Half a year does not a full year make, someone said. In the example of Santa Fe area residential real estate, the first half of a year is usually slightly below what the second half comes in at, because of more active summer and fall months. Let us plan on a stronger second half of 2016 since the first half was uninspiring. We could not even surpass the same six months from last year.
The various spreadsheets and charts available to you on this blogsite show the current sluggish nature of our sales market. Many seem to know the reason for the lack of zest and the flat results we are reporting this year compared to last year. Inventory of homes for sale is a factor. Interest rates are not a factor. A serious lack of new construction (above $350K) is a factor. Some might say the struggling economy and lack of new jobs in New Mexico is a factor. I also suspect there is lingering confusion about what Santa Fe residential real estate is “supposed” to look like.
For a few, separating wants and needs is important. We might all want to have a strong real estate market, but what will it take to get us into that mode? Do we need a bunch of new housing to be built? Do we need sellers to put their homes on the market to build up inventory so that buyers have more to choose from? After years when sellers tried to sell and consistently failed, for a long list of reasons, its likely difficult to believe that now is the time to sell. Some have been burned so often they don’t know whom to trust. You probably remember the days when everyone was trying to “call the bottom” of our market (or the national real estate scene). Now it seems everyone is trying to call the middle. We are at a crossroads of steady sales and shrinking inventory, so it cannot be a surprise that sales numbers are flat.
Look at June over the last 9 years (on the Monthly Sales chart). We dipped to as low as 113 homes sold in that month (2009) to as high as 202 homes sold (2015) but now this year we dropped back to 188 sold. That is a 7% drop last year to this year. Look at inventory as of June 30, 2015 versus June 30, 2016 (on All Price Ranges chart). Exact same number of sales for the rolling 12 month total (1944) and inventory is down only by 9 units (1489 to 1480). Does that feel flat to you? What is your proposed remedy? Do we even need a remedy, or are we in a Goldilocks zone with a good balance between sellers and buyers? Are some people hoping for a crazy hot market where homes are selling as soon as they are listed? Is that the answer to anything, other than sellers impatience? Buyers struggle with making offers on homes they cannot negotiate on, feeling forced to buy without careful inspections and the usual contingencies. The market where there are multiple offers is not sustainable, by definition. Sure, some will sell fast and even for more than full price. What about when those homes are gone? I don’t want that kind of market here, personally. Maybe its the Libra in me that prefers balance.
Is a flat market good? I don’t plan to offer a value judgment on our market conditions. I do think the sharp ups and downs of a volatile market hurt more than they help.
What will the second half produce? We remain optimistic for a stronger July thru December (as befits our understanding of historical results) and know that there is no place like home.
If you would like assistance and professional involvement in your real estate transaction, please feel free to contact me anytime. I am happy to consult with you about your real estate assets and how you might best manage them now and in the future. Thank you.