Not that they ever were That soft, but lenders made so many thousands or millions of loans on fake terms that they had to swallow their losses when homeowners defaulted and left the lender holding ownership in a home that was worth less than the mortgage balance. I recommended back then that some home owners default, actually mailing in the keys to their lender, in certain circumstances. Rather than waiting 10 or 15 years for their home to become worth more than their mortgage balance, some owners were better off taking a hit on their credit rating and going through foreclosure or bankruptcy or BOTH and walking away from their home. But that was then and now is now.

While almost every home that existed in 2007 is worth the same or more now than it was then, for the last 10 years, homes were worth less when comparing value versus debt. Just to change the subject, do you think the USA has more real value than its underlying debt? I guess it does, yet it can still feel very uncomfortable to have such high debt, particularly in the hands of a seven year old child/man with no understanding of people, business OR governmental management. This is an untenable situation and I suspect it will come to a loud ending soon. Much blame will be tossed around on how he got elected and whom he takes down on his way out, but really all of us share at least a little bit of blame.

The reports and spreadsheets visible by selecting a link on the left side of this page will show you another untenable situation; the lack of inventory in Santa Fe residential real estate. We are at just over 12 months on average for all inventory in the 1 million plus range to sell using today’s current rate of sales in that range. Would you care to guess the last time we had only about 12 months of inventory listed for sale in the 1 million plus range? Go ahead and guess. How about NEVER. Well, at least not since my close and careful study of statistics related to residential sales in Santa Fe began early in the last decade. So we are in uncharted territory locally. Unless buyers stop showing up here and buying homes, we are going to plumb run out of homes for sale sooner or later. And it looks like it could be sooner.

What do we need? We need banks willing to lend to builders to build spec homes (and both parties taking the risks involved). We need more tract home builders putting up product ranging from $250K to $600K, in all forms of housing whether condos or single family detached. We need help and assistance from all governmental authorities that must approve of new projects and issue building permits, plus allow for water and sewer hookups, maintained roads and electrical lines nearby. We will need all necessary services extended to the new homes in the new subdivisions, even if they are in areas that are scrub and cactus right now. 

Or we don’t have to have new homes and the sprawl that invites. We COULD actually support IN-FILL with many of the new homes and businesses being built on existing vacant parcels within city limits and with fire, police and other services available. Look at what is happening off of Siler and Rufina, near Meow Wolf. Have you been in that area recently? Lots of new stuff and turnover of old warehouses into work/live developments, small label brewpubs, housing that is affordable and in multi story structures. Can Santa Fe grow enough housing without relaxing its severe limitations on building heights? Ask your representative next time you see her or him.

There are about 845 homes for sale as of December 1, this year, in all price ranges, while on approximately the same date in 2007 there were 1845 homes for sale. Is that dramatic enough of a change? In the $500K to 1 million range, the same two dates show current inventory of 275 homes while in 2007 it was about 886 homes for sale. Kind of scary, no?

Enough for now. Get busy and find out what is being built and where and tell your buyer customers so they do not miss out. And have a safe and warm holiday season and a Merry New YEAR!

Stop making sense (when did you…?)

Interest rates are inching upwards, slowly but surely. Rate monitors say long-term residential mortgage rates have gone up about ONE percent over the last 12 months and another ONE percent is forecast for the next 12 months. What does that mean? It means that more and more people will be priced out of buying the home they might want. The home they could have bought last year will not be available to them next year. So waiting was not a good idea after all? Each person is different, so what you did with your money while you waited for the right time to buy a home is your business. Maybe you made a small fortune in the stock market? Congrats to you! Maybe you invested in your own business to further secure its long-term success; necessary before you splurged on that new home?

There are plenty of good reasons for almost any action you take when it comes to real estate. And it is incorrect to posit that all people are subject to the same rules and market conditions equally. But if you are on track to purchase (with a mortgage) a home about a year from now, you might be looking at fewer choices and a smaller or “lesser” home than you thought you would be buying. Should you jump now and get what you can get before that new one percent takes hold? Maybe. Call me to explore what is out there.

