The median price for a single-family detached home stood at $175,000 in March 2015.
Seven years later, that price has jumped nearly double.
According to a report from the Greater Albuquerque Association of Realtors last month, the median home price in the Albuquerque area stood at $325,000. The average home price stood at $372,002, according to the report. On both ends, that has translated to a nearly 20% increase.
And keeping with the trend of dwindling supply, about 523 single-family detached homes were available on the market in March. In February, about 540 homes were available on the market — which was, at the time, a record low, according to GAAR.
“It’s a supply and demand issue,” said Sarah Griffin, an Albuquerque-based real estate agent with Keller Williams Realty. “There are less houses than there are buyers.”
The hot market in Albuquerque and surrounding areas follows a nationwide trend of rising home prices and low inventory. Across the U.S., home inventory stood at about 950,000 — a decrease of 9.5% year-over-year — and the median sales price stood at about $375,300, which is an increase of 15% from March 2021.
Inflation, which has increasingly affected Americans, has played a part in increasing home prices, along with the low inventory and historically low interest rates for mortgages. But interest rates for mortgages have risen, sparking a view from some that the market will balance out in the coming months.
Less inventory, more bidding wars
There are some new home builds happening across the metro area, but supply chain issues have hampered timelines on construction.
Kimberly Kiegel, a real estate agent based in Albuquerque with eXp Realty, said new home builds aren’t always affordable for home buyers considering contractors are pricing new homes higher to match the rising costs of supplies to “make it worth it” for them.
Moreover, Kiegel said the inventory of homes for sale needs to be in the thousands to make the market healthier for buyers. But that hasn’t been the case in Albuquerque’s real estate market.
The low inventory has created bidding wars among prospective buyers, with some paying as much as $100,000 over listing price, experts say.
“You’re getting less house for more money,” Griffin said. “And you’re seeing multiple offers out there and buyers paying, you know, $20,000, $30,000 up to $100,000 (over asking price).”
Local experts say that trend, in part, has come from workers relocating to New Mexico with large amounts of cash on hand. Griffin has seen buyers from California, who she says are “pricing New Mexicans out.”
“They absolutely do affect our market,” Kiegel said. “Especially if they come from bigger cities. … I wouldn’t say that it’s like that across the board. But it is there.”
Rising interest rates
Inflation, and steps that federal policymakers have taken to curb it, remains a major factor in the local real estate market.
In the early months of the pandemic, the Federal Reserve took a number of actions designed to spur economic activity, including lowering the key interest rate. That interest rate has, in turn, played a part in the housing market over the last couple years — with interest rates for mortgages dropping as well.
But the Federal Reserve raised the key interest rate last month to address rising prices for consumers, which has also translated to an increase in interest rates for home mortgages — a sign of hopefully slowing down the hot market, Bank of Albuquerque vice president David Garcia said.
But experts say that the Albuquerque area market may remain tight with the low inventory of homes. Earlier this year, interest rates — and they vary from lender to lender — on average were in the 3% and 4% range, according to Luke Ham, branch manager for VanDyk Mortgage in Albuquerque. Mortgage rates now stand at about 5% — and may continue to climb.
“Most of what fueled everything for the last two years was just the (low) interest rates,” Ham told the Journal. “All of a sudden people were like, ‘Shoot, I’m going to buy property.'”
Garcia — though he believes the market will remain relatively hot — said he can see the prices for homes begin to even out with a rise in interest rates for mortgage loans.
“I think that prices will start to stabilize somewhat and sales prices may start to even out a little bit, slow down from the pace they’ve been going at,” Garcia said. “But there still is an inventory shortage.”
But that rise in interest rates can also lead to hundreds more dollars on mortgage payments, said Kiegel. That, in turn, can make homes that may have been affordable for buyers just months ago now out of reach.
“Your entry-level buyer who has no equity and no home to sell and (who) has to cobble together every dollar for a down payment, that jump in the interest rate is going to really hurt them because they can afford less per month now,” Kiegel said.
