This marks the one year anniversary of this newsletter’s existence as a monthly report. Prior to June 2008, I wrote a quarterly piece in my role as Managing Broker at Sothebys International Realty here in Santa Fe. It included numerous charts and a consistently rosy outlook on real estate and the Santa Fe market. Unfortunately, trend lines have deteriorated so an upbeat attitude is difficult to maintain. While anyone can have an opinion about what kind of real estate market we have, my newsletter is simply my reporting of statistics plus a little opinion from the perspective of someone with 25 plus years in all aspects of residential real estate in Santa Fe. You don’t have to read it and you certainly don’t have to agree. And I do welcome feedback and responses that might direct me to related information that is worth sharing with each of you. Recently, in response to inquiries about residential land sales, I included some stats that shed light on that segment of our market. All of the growth of my distribution list has been viral and almost every day I hear from someone wanting to be added to my distribution list. I am glad to be of service.
The attached spreadsheet is an indication of what our area Multiple Listing Service stats are saying. The Absorption Rate spreadsheet is a troublesome number. It should serve to illuminate the nature of our current real estate market in Santa Fe. And when the number of months it would take to sell all homes presently listed for sale gets close to two years, as it is now, we can assume our market will have to go through some hard times before coming into any sort of balance. Other areas report their inventory of homes is now at a six month supply, after being at a 15 month supply a year ago. Sadly, those numbers do not apply to us. Please understand that real estate markets are always local; what happens elsewhere may or may not happen here. The Absorption Rate in the attached study is a conservative method of tracking and also might reflect the most disheartening way to look at our current market. But I also believe it is the most revealing and the most sensitive method. As soon as there is some improvement, the numbers will show it. And they do not show any improvement yet. The inventory is expected to grow during this time of year and it is growing. Many new listings come online during spring and summer, inflating the inventory figures. That increases the Absorption Rate. Until sales activity picks up, it is going to feel like we are stuck in a deep rut. Any future change is bound to be good! That’s the optimistic viewpoint!
Now, pardon me while I get sidetracked with a recent headline I saw. Move to India, keep your job. Go ahead and read it again if you haven’t seen it. That phrase might be cynical, angry and sarcastic all at the same time. First, who among us is willing to relocate in order to keep the job we have? And even if you are willing to move, what about moving to India? Do you know anyone there that could help you get settled in and introduce you to the culture and the ways of life you should know? Let’s assume you are looking for work in an area of employment that exists in India. What is it that many of us automatically assume is a thriving industry in India – call centers? OK, so you think you could work at a call center? What do you think the pay scale would be there? And what about your chance of advancement? And what sort of benefits do you think you could negotiate? Employer paid health insurance? 2 weeks paid vacation every year, plus nine holidays you don’t have to work yet still get paid for? What about a one hour lunch and two 15 minute breaks twice a day? What is the length of the workday anyway? Eight hours? Rereading the six words underlined above, if you are willing to move to India, can you keep your job? Really? But on what terms and conditions? Will your employer pay some costs for you to relocate? Moving expenses, maybe? Not very likely. Why else would your employer move your “job” to India if not to cut salary and expenses?
If you are willing to relocate to India to keep your job, offer instead to stay put and take a pay cut. Possibly volunteer to give up health insurance benefits, paid time off and sick leave. That might remove the incentive for your employer to move your “job” to India. But is that really an issue for someone you know? Not likely, but you very well may know someone that is learning to live with less income and fewer benefits. That group seems to be growing.
Sometimes a person just has to dig deeper to review what is bothering them. If you are camping in the woods, it could be clouds of flies swarming around your head. If you watch the evening news, you might have grown weary of the dismal economic news broadcast daily. If you read the Wall Street Journal, you might not be able to get through an entire issue without feeling put down. Maybe your 35 year old offspring just moved back home and seems intent on staying. It’s also possible you have a good steady job, but find yourself limited to a summer vacation of doing projects around the house and taking day trips to Bandelier (not that there’s anything wrong with that!). But what is really bothering you? Is it getting under your skin that you now feel it’s essential to save every penny not required for groceries and utility payments? Is all the fun is gone from your life when you can’t go to the store and drop $75 on plastic stuff you might use someday? What can you do about what is bothering you? If you have positive forethought about things – your work, your life – there is an excellent chance that good things will happen. More on that in coming issues…
After five months of the year are in the books, we have a good indication of the way things will look for the full year. Statistics on home sales and listings do not make huge jumps from month to month. Even the 30 plus year historically low interest rates did not motivate many of the prospective home purchasers. They sat on the fence watching sellers go broke and keeping an eye peeled for really cheap deals, and few did anything but look and wait. They might have missed the actual bottom of the market (a combination of low asking sales prices, highly motivated sellers and low interest rates) and now every day they wait, the cost inches upwards for them. So call someone you know that is thinking about buying a home or a residential lot in Santa Fe and encourage them to take the next step. They can thank you later.