More or less what you expected

The first two months of 2017 are in the books and the numbers are fairly predictable for unit sales in all price ranges for the market area of Santa Fe NM and surrounds. Not much changes month to month anyway, but we are staying the course and building a solid foundation for future growth, should it occur. Help yourself to any of the spreadsheets available in this blog site and feel free to print and share with friends and foes alike. And possibly make your foes into friends.

The year may bring unsettled results if mortgage interest rates climb as expected. Nobody who predicts the future actually knows anything, so maybe stop listening to their rants and smooth talk. And if they did know anything, they are probably not saying what lies ahead for real estate in our City Different.

As we are now approaching the spring season (also known as Allergy Season, see prior posts), our market begins to heat up with most of the movement coming in the form of new listings appearing on the market. Over the last 8-10 years, many new listings were actually old listings that did not sell. Now we are nearly done with that old inventory and are chugging along with new sales matching up with new listings on a fair and balanced basis.

The current powers that be in our nation’s capitol have some folks thinking the future is uncertain. And those not it power, citizens and the loyal opposition, are confident the future is uncertain. Yes, but please confirm; it is always uncertain. Live life to the fullest, live every day as if it will be your last and dance like you actually had some dance training. Be friendly and be nice, get yourself healthy and if you decide to dig a bomb shelter to hide in when the bad guys come for your guns, consider stockpiling thousands of rounds of ammunition so you can kill everything that survives the Zombie Apocalypse and be the last person standing (along with your family) on the ground you love so dearly. Then call me and I will find you a new home to move into.

The differences between various beliefs and values that we read about and see online are at times as wide a gap as the difference between black and white. One side wishes the other did not exist. Of course one side would not exist without the other. If there were no black, there would be no white. All would be the same color. And yet when someone is able to voice what is truly important to them, despite the headlines and alternative facts, the same old things keep coming up. Health and happiness. Safety and security. Shelter and clean water. Stylish clothing and the best personal trainer. Fast internet and reality show entertainment. No wait… fast internet? Is that a bedrock value and need for people? Maybe so these days. I want what I want. I might also want what you have. If I am a bully and have money and ammunition, do I have the right to take what I want from you? You want what you want. Will you share what it is that is important to you? Willingly or only under threat of physical harm? Can we get along?

You can be as disgusted as the next person with what is going on out there in the Land of the Free. What are you doing about it? If you are unhappy are you looking for ways to right things that you perceive as wrong? Or are you just digging a deeper hole to hide in, hoping it all goes away? Our grand kids, some of you already have some, have the duty to ask us in the future what we did to mitigate rapid climate change and what we did to bring peace and understanding to different groups that seem constantly at odds . Is it OK with you if we are seeing species of animals and insects disappear faster than we can discover and study them? How do you know that the complete extinction of the pink tail blow fish in Southeast Asian waters will not lead to the end of life in our oceans as we know it? Is there a caring cell in your body or is it every man (or woman) for himself (or herself) and damn those that get in the way? Make America White Again? Really? Like your good old days? Good for whom?

Besides real property as opposed to personal property, what is real estate to you? The land is the earth and it has nurtured us to this point in history. Even in the high desert the land can support us. Like it or not we all came from Africa somewhere approaching 200,000 years ago. Check your DNA (I assume you might trust science and think DNA has value in amassing knowledge?) and find out where your distant ancestors came from. Mine migrated North out of Africa some 50-60,000 years ago and moved thru the Middle East, then migrated West finally settling in Europe. Then from the 1600s to the 1800s both sides of my parent’s families came over the ocean on big sailing ships to settle in the new land; a wild and woolly America. Both sides included many people who farmed and raised food and lived off of the land. How can you value a piece of fertile dirt that might sustain you while everyone buys sugary soda drinks and highly processed foods at the corner store known as IGA?

