Are you a student of real estate and a close observer of Santa Fe NM residential homes and land? There is a phenomenon taking place now that compares with many other annually recurring events and themes. Think of the migration of millions of birds heading North. Or the run-off in the Rio Grande as the snow melts off of the mountains. Or maybe something less dramatic.
Listing inventory is going up, as I write and as you read. From the end of March to the end of April the percentage increase was nearly eight percent in just one month. April to May will probably be very similar. On a daily basis, the numbers are approximately 40 new listings every day while 25 are reported as sold, for a net gain of about 15 a day. That sounds like a gross increase of 450 listings in one month. More or less due to expireds and terminated and other such categories…
So a savvy buyer is probably glued to their computer screen to be the first to see the new listings as they show up online. Some brokers have developed methods of rolling out new listings in a manner that might allow special people (to be defined) to have a shot at those listings prior to the general public getting an email notice about same. Is there an advantage to being the first to know about a listing? Well, possibly there could be which makes one wonder about what is fair and what is not. Is the listing agent charged with the responsibility and the duty to market the property to the best of their ability? Something like that. Should we discuss whether this is still a buyer’s market or does someone know something new they would like to share?
Meanwhile, at any given time I open up the MLS program, I will see plenty of new listings of all sizes and shapes, in all sorts of places. After all, our market area covers a wide swath of Northern New Mexico from the Chama area to almost Albuquerque. Taos has somehow escaped full absorption into out market data by their own choice. They don’t want us Santa Fe brokers working their streets but they are not shy about working ours.
It still seems true that the first listing price is somewhat above what will become the final listing price. That is the way our market has evolved. I recall a recent referral in another city where things were much different. The day the listing hit the computer screens, there was a full-blown open house and 4 offers were on the listing agent’s desk by the end of that evening. They took the best offer and it closed in a normal amount of time and everyone was happy except those that did not offer enough money. It does not work that way here. Usually a home is listed for x dollars and sometime later, maybe 30 or 90 or more days have passed and a price reduction shows up. If the home was priced about 8% above what it would later sell for, the first price reduction might have been 2 or 3% of that gap. Then there will likely be another reduction such that when the offer does show up, the buyer is still not paying full price. If nobody prices their home at the price they expect to get when it sells, the game continues.
There are exceptions to this pattern. Some foreclosures are already so marked down that there is no room to negotiate further. Same with some of the estate sales we see, where the heirs to the estate want it gone in 60 days so they can move on with their lives. What would our real estate world look like if our listing prices were pretty close to the actual sales prices? The marketing campaigns would be more immediate and getting a crowd to the home on Day One would be the goal, with the home selling itself. This assumes repairs and cosmetic work was already completed, of course.
So just for fun, one could take a sample 20 listings from today’s new offerings and track them through their lifespan in our MLS database. 18 of them would have had at least one price reduction, based on past performance. I know, you can’t predict the future based on past performance!! But has the Santa Fe NM residential real estate market changed that much since last year? No, even wistfully thinking yes, the answer is no. We are moving in all the right directions. But we have plenty of ground left to cover to get to a healthy real estate market here.
We have been blessed with wonderful spring rains lately and more might arrive due to the El Nino effect we hear we are finally getting back to. That does not always happen this time of year. An increase of inventory of listings is inevitable, like taxes I guess. Spring rains are the pleasant surprise.