ALBUQUERQUE, N.M. — The law of supply and demand is firmly at work in Albuquerque’s resale housing market.
Based on the first two months of the year, with tight inventory the story in most neighborhoods, Realtors are hopeful that the peak spring selling season will bring more listings to the market for eager buyers.
What listings there are have been going quickly. The average detached home that sold in February was on the market for just 66 days, eight days fewer than a year ago.
Shrinking inventory has led to homes selling faster for more money, according to data compiled by the Greater Albuquerque Association of Realtors. Although the rise in home prices has been a boon to many sellers, buyers have had to act fast to get the homes – especially moderately prices ones – that they wanted.
“They can’t dilly-dally,” said Don Martindell, GAAR president. Buyers that were shut out last year because of competitive offer situations are poised to be more decisive, he said, meaning they’ve cleaned up credit scores, and have approved financing and down payments in hand. Meanwhile, Realtors are “definitely working their networks” to drum up listings, Martindell said.
The recovery in New Mexico’s housing market gained momentum in 2016, with single-family home sales hitting the highest number since the beginning of the Great Recession.
Just under 20,000 home sales were reported to the Realtors Association of New Mexico during the year that just ended, a 6.4 percent increase over the previous year, fueled in part by low interest rates. Homeowners were prompted to pull the trigger before rates went higher, said association officials.
Mortgage interest rates moved to the highest level since 2014 last week. According to the Mortgage Bankers Association, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 4.36 percent to 4.46 percent, its highest level since April 2014.
With rates still low by historic standards in 2016, buyers moved quickly and sellers benefitted from a stellar year. New Mexico’s housing market contributed more than $4.5 billion in volume generated by real estate sales last year, the most money making its way into the economy since the association began compiling statistics.
Not too surprisingly, Bernalillo and Sandoval counties, where most of the state’s jobs are concentrated and the largest number of residents live, registered more than half of those single-family home sales, with 7,511 and 2,348 transactions, respectively.
The number of newly listed metro-area homes added to the local housing market declined once again in February. Compared to 1,415 new listings in 2016, this February’s 1,263 newly listed detached homes for sale represented a 10.7 percent decline. At the same time, the number of newly listed townhomes and condos dropped by 6 percent.
Contrasting the drop in availability, greater Albuquerque’s median and average home sales prices continued to rise. For detached homes, the median sales price last month increased 6.6 percent to $186,500 and increased 10.3 percent to $144,324 for townhomes and condos.
“While the rise in home prices is good news for home sellers, it can be a challenge to buyers, especially first-timers,” said Martindell. He added, “Many sellers are getting generous offers in the current market, but worry that they have less homes to choose from when they, in turn, are buying their next home.”
As prices have risen, people whose houses have been “underwater” – cases where the mortgage is higher than the value of the property – could climb into a positive equity position, and finally will be able to sell and move, said Martindell, a 30-year veteran of the local real estate market.
Meanwhile, the region’s homebuilders hope that low resale inventory will drive buyers in the new-home market.
“My outlook for 2017 is very positive,” said Jay Gillilan, president of the PulteGroup’s New Mexico division, a production homebuilder selling properties in all price categories to make up for the shortage on the resale side.
Of the nearly 1,800 new-home permits pulled last year in the metro, PulteGroup was the market leader, building 25 percent of the residences in communities in the northwest and southeast areas of Albuquerque, Rio Rancho and Bernalillo. PulteGroup has also entered the Santa Fe market.
Gillilan said interest continues to be strong in the company’s Mirehaven project, an almost 1,000-lot endeavor in northwest Albuquerque, which is now in its second phase. Gillilan said the 550-home Del Webb portion of the community targets a large demographic of baby boomers in the market. “Some of these (55 years plus) buyers are downsizing from four-bedroom homes in the Northeast Heights” to something on one level and with access to an amenity center a short walk away.
Many of the Del Webb customers are still in the workforce, and the community is an “easy commute” to job corridors in Rio Rancho and Downtown, said Jolene Montoya, marketing coordinator.
The Del Webb Homes at Mirehaven start at $242,000. “These homes offer something new and fresh that you can’t find with a lot of resale properties,” said Gillilan. Homeowners are also paying for the community center, a 10,000-square-foot facility that incudes a fitness center, conference room, large pool area and sports courts.
Those buying the Del Webb homes are both New Mexico residents and retirees from out of state. “A fair amount (of the Del Webb) homes are all-cash purchases,” said Wade Messenger, PulteGroup’s vice president of sales. Indeed, he said, the company’s affiliated mortgage operation has a 92 percent capture rate across all its Pulte-branded homes in the state. When sales and home financing are integrated, customer satisfaction tends to increase, Messenger said. And an affiliated mortgage operation for large builders provides another source of income, too.
While PulteGroup New Mexico directly employs 70 people in the metro area, the economic reach of the business extends to many vendors, suppliers and general contractors.
“We’ll be spending “tens of millions of dollars” in New Mexico this year,” Gillilan said.
However, the company, which owns 2,000 entitled lots in the state, is building at a modest pace.
“We’ll need additional job growth to really push the economy forward” and prompt more home building, Gillilan said.
Shrinking inventories could make housing less affordable just as crucial spring selling season heats up, especially for buyers that have benefitted from a down payment assistance program offered by the New Mexico Mortgage Finance Authority. Qualifying borrowers, who must invest $500 of their own funds, can receive up to $8,000 of down payment assistance.
Purchasers on the lower end of the price range may see some upward pressure on loan sizes.
“I don’t think many of our clients will be shut out of the market, but they may be borrowing more,” said Jeff Payne, senior director of homeownership. In 2016, MFA increased its mortgage loan production by 67 percent and the number of homebuyers receiving down payment assistance increased by 64 percent.
The average sales price of a home financed by MFA is $141,300.
Payne said that, as the existing housing stock declines, new construction takes center stage for many first-timers. “We are pleased to see that homebuilders are showing increased interest in building single-family affordable homes,” he said.
Of the 142 new-home permits pulled in the metro area in January, 92 ranged in price from $90,000 to $200,000, according to DataTraq, the Albuquerque new housing market letter.