Get some dirt under your nails. Buy some land you can love and will spend time on, even better if it’s a long way from “town”.  Learn the night sky. If you can establish fruit trees and create garden space, you will form an attachment that is much stronger than steaming movies from Netflix or having a tamale at the local grill. Buy some land today. Give it to your heirs. If you are able to, buy enough that you can put some of it into a conservation easement and protect it from development forever. Why? So we might all benefit from seeing it in an undeveloped condition. The old natural look; no make up and no hair spray.

Thanks for reading and visiting. There is much to do and at times it seems like we are climbing up a very steep hill. But consider the views from the top. It will be worth the difficult ascent

Absorption Rate – Unplugged

A major focus of this blog site, along with statistics about the Santa Fe NM residential real estate market, is something called an Absorption Rate. On the left side of the site pages you will see the list of spreadsheets and charts available for review. Four of those charts are specific to Absorption Rates and they are in four price categories: all prices and then each of three smaller categories.

What does it mean if your home is approximately in the middle of the price range of $500K to $1 million? What it means is that there is an absorption rate that may apply should you attempt to sell your home. The rate uses averages so is no more precise that throwing a dart at a board, but it is very instructive if understood and factored in to how your home is marketed.

First, the chart for that price range shows four columns; inventory of homes for sale – total homes sold in that range over the last 12 months – average number of homes sold per month – average number of months it would take to sell all of the inventory (from the first column). This set of calculations presumes that only those presently for sale will actually sell and no new listings will come along in the mean time. It is a diminishing return sort of number, even though in reality, homes are withdrawn from the market and newly listed homes show up all the time.

Looking at the fourth column, the number of months entry; this is the approximate number of months it will take for those homes to sell. Let us say you have a home in that range and it is for sale. If the months count is 10 for example, one out of 10 homes will sell each month for 10 months. Each month 10 percent fewer homes will be for sale because they would have sold. A key question to ask yourself at this moment of clarity is: in which month do you want your home to sell? Maybe you are highly motivated and want yours to sell in month one or month two. Next I recommend looking at the other homes for sale in your price range and positioning yours to compare favorably with the competition. If you have a fairly “normal” home and it should be worth about $700,000, what is the asking price? If its much more than maybe $735K, what are you doing? Are you hoping a buyer will come along that cannot tell the difference between your home and another one that might be priced just above $700K?

The charts and graphs and spreadsheets herein are for your use and education. You are always welcome to share, print and quote the content with appropriate attribution. If you think I am an idiot and want to share your criticism, please feel free to contact me and I will try to incorporate your suggestions. There may be no other site that will give you the depth and breadth of information that this site offers. If you know of one, please let me know so I can take a look. I do like knowing what the competition is publishing.

Sending you our best wishes

…for a great year in 2017. May the numbers you visualize show up on time and may the results you desire come true. Ending 2016 with a solid number of sold homes over the prior 12 months, in excess of the 2000 level, is gratifying and it seems to prove we are on solid ground and not backsliding.

Your image of how you think our market should look is important. It seems we should be in agreement on the following statements. You may not agree, but then we don’t have to be in full agreement.

Interest rates are climbing and will continue to climb during the year. This always means a slight slowdown in buyers purchasing homes. The higher the rates go the more of a slowdown we can expect. It is simple mathematics, not voodoo or blind faith.

New construction seems to be picking up, helping with a dearth of inventory in the lower price ranges, taking pressure off the 40-year-old homes to satisfy the needs of today’s buyers of affordable dwellings. Proposed apartments seem to be quickly approved now also and that will also affect the lower priced inventory as people will have a bit more choice. Of course we hope they buy instead of rent. That is the standard Realtor belief: that everyone should be a homeowner.

The City of Santa Fe seems to be committed to providing high-speed internet access and updated airport facilities (maybe I am dreaming) which experts believe are sure-fire ways to stimulate economic development and entrepreneurial activity. When a business opens and stimulates everything around it (as Meow Wolf seems to be doing), economic development is no longer a mystery. Oh if only we could have ten copies of Meow Wolf please! Proximity is important in real estate. Walking distance is a growing asset in residential real estate. So is being near Meow Wolf, the Plaza and several other locations such as the Dale Ball Trails, shopping centers and schools.

