ALBUQUERQUE, N.M. — The recovery in the Albuquerque metro area’s housing market gained momentum in 2013 with both single-family home sales and prices on the rise.
The 9,741 single-family home sales, both detached as well as condos and townhouses, were the highest number since the 2004-07 housing bubble years and roughly equivalent to the number sold in 2002, according to the Greater Albuquerque Association of Realtors.
The high sales volume is particularly impressive given the tighter mortgage-lending standards, especially when compared to the bubble years, said association President John Kynor.
The average sales price for detached single-family homes, which make up 91 percent of the for-sale housing market, increased year-over-year by 2.9 percent to $210,488 in 2013. The increase is within range of the historical average annual increase of 4 percent from 1983 to 2003.
The median price, meaning half sold for more and half for less, increased year-over-year by an even higher 3.5 percent to $174,900 in 2013, according to the association’s yearend report.
“I suspect 2014 will more of the same,” Kynor said. “We’ll be picking up more steam.”
Home prices increased year-over-year in nine months of 2013, up from eight months of 2012 when the market turned the corner toward improvement. Prices only went up year-over-year in two months of 2011.
The ratio of home sales to listings pointed to a balanced market between sellers and buyers in 2013.
Last year’s average sales price of $210,488 is 13.4 percent or $32,601 below the average price in 2007, which was the peak year for home values in the metro.
The average home price rose by nearly 40 percent during the 2004-07 bubble years, then dropped by just over 18 percent during the 2008-11 downturn. The rise and fall in home prices during those eight years was unprecedented in the metro.
The recent recovery in home prices, while modest, has not been evenly distributed across the metro, based on an analysis of data from the Southwest Multiple Listing Service, a GAAR subsidiary. A few MLS areas appear to be rebounding, while most are still lagging.
It should be noted that an individual homeowner really doesn’t know the value of his or her house until it’s put on the market and an offer arrives.
The biggest rebounds in 2013 were in the Downtown and Corrales MLS areas, where the average prices for detached, single-family homes were fully recovered to the level of 2007. The Southeast Heights MLS area, which is bounded by Central, San Mateo and Tramway, is on the cusp of a full price recovery.
Three other MLS areas registered average sales prices within 10 percent of their 2007 levels:
- Foothills North, east of Tramway between Montgomery and Academy, at minus 4.5 percent.
- Near North Valley, from Interstate 40 to Montaño, at minus 6.8 percent.
- North Valley, from Montaño to Alameda, at minus 7.5 percent.
Five MLS areas registered average sale prices that were more than 20 percent below their 2007 levels:
- Near South Valley, which straddles the Rio Grande between Downtown and Rio Bravo, at minus 29.8 percent.
- Southwest Heights, west of Coors between Central and roughly Dennis Chavez Boulevard, at minus 24.3 percent.
- Valencia County at minus 23.8 percent.
- Rio Rancho Central, north of Northern and west of Unser, at minus 22.8 percent.
- Rio Rancho Mid-West, west of Rainbow between Southern and Northern, at minus 20.2 percent.
The remaining 30 MLS areas in the metro registered average home prices between 10 percent and 20 percent below their 2007 levels.
Why some MLS areas are recovering home values faster than others is mostly a matter of speculation.
The bottom five have some of the cheapest home prices in the metro, which made them affordable to families with comparatively low incomes, said GAAR Executive Vice President Janice McCrary.
Lower-income homeowners could have purchased their houses with mortgages they couldn’t afford during the easy lending of the bubble years. Or they could have suffered a financial setback, such as a job loss, due to the slow economy that rendered them unable to pay their mortgage.
For example, Sandoval County, home to Rio Rancho, had 14.6 percent of the metro’s total population but 21.1 percent of the total foreclosure homes in 2013. Valencia County had 8.6 percent of the metro population but 14.5 percent of the total foreclosure homes.
Foreclosure homes, especially when unoccupied, tend to drag down property values in their neighborhood.
Then vs. now
There appears to be some minimal correlation between a run-up in home prices in a given MLS area during the bubble and the pace of its recovery of home values since then.
A reliable calculation of the run-up in home prices by MLS area is impossible for most of the metro. There were only 20 MLS areas in the metro in 2003, the last year before the bubble, and 41 MLS areas by 2007, the end of the bubble. There are still 41 MLS areas today.
Valencia County, however, has had its own MLS area for more than a decade. It registered an 81 percent increase in average sales price from 2003 to 2007, one of the highest rates of appreciation in home values in the metro.
Some of Valencia’s huge average price increase from 2003 to 2007 can be attributed to the nearly 2,300 new homes built in the county during 2004-07. New homes sales tend to drive up average home prices in a given area, although GAAR doesn’t always capture new home sales if direct from builder to buyer.
Sales data points to similar huge run-ups in home values from 2003 to 2007 in the Near South Valley and Southwest Heights, but not so much in the Rio Rancho Central and Rio Rancho Mid-West areas.
At the top end of the recent home price recovery, both Corrales and Downtown also have had their own unchanged MLS areas for more than a decade.
The average home price in Corrales increased by 55 percent from 2003 to 2007, while the average Downtown home price increased by 50 percent. The average sale prices in those two areas were maintained in 2013, probably due to a higher price point of the houses sold during the year.
Ultimately, home sales and prices in neighborhoods that make up an MLS area tend to go through cycles, McCrary said.
For example, a generational shift in the residents can occur from empty nesters moving out and families with kids moving in, or vice versa. Neighborhoods can go into decline or get revitalized, which gets reflected in the home values.
“Neighborhoods tend to have a life of their own,” she said.