Albuquerque has long had a reputation as one of the West’s most affordable cities for renters and home-buyers alike. But a couple of studies suggest that may be changing.
A study from RealPage, a Texas-based company that provides data analysis and other services for the real estate industry, noted that rents across Metro Albuquerque have risen 5% in the past year, the 12th-largest jump among small metros during that same period.
Separately, a study from Apartment List showed that more than half of Albuquerque renters spend at least 30% of their salary on rent, a higher percentage than in famously expensive West Coast metros like Portland, San Francisco and Seattle.
Carl Whitaker, manager of market analytics for RealPage, said he attributed it to Duke City’s slow-but-steady job growth in recent years, and a limited number of new homes to rent and to buy.
“With pretty limited availability, that does give apartment operators more wiggle room,” Whitaker said.
In absolute terms, Albuquerque’s rents remain low compared to many western cities. Whitaker said Albuquerque’s current average monthly rent is $877, which pales in comparison to the national average of $1,041. However, New Mexico and Albuquerque both have average renter incomes that are well below the national average. Data from Apartment List shows that New Mexico’s median renter income as $31,953, ahead of just six states.
Whitaker added that the supply of apartments is an issue. He said the occupancy rate in Albuquerque reached 96.4% in the third quarter of 2019, the highest figure in the approximately 25 years since RealPage began tracking market data for Albuquerque.
“We’re not seeing housing starts return to the levels we saw pre-recession,” he said.
The lack of supply is affecting home prices as well as rents, keeping potential buyers in rentals. Jessica Beecher, owner of RE/MAX Select in Albuquerque, said the inventory of available homes in Albuquerque dropped precipitously during the second quarter. Not coincidentally, home prices also rose 9% during the same period.
“That 9 percent is the highest percent we’ve seen in over a decade,” Beecher said.
With inventory already low, Beecher said homeowners were reluctant to put their homes on the market, in case they don’t find anything better.
Additionally, neither home nor apartment construction has caught up to demand. Whitaker said Albuquerque has fewer apartment units under construction than western peer cities, including Fresno, California, Santa Rosa, California and Colorado Springs, Colorado.
If there’s an upside for Albuquerque renters, it’s that Beecher and Whitaker agreed that rents and home prices are unlikely to continue rising at this same rate. Whitaker said smaller markets like Albuquerque don’t typically see continuous rent growth. Without an uptick in new residents or sustained job growth, he said rents were likely to stabilize as new homes are completed.
“It’s hard to sustain 5, 6% rent growth,” he said.