The lack of supply in the Albuquerque metro area continues to seep its way into increased home prices.
After a drop-off in January, the median sales price for a single-family detached home has reached an all-time high — $344,040 in April for the Albuquerque metro area, according to the Greater Albuquerque Association of Realtors. It’s an increase of more than $28,000 since the beginning of the year.
Kelly O’Donnell, a longtime New Mexico economist and chief research and policy officer with Homewise, told the Journal the local housing market ended up here due to a variety of factors, including — but not limited to — the Great Recession more than a decade ago, supply chain issues that drove up costs of construction in recent years and low mortgage rates during the COVID-19 pandemic.
“For a variety of reasons, home construction never truly bounced back after the recession and, as a result, housing supply has not kept pace with growth in the number of households that want to own a home,” O’Donnell said. “The upward pressure on home prices due to the housing shortage was compounded by the flood of folks relocating from major — and majorly expensive — urban areas during COVID, which itself was further intensified by the extremely low mortgage interest rates during that period.”
But the issue of supply is not a new phenomenon in the metro area market. For example, last month’s inventory stood at 886, a slight decrease from 898 a year ago — thousands of units below the number of homes experts say should be on the market for it to be healthy for both buyers and sellers.
That lack of inventory has made bidding wars common, which has led to homes staying on the market for shorter periods.
Typically new construction stays on the market longer, GAAR President Carrie Traub said. But when you factor out new construction, homes stay on the market for less than a week.
“We went up to about 19 days on the market in January,” she said. “Now we’ve gone back down to 4 days, which is almost the same as it was last year at this time.”
Albuquerque’s lack of supply and increasing prices in homes has also been compounded by mortgage rates that have jumped over the past year. In mid-April, the 30-year fixed mortgage rate hovered in the 6% range, an increase from 5% a year ago, according to Freddie Mac.
But mortgage rates, despite their increases, remain historically low, says David Garcia, Bank of Albuquerque’s senior vice president and head of mortgage lending. Garcia said deciding on purchasing a home based on where rates stand now isn’t necessarily a good idea.
“The one thing I will say is even though prices have gone up and interest rates have gone up, owning a home is still a very important part of a long-term strategy for financial soundness,” he said.