The world of foreclosures and short sales seems to be on the tail end of a long and painful run, though we will still see homes show up in both categories this year. The top broker in unit sales in this market several years ago was a specialist in foreclosures. That is not the case today, but our recovery is still a work in progress. Witness that many homes are not yet worth what someone paid for them nine or ten years ago. When you want a bargain, do you look at foreclosures first? Those days are about over with. So many buyers came away with huge headaches from trying to buy a foreclosure. And of course nobody made a profit except the lawyers (bless them and everyone) and the people doing the winterizing and the repair work.

2017 is going to be a watershed year for many due to unknown future events that some are looking forward to and others are living in fear about. Will Obamacare be repealed, or replaced? Will inflation take off and throw a wrench into our economic gears? How will the Tweeter-in-Chief rule the country? How will his supporters and his detractors heal wounds and work together in this coming year? Will they be able to work together at all? Will our citizens feel safe or will the threat of terrorism grow? Will our forgotten youth and disadvantaged groups be included or excluded in our uniquely American future? Will Christians be able to reconcile their religious beliefs with their demands for making America great again? Is the gap between the haves and the have-nots going to grow or shrink? Does it matter to you? Should it matter to anyone? Is TRUTH an endangered species? Will the Cowboys win the Super Bowl? These important, and not so important questions will be answered this year, maybe.

Please plan a return visit to this blog site on January 10th if you are interested in the most recent monthly numbers plus the 12 month studies of how the Santa Fe residential real estate market is doing. I am working on the annual report of residential lot sales, a 4th quarter report for homes and the rolling 12 month recap, which is showing total sales above the number of 2000 homes. This has been a long time in the making. Can we maintain 2000 plus this year? With your help it can be done.

Wait, there’s more

OK, so I already said what I felt like saying about not voting on November 8th. See last post. But there is more to it. Many said and acted as if they were disgusted with the two major party candidates. That easily could account for the lower turnout. Many groups voted in smaller numbers than in the past; groups that are popularly considered to be of limited influence and getting less than average respect and opportunity. Yes, we show up to vote in a half-assed way, if you can say about half means about half.

Please find the New Yorker magazine article None Of The Above by Caleb Crain from the November 7, 2016 issue, distributed a week before November 8th. Its subject is voter ignorance and neither major party has a franchise tag on that status. He references numerous books published in the last 10 years about what is wrong with our method of general elections along with the usual suggestions of how to fix them. This assumes democracy needs fixing. I have a couple silly ideas, but what will actually work?

Make it a national holiday with the easiest access to the polls that can be arranged (Lyft rides, free flu shots, a free dental exam, DNA analysis to confirm your bloodlines and a kiss from Miss or Mister America). Pay everyone $25 when they show up and vote. Pay them more if that is what it takes to get turnout higher. Give some people more incentive to vote, such as a chicken in every pot plus the money. Waive some student loan amounts for voting. Make it a tax amnesty holiday. Give tickets to see Hamilton (not the one in Ontario Canada). Free parking all day. Gift certificates to Meow Wolf.

Seriously, ideas have been floated that make sense. If you cannot name your state Senators (you have two) and at least one Representative, plus your Governor, should you be able to vote? Can you tell me the capital city of the state in which you live? Amazing numbers of people cannot answer simple questions about the government they are able to vote for. Name 3 of the Supreme Court justices? How about name two? In what year did Jesus die? Is Dick Cheney a small game hunter? Is Chelsea going to be President someday? Or Ivanka? Did anyone write in Bannon or how did he get into the Oval Office so fast?

Democracy may be just fine. Likely it is better than any other form of government. But it may have been a bit under the weather the last few months straining to take in some bland food without upsetting its digestive system more than necessary. Maybe it is not important that more people vote. Flipping a coin might be the best way to choose who gets to serve. More people voting might have given us the same results, but its the ones that do not vote and them scream their little heads off about what is wrong that get me going. Do we have to listen to them for four years? Did we listen to them the last four years?