Rates are still at historically low levels. If you are quoted 4.75% to 5.25% right now, that is much better than most of the last 40 years. It’s just the last 8-10 years, when rates hit bottom to assist in getting our economy back up and running, that you could get a lower rate. Those days of crazy low rates are gone now. I recall back in 1979 being told the going rate for a home improvement loan was over 18%. Yes, I know, your credit card rate is likely higher and I hope to heck you pay it off monthly! But home improvement loans can run for 10 or 15 years.

Meanwhile, the Santa Fe residential real estate market is healthy going into the winter. Many assume homes don’t sell in the winter, but they do sell. In relative terms, winter will see 120 to 140 home sales a month while summer will see 200 to 240 unit sales. There is no wrong time to list your home. And allow me to be a broken record: inventory is low and dangerously low in the mid and lower price ranges. Even the million plus range has less inventory compared to demand than has been the case in many many years. That makes it a sellers market overall, with occasional geographic exceptions and anomalies.

What else is going on?

IMHO, logic and reason can sometimes modify gravity, hold back the floods, temper the wildfires and heal the sick, but they cannot explain some of the current events in this great country. Allow me to wonder when exactly America used to be great and how we lost our way. And leave it to you to speculate when we should go back to (in years, maybe the mid ’50’s – a time of innocence for baby boomers?).

Do you want to return to any particular year or decade? Was that time long before the Civil Rights laws and the efforts by some to give people of color a chance at living in America without having to live with widespread racism and persecution?  Was there a time of economic prosperity that lifted everyone equally, when almost nobody went hungry or without shelter? Is the time you want to return to when your family and friends had everything and the hell with everyone else? Were you slave owners or something? Is your happiness dependent upon others suffering? Go ahead, take a look at what you say you want. I’ll wait.

Personally I would rather move forward and make progress on many issues rather than go back to another time with different conditions for living in America.

Our country is in the hands of people who do not have my or your best interests at heart. They solely have their own interests in focus and the rest of us can go eat worms. With just a touch of curiosity you can learn of the deep damage being done today to humanitarian efforts and systems that are the only safety net for so many that do not have food and shelter. Our national parks are being ignored and underfunded, selling drilling rights where sacred ground and wilderness should prevail. Health insurance is quickly becoming something for the few, not even the majority, not to mention the need everyone has for some level of health care. Corporations are raping and pillaging our environment in the name of stockholder returns and preventing true progress in alternative fuels and care for the earth we must live on.

The recent mid-term elections seemed to prove, among other things, that now more than ever we must put women in leadership and control. They are going to be in charge sooner or later. I hope it is soon enough to allow them to correct the course we are on, because it needs serious correction. Leaving the fate of our future in the hands of old white males seems suicidal. As a group they seem bent on the destruction of morality and the abandonment of progress, although I am sure there are some fine people on both sides! Both sides of what?

What is your worry when you go to bed at night? What keeps you awake? I observe the downward trends in civility and honesty among those that live and work together, yet might not always agree on things. I worry about drunk drivers and careless texting while driving, putting me at risk of being terminated by an event I cannot control. I am sorry so many fail to take care of themselves as they age and sad for those that were unable (or unwilling) to save money for their old age years. Who will pay for their care?

As people age they need more help in simply living and the oldest need the most help in the current system of societal care for elderly. If we are too old to work and are not employable, what are we contributing to our world? Are we caring for grandchildren and providing love and nurture to those less fortunate; to those in great need? Or are we watching TV all day and grumbling about the dog shit left in our front yard and the lack of money for infrastructure leaving potholes to grow larger? What is bothering you?

Thanks for staying in front of your screen and I hope to have helped trigger some thinking and some reflection on what sometimes is forgotten. Now go buy a house!