If Santa Fe residential real estate gets any hotter, we are going to have to jump in the pool. At this point year-to-date we are 11.5% ahead of last year’s unit sales pace. Through July 31, 2015, 1139 sales had been reported while the same period in 2014 saw 1022 sold. That fact alone should make your day or your week. It might make it a memorable year if the upswing continues.
Funny how these things work. 2014 total unit sales was almost identical to 2007. And maybe possible there is a good chance that 2015 will see us break the 2000 unit sales barrier, which we used to be camped in from 2002 to 2006. To arrive at 2000 sold units for this year, we would need the annual increase to be at least 9% and we are running at 11.5%. Your hunch looks good right now.
What about average or median sales price? That continues to climb somewhat consistently. Using 15 years of data from the spreadsheet Monthly Residential Sales (available on this blog) our average sales price has been at $295K in 2001 and as high as $521K in 2008, with each year since then in the low to mid $400’s. That puts us in a fairly high tax bracket when compared to many other cities in our region. Denver recently was ranked #2 overall hottest market for home sales in the USA (behind perennial champ San Francisco). Santa Fe is not even on the radar being a somewhat small town, but I will take a 11.5% year over year increase in unit sales any day!
Where is the increase coming from? First, we must acknowledge that price creep, the gradual increase in average sales price, moves the meter in the upper ranges. A home that might have sold for $780K in 2003 may now be worth $1,100,000 without any major addition or remodel. On the other hand, a home that sold for $1,100,000 in 2009 may now still be worth only about $900K due to the backsliding we have endured since the bubble burst and the bankers took the profits and split. Yes, it was such a slow motion scam and larcenous event that many of us did not realize how we were losing our net worth and our life savings while super sized bonuses were being paid to financial players in New York and in other money centers. Those that knew were unable to get our attention and those that were stealing effectively hid it from plain sight. I heard one of the candidates for POTUS is claiming Dodd-Frank must be repealed. I guess NO reform of financial regulation is needed according to him. Free markets mean free to steal. Nobody goes to jail in that system.
Back to our little corner of the universe: sales are most robust in the lowest price ranges. I measure and report of brackets you can easily review in the spreadsheets available for you on this blog. Under $500K is the healthiest part of our market compared to $500K to $1 million and above that. Within the $500 and below range, the lower the price the faster it sells. Try finding a single family detached home here under $200K and then tell me how much work it needs or how close it is to a major street. Quality always costs more. If you can do some fix-up you can create equity while if you want a major remodel candidate, then be prepared to pay over $150 per foot for the mess you have to start with to do your magic upgrades.
The middle range of $500K to $1 million has become lethargic. Inventory has leveled off and sales are a bit flat. That segment was red-hot about 2 years ago, but now maybe many homeowners recognized the lack of quality product (reported on in prior posts on this blog) and put their homes on the market.
The $1 million plus range has grown in both inventory and unit sales but still hovered around the 30 months to absorb range since the end of 2012. We are now consistently above 100 homes a year selling in that range but there are more homes for sale, so no dramatic market trends are in play.
Rentals in Santa Fe continue to be strong for landlords and property managers. As the City fathers declined approval for a new 399 unit development of apartments between Agua Fria and the Santa Fe River, the lack of rental properties will just get worse until the demand forces more people to commute from out-of-town or rent from friends or family to be able to live here and ride the bus to the movies. No opinion is given here about that project, but where are the new rental units coming from? The developments near the WalMart SuperCenter or the newest one near the Airport? Something tells me that includes the extension of City services to outlying areas; water, sewer, trash pickup, bus lines, police and fire squads, Uber drivers, animal control, sign compliance ordinance. And private services too; Realtors, window washers, landscape artists, baby sitters, legal beagles… What really did happen to the logic of infill in Santa Fe? Political pressure? Logic be damned sometimes.
Visitors continue to discover Santa Fe and aren’t we all in agreement that’s a good thing? As long as they don’t bring crime and punishment for us locals, bring ’em on, I say! Remember that Mayor that implied many visitors should just get back on the bus they came in on? For all his current troubles with recent votes and decisions, I like our Mayor and hope he can successfully navigate the choppy waters of Santa Fe NM. Would you want to be Mayor of this town? (see prior post on Pleasing Everyone)
So lets take our double digits and raise them high signaling our approval of a healthier real estate market. If you want to ponder, a healthy real estate market is a high tide raising all boats. The ripple from increased home sales (and other real estate segments) has a lifting affect on many trades and professions. You are in it or very close to someone who is in this rising tide. Raise your double digits!