ALBUQUERQUE, N.M. — Coming off a year of record home prices and sale numbers, Albuquerque housing market experts agreed that the metro area is on the map to a degree it hasn’t been in the past.
“I think we need to realize that Albuquerque has been discovered,” said Cathy Colvin, president of the Southwest Multiple Listing Service, during NAIOP New Mexico’s annual housing market update roundtable Thursday morning.
A panel of real estate experts lauded the market’s success, but acknowledged that the intense demand for housing brings a new set of challenges, including building quickly enough to keep up with that demand and finding affordable options for first-time homebuyers.
“The challenge in our market is, we’re running out of $200,000 houses to sell,” said Albuquerque realtor Tego Venturi. “I really think probably in the next year … that’s going to be a thing of the past in the Albuquerque market.”
By any measure, 2020 was a year of tremendous growth for Albuquerque’s housing market.
Despite the pandemic, Venturi said 14,904 home sales were recorded in metro Albuquerque in 2020, more than any year on record. Sales totaled just under $4.13 billion last year, another Albuquerque record.
Venturi added that the high-end market in particular saw growth. He reported a 49% year-over-year rise in sales for $500,000 or more.
“That market has really exploded,” he said.
The panelists agreed that a mix of low interest rates, demand for more space, extremely limited inventory and new large construction projects has propelled a mix of buyers, from first-time homeowners to out-of-state retirees, to look at buying homes in metro Albuquerque.
“We’re seeing a tremendous amount of retirees wanting to locate to our state,” said Jenice Eades, first vice president of the Home Builders Association of Central New Mexico.
The panelists agreed that demand is likely to stay high in 2021, particularly in outlying parts of the metro area, barring a substantial rise in interest rates.
One challenge is building enough homes to keep up with that demand. Venturi said the supply of homes on the market dropped by 40% in 2020, and half of the homes on the market sold in six days or less in 2020.
There are a few challenges preventing Albuquerque builders from keeping up with demand. Eades said the cost of lumber, sheet metal and other building supplies has risen significantly in the last year, and supply chain challenges have prolonged projects.
Additionally, a shortage of shovel-ready lots in Albuquerque and surrounding areas makes it hard to meet demand.
“That will continue to hinder us,” Eades said.
Venturi added that it might not be the worst thing for Albuquerque’s real estate market if interest rates trend up slightly. While the panelists agreed that Albuquerque does not currently have a housing bubble, Venturi said the current rate of growth isn’t sustainable for the city.
“We could actually use a little bit of slowdown,” Venturi said.