Thanks for listening. Enjoy the rest of your democracy.

Apology not accepted

If you are of age and eligible to vote, and you did not vote, I don’t want to hear how you got busy with your blog and forgot to go vote. Your apology only will be accepted if you had a legit reason to not show up. Maybe you were sick? Maybe your car broke down in the Gobi Desert and the rescue team that got you out of there took two days? I don’t know. It’s somewhat indefensible to take the position that one’s vote does not count or does not matter.  Unless it does not matter, or is not counted. Is it much different that stating that you are breathing because there is enough air for everyone, while at the same time you are burning tires and wet leaves and adding methane to the air with your feedlot operation? OK, enough of this. If you did not vote, almost nobody appreciates your logic or reasoning, whatever it is. I would never say who you should have voted for. That is your choice and your right as a citizen. But if slightly less than half (47%) of the eligible voters of the great old USA chose not to vote, how can they be either satisfied or dissatisfied with the results? If you did not vote you are saying you are OK with whatever happens.

And yet you are actually not OK with whatever happens. More people complain about our local state and national government operations (saying they are dissatisfied) than vote. And we have to listen to them and read their letters to the editor and watch them march down main street with signs denouncing what they do not like. I have marched, but then I actually voted. Not all letter writers and marchers and whiners failed to vote. But seriously there should be a test you have to pass before you can air your laundry in public. Prove you voted first. OK, tell me I am being unreasonable or ridiculous.

Again, I am not saying I wish you had voted for Brand A or Brand B. Just saying that you should have voted for someone on November 8th. Or just shut up, please. Learn from your mistakes. Try to be more decisive in the future.

If all candidates were unfit, your concern needs to go deeper than voting and you need to be involved at a much earlier stage of candidate selection. Just because your candidate did not prevail, (Sanders? Cruz? Nader? Ross Perot? Dewey? Hamilton?) does not mean the others are unfit (even if they might turn out to be unfit). They just are not your favorite. Warning: metaphor shift…If you don’t get to play quarterback are you going to take your football and go home? And I thought it was a team effort. Join a party and get active. Or create a new party and make it grow. Do something to make this the place we will all enjoy living in, safe and sheltered, healthy and blindly entertained by social media sites.

Do not, however, tell me what religion I should believe in. Do not tell me that I must worship your God and not my God. Do not tell me an oil pipeline has precedence over native people’s source of clean drinking water. Do not tell me the people of Flint deserved what they got. Do not tell me that you are too big to fail. Do not tell me we must frack for oil under every damned city and village in America before we increase alternative fuel usage. Don’t tell me we need to increase our use of torture to fight the bad guys. Fight them fair and square. We have the might and we have the resolve. Do not tell me you are right and someone else is wrong, or that they are wrong because they do not support your views. I told you so is not the best thing to be saying today. By anyone on either side or any side. Anyone can come up with that phrase, but what does that accomplish? I can easily find fault with you, but it does me no good to do that until I find fault with myself and strive to correct that fault. How can I ever expect you to change if I am unwilling to change myself?  You can easily find fault with me. When you finish tearing me down, then what is your plan?

No apology, at this hour, will change the election results. Except for North Carolina, they are mostly final. I am not saying they are right or wrong results. Some of us voted (about 53% of eligibles) and we got what we got. Lets figure out how to be honest with our selves and then try to be a positive force in the world. We already have enough negative forces without you enlisting to help destroy, belittle and demean. Are you going to move out of the country? I am not moving to Mars or to Canada. You are stuck with me. As I am stuck with you.

Wanna buy a house? I know a guy…just sayin’

Happy holidays!

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.

Too good to wait

The news out of the Santa Fe residential real estate market is really good today and I just can’t wait until the 10th of September to mention this. As of 10:30 on Sep 2nd, the total monthly units sold in Santa Fe city and county during August 2016 has reached 219. This is fantastic, and still with likely a few more yet to be reported today or over the next few days.

Why does this matter? This will be the single best month in reported solds into our MLS system since at least as far back as July 2006. AND THAT IS 10 YEARS OF WAITING TO GET BACK TO THAT LEVEL!!

