Lack of inventory has been promised and/or threatened for years around here. This is the year we are finally seeing it in full force and effect. This lack of inventory is a problem no matter how you look at it, unless you are just plain greedy, hoping that homes climb so high in price you can make a killing selling your’s for triple what replacement would cost. But that is not realistic.
The fewer homes that a prospect can view means the more urgent their search and decision becomes. And that plays into the sellers hands for price and value. If you are a buyer and find yourself competing with others for the same home, which is more and more common these days, then your bargaining power is low and your likelihood of getting a “great” deal is much lower. You will get what the market will bear.
And you might have to overlook some shortcomings and a less than average home for what may feel like above average prices. Feel free to use the charts available to you on the left margin as you compare today’s status of sales and inventory with last year and each and every year since the mid oughts. Somewhere around 2006 it was “tight’ but not as much as it is now. While we had more unit sales per month thru the 2004 thru 2006 time frame, the average absorption rate was much higher because the inventory was much higher. Now there is less to look at. If there were more homes for sale, the number of sales per month would be higher.
I cannot predict how many more sales would occur if there were twice as many homes for sale out there. Just that there would be more sales. In 2016 and 2017, the average number of months it would take to sell a home (in all price ranges) was between 6 and 7 months. That seemed balanced and fair to all parties. There were homes to compare and choose from. And sellers were getting close to what they expected to get when they did sell. Now its worse for buyers and even better for sellers.
An imbalance is fine as long as everyone knows about it. There is no law that says a market has to be in balance. But make no mistake now it is a seller’s market. This is strongly the case in the lower price ranges but still true as you go up the scale to the seven-figure homes.
What a time to be a seller, right? Except what are you going to do when your home sells? Are you going to pay more than you just sold for, due to the market conditions? Maybe you are downsizing and can look in a lower range and for a smaller home now. But that is exactly where the market is so tight, where inventory is so scarce.
There is still an issue out there that I plan to research and it would potentially have an influence over the numbers I present to you each month. There are new homes being built and sold (by Pulte Homes) in the segment of land between Governor Miles Rd, Cerrillos Rd, I-25 and Richards Ave that are not in the Santa Fe Association of Realtors numbers. Well, I am guessing many of them are not there. Our MLS database shows only about 20 home sales in that area in the alast few years. My uneducated guess is it would be closer to 100 sales, if not 150.
I have mentioned this in prior posts but this is going to take some detective work to get a more representative count of what is going on in Santa Fe housing. It is not really correct that there were 1639 homes sold below $500,000 over the last 12 calendar months, even though that is what the Absorption Rate report says. Maybe it was 1700 sales. Maybe even more or who knows? As soon as I can get a handle on it, I will share what I learn. If some sales are not included in our MLS database, so what? It’s not really a big problem except it means the MLS data is less reliable that it used to be. And that makes this little blog less informative and useful to buyers, sellers and real estate professionals. Meanwhile, enjoy the coming fall season and lets hope for plenty of snow in the mountains.
Thanks for visiting!