Albuquerque-area homes are getting pricier — and staying on the market longer

Home prices in the greater Albuquerque area and the time it takes to sell a home continue to climb, though real estate and finance experts say the market is returning to normal after a tumultuous few post-pandemic years.

A high demand caused by a shortage of homes — particularly more affordable “starter homes” — has caused housing prices to rise. This August, the median price for a single-family detached home in the greater Albuquerque area reached $379,545 — the highest number ever recorded by the Greater Albuquerque Association of Realtors.

Though affordability is a major concern for many homebuyers, the area’s housing inventory is at its highest level since May 2020, and combined with slower sales, it signals a cooling trend in the market, experts say.

“We definitely have our affordability challenges,” said Albuquerque real estate agent Tego Venturi. “That’s really the number one problem with the housing market right now. It’s priced a lot of people out, and it’s unfortunate.”

Fewer people are choosing to move, preferring to stay in their homes to take advantage of the low interest rate they may have secured during the pandemic, which means fewer people in the market overall, Venturi said.

At one point in the years directly after the pandemic, half the homes on the market sold within four days, Venturi said. Though prices have edged higher, more inventory and a longer time on the market indicate the market is returning to equilibrium, he added.

“This is what a normal or a balanced housing market looks like,” Venturi said. “There’s not an excess of sellers. There’s not an excess of buyers. It’s just balanced.”

According to data from the Greater Albuquerque Association of Realtors, houses spent an average of 39 days on the market in August, up from 30 days a year ago. Inventory of single-family detached homes also spiked nearly 15% to 2,163 in August, according to GAAR data.

More time on the market is not necessarily a cause for alarm, said GAAR President Christopher Shain Tanner.

Average days on the market for homes in Albuquerque have fluctuated from as low as 12 days on the market in 2021 — when buyers were racing to take advantage of low interest rates — and as high as 54 days in 2015, because of a larger housing supply.

“We still have a supply and demand issue, where there’s not enough supply,” Tanner said. “But I will say that the demand isn’t quite as hot as it was in the 2020, 2021 timeframe, because the (interest) rates are double what they were (then).”

Mortgage broker Heather Prather said she encounters some prospective buyers at her Albuquerque firm, Infiniti Mortgage, who are on the fence because of higher interest rates. Though, as rates come down slightly, clients are more willing to take the plunge.

Interest for a 30-year fixed-rate mortgage was 7.04% in January, though interest rates have fallen to 6.3% as of Sept. 25, according to the Federal Reserve Bank of St. Louis.

In January 2021, interest rates dropped to 2.65%, the lowest point in a decade. Those mortgage rates were so low, Prather said, that buyers would pay more for a home than its listed price to secure a good deal on an affordable mortgage.

“It was very, very rare that someone was not overpaying for a home,” Prather said. “It’s definitely changed. We don’t see a lot of that anymore.”

Though housing stock is increasing, if a buyer is looking for a newly built home around the $300,000 mark, “Good luck in Albuquerque,” Tanner said. “It’s probably not going to happen,”

Those in search of a more affordable home may be drawn to areas like Los Lunas, Rio Rancho and even Moriarty, where new homes are more affordable and more plentiful than in Albuquerque, he added.

Trying to build an entry-level home under $300,000 is “just not possible,” Venturi said, because of the high cost of construction and land. Advocates are pushing for high-density housing, he said, which is cheaper to build, but can be politically fraught.

Even though some would-be homeowners are priced out of the Albuquerque market, Tanner said the city is ultimately in a better position than other Western markets like Phoenix, Dallas and Denver, where populations boomed post-pandemic, and home prices shot up sometimes by as much as 25%.

Though Albuquerque’s market did see a spike, it was around 18%, Tanner said, not as high as other cities.

“The great thing about that is that it kept us insulated, where other markets were not insulated. When they spiked really high, they also had to correct with a downturn, and we have not seen a negative year,” Tanner said. “The colloquial term for New Mexico is ‘the Land of Mañana,’ right? Well, sometimes that hurts, but with real estate, it actually protects us.”