… because I am busy trying to figure out where the homes are going to come from that buyers will be looking to buy next year. We have precious little to choose from making our market a lopsided seller’s market. That means buyers are not going to be in a strong bargaining position with sellers. One could say they could take it or leave it. And if they leave it they can figure someone else will come along and buy that home that they were not willing to pay for.
You see, these days a buyer actually has to pay back their mortgage and cannot count on lenders being forgiving and soft on repayment terms. Not that they ever were That soft, but lenders made so many thousands or millions of loans on fake terms that they had to swallow their losses when homeowners defaulted and left the lender holding ownership in a home that was worth less than the mortgage balance. I recommended back then that some home owners default, actually mailing in the keys to their lender, in certain circumstances. Rather than waiting 10 or 15 years for their home to become worth more than their mortgage balance, some owners were better off taking a hit on their credit rating and going through foreclosure or bankruptcy or BOTH and walking away from their home. But that was then and now is now.
While almost every home that existed in 2007 is worth the same or more now than it was then, for the last 10 years, homes were worth less when comparing value versus debt. Just to change the subject, do you think the USA has more real value than its underlying debt? I guess it does, yet it can still feel very uncomfortable to have such high debt, particularly in the hands of a seven year old child/man with no understanding of people, business OR governmental management. This is an untenable situation and I suspect it will come to a loud ending soon. Much blame will be tossed around on how he got elected and whom he takes down on his way out, but really all of us share at least a little bit of blame.
The reports and spreadsheets visible by selecting a link on the left side of this page will show you another untenable situation; the lack of inventory in Santa Fe residential real estate. We are at just over 12 months on average for all inventory in the 1 million plus range to sell using today’s current rate of sales in that range. Would you care to guess the last time we had only about 12 months of inventory listed for sale in the 1 million plus range? Go ahead and guess. How about NEVER. Well, at least not since my close and careful study of statistics related to residential sales in Santa Fe began early in the last decade. So we are in uncharted territory locally. Unless buyers stop showing up here and buying homes, we are going to plumb run out of homes for sale sooner or later. And it looks like it could be sooner.
What do we need? We need banks willing to lend to builders to build spec homes (and both parties taking the risks involved). We need more tract home builders putting up product ranging from $250K to $600K, in all forms of housing whether condos or single family detached. We need help and assistance from all governmental authorities that must approve of new projects and issue building permits, plus allow for water and sewer hookups, maintained roads and electrical lines nearby. We will need all necessary services extended to the new homes in the new subdivisions, even if they are in areas that are scrub and cactus right now.
Or we don’t have to have new homes and the sprawl that invites. We COULD actually support IN-FILL with many of the new homes and businesses being built on existing vacant parcels within city limits and with fire, police and other services available. Look at what is happening off of Siler and Rufina, near Meow Wolf. Have you been in that area recently? Lots of new stuff and turnover of old warehouses into work/live developments, small label brewpubs, housing that is affordable and in multi story structures. Can Santa Fe grow enough housing without relaxing its severe limitations on building heights? Ask your representative next time you see her or him.
There are about 845 homes for sale as of December 1, this year, in all price ranges, while on approximately the same date in 2007 there were 1845 homes for sale. Is that dramatic enough of a change? In the $500K to 1 million range, the same two dates show current inventory of 275 homes while in 2007 it was about 886 homes for sale. Kind of scary, no?
Enough for now. Get busy and find out what is being built and where and tell your buyer customers so they do not miss out. And have a safe and warm holiday season and a Merry New YEAR!