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.