ALBUQUERQUE, N.M. — While Albuquerque is primed to welcome more retirees, millennials and investors in rental properties, it still needs to get more shovel-ready land onto the market for the kinds of mid-priced single-family homes that a cross-section of buyers can afford, several speakers told the crowd Monday at a NAIOP New Mexico luncheon.
John Covert, director of Metrostudy’s Colorado-New Mexico Region, said Albuquerque‘s new home construction rate currently lags other Western cities where economies are more robust.
Covert, who lives in Denver, regularly meets and consults with many of the top home builders in the Albuquerque metro area, as well as with lenders, developers, investors, suppliers, utilities, school districts and local governments concerning trends in the local economy and their effects on the real estate market.
Covert said that of the 6,000 lots available for single-family home construction in the metro area, only 1,800 of the parcels fit the bill. “Finding finished lots are a challenge,” Covert told the crowd, which includes members of the city’s commercial real estate development community. That means developers will more than likely build homes exceeding $250,000 in order for their investments to pencil out.
The upshot: as the supply of available homes tightens, prices rise and mortgage rates budge slightly, buyers will gravitate to existing homes, which are more affordable at the starter price points, said Covert.
The regional residential real estate update also featured Todd Clarke of New Mexico Apartment Advisors and Bob Grassburger, an assistant professor at UNM in organizational consulting and applied research.
Clarke detailed the growing interest in the multifamily housing market by local and out-of-town investors. He just accomplished a first: listing and selling a remodeled fourplex for over $500,000. He forecasts more transactions in 2018, as sellers of older apartment units look to cash in, especially in Nob Hill and Old Town, both popular rental areas. These areas, with high bike, walk and transit scores, rate well with both baby boomers and millennials, Clarke said.
Grassburger spoke of the benefits of attracting more retirees to New Mexico, especially those who “are healthy, wealthy and wise.”
His research, which focuses on the economic impacts of retirees, shows that every retiree household setting up in New Mexico creates “half a job.”
With stable “mailbox” incomes (money coming from pension or Social Security checks), retirees are strong contributors to to the state’s gross receipts tax fund and property tax rolls. Many retiring baby boomers, he said, also are twice as likely as other generations to launch businesses.
New Mexico is about 30 years behind Alabama, Arkansas and Texas — states that have strong marketing efforts to attract retirees, said Grassburger.
The current state budget proposes that $150,000 be set aside to research the feasibility of a similar marketing program, Grassburger said.