Hot housing market edges out would-be buyers, tightens rentals

Sarah Burkhart moved to Albuquerque last year to care for her mother and has been looking for a rental for the past several months. Though she recently secured a rental, she said it was largely due to the time she dedicated to finding a unit. (Roberto E. Rosales/Albuquerque Journal)

EDITOR’S NOTE: This is the final in a series of stories on Albuquerque’s growing housing affordability crisis.

Copyright © 2021 Albuquerque Journal

For the past year and a half, Sarah Burkhart and her husband, David, have been living and caring for her mother in her mother’s Corrales home.

But when Burkhart began to look for a space of her own a few months ago, she found herself in the middle of a competitive rental market with fewer options and available properties being rented almost immediately and for higher-than-normal prices.

Burkhart said their budget was around $1,000 to $1,200 a month, which allowed them to have more rental options than some.

“I know that we operate from a place of privilege, and (for) a lot of people that have been here, $1,200 is a lot of money for rent,” she said. “It’s a lot for us too, but it’s worth it and we have the ability to do it.”

Burkhart, who works from home and has a flexible schedule, said she dived into the rental market, often spending her mornings checking rental websites and calling properties as soon as one became available.

“It probably took two weeks and contacting a lot of places, and either not getting responses immediately or not at all,” she said. “… It doesn’t sound like a lot, just a couple of weeks, but on some of those days that was all I did all day.”

Burkhart is one of many renters and prospective renters who have found themselves in need of housing during a time in which the demand for rentals and the increase in cost of rentals is at an all-time high.

Renters are now in a market in which available rentals are rented quickly and often for a higher price. Pictured is a home for rent on Gold Avenue just south of the University of New Mexico. (Roberto E. Rosales/Albuquerque Journal)

The average rent in Albuquerque is $1,009, according to a report by RENTCafe, a national apartment listing service. And wages aren’t necessarily keeping pace. One study suggests nearly a quarter of New Mexico renters are spending more than half their income to pay for their housing.

The cutthroat rental market is another symptom of Albuquerque’s rising housing costs, which have affected the homebuying market as well and threaten to undermine the region’s reputation as a more affordable midsize city.

Michael “Mo” O’Donnell, acting director of the University of New Mexico Bureau of Business and Economic Research, said the increase in rental prices in Albuquerque began at roughly the same time as the demand for and cost of housing began to rise, although rental prices had been rising before the pandemic.

He said rising housing costs push people out of the housing market and force them into the rental market – which in turn causes rent to increase as the demand for rentals rises.

“I think that’s the reason you now have this increased demand for rentals – because people who maybe two or three years ago would have potentially purchased a house, those people are getting pushed out of the market because those prices are now higher and higher as well,” O’Donnell said.

This has resulted in a rise in rental rates not seen in recent history, with some estimates of the increase reaching 7% compared with the previous year, he said.

Barbara Maddox, marketing and maintenance manager at Maddox Management, said some properties have increased in price much more than in previous years.

Maddox said the company normally doesn’t raise rent until a tenant moves out. In the past, that increase tended to be 3% to 5%. But now increases on units after tenants move out are 10% to 20%, based on demand.

Maddox said demand for rentals soared beginning in February. Maddox attributes that in part to vaccine distribution, which she said may have eased some people’s concerns about moving.

“They wanted to be in a better space, because, I think, we spent so much time locked up into our houses for the year that people were, like, ‘You know what? I want to be in a better space, I want to be in a bigger space, I want to be into something that has a yard,'” she said.

Maddox, whose company manages around 700 units mostly near the Central corridor, said units are moving incredibly quickly, with available units getting multiple applications within hours of listing. She said more renters are also signing leases sight unseen – an uncommon practice until recently.

While demand has kept the company busy, Maddox said she thinks supply will eventually even out demand in the future as construction picks up, though it is unlikely that rents will decrease from current levels.

Renters are struggling to find housing amid a high demand for rentals and a sharp increase in rental rates. According to some estimates, rental rates have increased by 7% compared with the previous year. (Roberto E. Rosales/Albuquerque Journal)

Finding a home

Although Burkhart eventually was able to find a loft in Downtown Albuquerque for just under $1,000 after several weeks of serious searching, she said the experience was stressful and reminiscent of her time living in Austin in the 2000s. The higher rents combined with the increased traffic in the booming city eventually caused Burkhart to move to Irving, Texas, where she lived before moving to Albuquerque last year.

Burkhart said she’s concerned that Albuquerque will only continue to get less affordable for renters.

“I think people are really starting to get alarmed, and I think that it’s rightful that they get alarmed,” she said. “But I also don’t know that there’s anything that’s going to really alleviate the situation.”

During her housing search, she encountered other signs of the booming housing market like hearing stories of people renting properties sight unseen.

“I think it’s like really crazy because people are feeling desperate that they’re even going that far to just sign paperwork without seeing a place,” Burkhart said.

The increase in rents has also come as a surprise to Chris Gillooly-Kress, who is looking to return to Albuquerque after living on the West Coast for several years.

“Really, what I’m finding is kind of frustrating, because I’m looking at sort of really small spaces and the rent just doesn’t seem commensurate with what I’m getting,” he said.

Gillooly-Kress, 34, has lived in Albuquerque for most of his life and returned to the city last year to work as a caretaker for his sister after spending several years in Oregon.

After living with his parents for the past year, he said, he is ready to find his own place since his parents and sister moved to Phoenix last month. He said he has been searching for a place to live for several weeks.

Though Gillooly-Kress said he is excited to return to Albuquerque, the experience of finding a place to rent has been stressful.

“I’m a little nervous about it,” he said. “… (To) not be secure on where I’m moving next is a little nerve-wracking,” he said.

Rent consequences

The high demand and corresponding prices could have consequences for New Mexico renters.

“Over the long term, we may be in a situation where these rents have increased by a percentage and wages aren’t necessarily able to catch up to those increases – meaning that people are going to be in positions of paying a greater percentage of their checks toward rent,” UNM’s O’Donnell said.

A 2020 study produced by the New Mexico Mortgage Finance Authority estimates that nearly 45% of New Mexico renters are cost-burdened, meaning they spend more than 30% of their income on housing costs. And half of those renters are classified as extremely cost-burdened, meaning more than 50% of their income is spent on rent.

The study also showed that on average, renters earn significantly less than homeowners. Homeowners have a median income of $58,417, compared with renters’ median income of $30,817.

He said that higher rents can make it difficult for people to find appropriate housing and that renters may have to make concessions on the housing they can find rather than going with property that they would like.

“It’s a matter of having to kind of reassess what the landscape is in terms of what’s available and what they can currently afford, rather than what they may have been able to afford in the past,” O’Donnell said.

The increase in rents could also further threaten renters on the verge of eviction, according to Maria Griego, economic equity director at the New Mexico Center on Law and Poverty.

Griego said that the state was dealing with the highest increase in homelessness in the country pre-pandemic and that COVID-related issues have left more renters struggling to pay rent.

“It’s just becoming a really untenable situation,” she said.

Housing affordability crisis poised to harm ABQ’s economic, social development

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