Trying to bring back “groovy” while using real estate methodology is not an easy task. Bear with me as I explain. Or just skip to the statistical data included on this site, if you prefer. The data is good and getting better all the time. We have clearly broken the back of the awful Santa Fe residential real estate market, with increasing sales and even some new construction happening to give buyers more to choose from. Look for a special feature on some of the new homes popping up around the area soon.
Our strongest segment, homes under $500K, shows over 1300 homes sold for the prior 12 months for the first time since 2006. That range Absorption Rate is just under 8 months, the best since 2006 and 2007. In the middle range segment of $500K to $1Million, inventory of homes is keeping a lid on the increase of sales we are seeing in higher and lower price ranges. We have less than half the number of homes available than we did at the end of 2007. Normally inventory increases through the spring and into summer. This seasonal trend keeps us from completely running out of homes to sell.
Above $1Million, the volume continues to climb gradually with sales now consistently above the count of 100 for the prior 12 month period. That has not been the case since 2008. Plus inventory is lower than it was 6 years ago so buyers could honestly say they have less to choose from. Overall, for homes in our market area, we are now consistently below 10 months in length of time calculated at Absorption Rate. The formula is # homes sold prior 12 months divided into current inventory. At its historical worst, our rate was in excess of 22 months in 2009. One can feel groovy to see that number cut in half.
Lot sales are another animal entirely. While volume has risen about 35% each of the last two years, we still have fewer than 200 residential lots sold per year these days compared to a range of 490 to 610 from 2001 to 2006. In those days of the inflating real estate bubble, many lot sales enclosed hopes of a quick flip for profit. By 2008, those hopes disappeared as values fell steeply. There are nearly 700 residential lots on the market today, while I am certain there are hundreds of others that are not “listed” but could readily be purchased for the right price.
At an annual rate of 200 lot sales, we have probably a minimum of 3.5 years of inventory without anything new coming on the market. So if those sale pick up, we might see some of that shadow inventory present itself to the market.
What is the long-term view of Santa Fe real estate? Some obvious answers include that our area remains at or near the top of many lists of desirable places to live or visit. And visitors sometimes decide to make an investment where they love to vacation. Nobody should discount the importance of water in the high desert and our repeated years of drought do not help anyone feel better about our ability to live comfortably here forever. What significant changes might be brought about that would allow our area to continue to grow?
Bottled drinking water is no the answer. Our landfills don’t need more plastic. Should small-scale farming be sacrificed for New Mexico newcomers to be able to turn on the tap and have cheap and clean water? The Phoenix area saw huge numbers of citrus trees replaced by huge numbers of homes as water rights changed from agricultural to residential. Of course we have a swimming pool. I use it every weekend!!
There are large underground seas of salty or briny water south of here and east of Albuquerque. Should that water be prepared for human consumption with elaborate plants and pipelines to feed the long-term growth of our State Capitol and our largest city?
Long term might mean the year 2020 to some while others think of their grandchildren’s quality of life. Our long-term health is tied to water and that means the cost of it is likely to rise. We already conserve as well as any city in the US. But is that enough? Are you feelin’ groovy today?
The bright side is always tempered by the unknown and we are continually presented with choices of good vs. bad or quality vs. quantity. Most would predict the Realtor population would vote for quantity, but quality has an allure that is undeniable. Personally I would rather see single digit changes in our market conditions and trend lines. Faster growth sometimes creates bubbles and encourages quick profit over stability.
Thanks Simon and Garfunkel, the newly elected Mayor of Santa Fe and all children who inspire us to behave well and value honesty. And a hard day’s work. For a working Realtor who knows how to negotiate and close, contact firstname.lastname@example.org or phone Alan at 505-470-7153