Oops, sorry. I did not mean to yell just then, but it sure is exciting!! Hope you agree.

Stay tuned and visit again around the 9th or 10th of September to see the entire month of August in perspective and plan on getting a boost of confidence and energy for the rest of this year.

 

 

The things we say (write)

When we talk, we say what we want to say, but not everyone will understand it the same way. I don’t think its unique or new, but all of a sudden it seems anyone I listen to must correct me when I try to confirm what I heard. And those that I say something to cannot repeat back to me what I just said as they understood it in a different way than what I meant to say; what I wanted them to hear.

Today’s award for the most creative language in a real estate ad goes to about 150 brokers who are all using the same words in their advertising text.

My current favorite is NESTLED. You can find the word nestled in approximately 422 real estate listings. I suspect it comes from a thesaurus and referenced how a home is sited or positioned on a piece of land. But how does one know if a certain home was nestled or not nestled? One might wonder if it is partially bermed into the side of a hill that might be the dictionary definition of nestled. For the record, dictionary.com has this:

verb (used without object), nestled, nestling.
1.  to lie close and snug, like a bird in a nest; snuggle or cuddle.
2.  to lie or be located in a sheltered spot; be naturally or pleasantly situated:  a cottage nestling in a pine grove.  Archaic:  to make or have a nest.  2.  to make one’s home; settle in a home.
verb (used with object), nestled, nestling.
4.  to settle or ensconce snugly:  He nestled himself into the hay for a short nap.
5.  to put or press confidingly or affectionately:  She nestled her head on his shoulder.
6.  to provide with or settle in a nest, as a bird.
So yes there are some references to one’s home along with some bird images and snuggling.
The next home I buy should be nestled and there should be lots of snuggling and birds.
Second favorite: PERCHED. I know, you immediately pictured a bird perched, right? But these are houses for sale, so unless it looks like a bird, this home has been perched or is perching at this moment. Homes that sit on the top of a hill or near the top might be imagined to be perched. They might also be exposed to more wind and have less privacy than those nestled homes.
Next I really enjoy OASIS. When one is in the high desert, an oasis is a real treat to find. It may mean that natural springs are flowing on the property; fragrant and clear water bubbling up from below. Or it could mean the property owners and landscaping workers have watered the heck out of the property so it feels like an oasis, although the water might be chlorinated or mineral laden coming from a known source that is not a naturally occurring spring.
Then there is VIEWS. Which should have some measure of qualification, because almost every home has views except maybe those with serious nestled locations. You have heard of million dollar views? Maybe that’s the ticket: rank the views from a home based on a dollar value. A home that just sold for $295,000 might just have million dollar views, while a home that sold for $1,080,000 might have $575,000 dollar views. Then we might want to clarify if those views are from every window, from the rooftop deck or from the master bath soaking tub. Maybe they are from the garage. I have seen homes perched on a hillside with a detached garage that has better views than the actual home. There were serene.
And we must not forget LOCATION. Always an important word to any potential buyer, location of a home is relative to what it is near. Is Canyon Road a great location or just a desirable address? Is being walking distance to Trader Jose’s and the Farmers Market a location to be featured in marketing writeups, or is it just a nice feature since not everyone is able to walk. Family homes don’t exist any longer because we would be discriminating against non family units if we called a home a wonderful family home.
I guess any number of bedrooms would not guaranty a good nights sleep so we should no longer mention the number of bedrooms? Or just the ones that have soundproofing and black-out curtains?
The list is endless. Solar, energy efficient, Santa Fe style, fixer-upper, handyman’s special (or should we say handyperson’s special?), new roof (now that’s a good one), bedroom separation (the owners have their own respective bedrooms?), cook’s kitchen, radiant heat, oh my word I am running out of steam. If you see a word in a marketing piece and it kind of makes you wonder, what does that mean, you could ask the listing broker or look up some similar words to find out what nestled (for example) means. And when you see reference to birds nests, then you will know.

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.