After surviving a double-dip recession in late 2012 and experiencing the loss of many of its residents, New Mexico is facing a long road to real estate market recovery.
An article in Albuquerque Business First (“Economic Outlook conference explores NM’s road to recovery,” Jan. 15, 2013), quoted University of New Mexico Bureau of Business and Economic Research Director Lee Reynis saying “the state’s economy is ‘continuing to move sideways.’
“The state’s private sector, with the exception of the construction industry, added jobs during the year, but the government sector shed jobs to bring the overall job growth rate down. And while New Mexico’s unemployment rate is 6.2 percent and below the national rate of 7.8 percent, much of that is due to the fact that the state’s labor force has decreased in size, Reynis added.
‘The number of people that are counted as unemployed is falling. People are dropping out’ of the labor force, Reynis explained.
“U.S. Census Bureau figures showed the state is now experiencing an out-migration of residents, confirming speculation that many of the 53,000 state residents who lost jobs during the recession have left the state, Reynis added.
“As for the Albuquerque metropolitan area, which has been shedding jobs since June 2012, ‘we simply do not see evidence of a recovery, and this is five years after’ the recovery from the recession began, Reynis said.
However, CNBC (“Housing in Mountain States Climbs back,” March 30, 2012) reported that the residential housing market in New Mexico, Colorado and Utah did not experience the extreme rise and crash of that of other states following the real estate bubble and subsequent recession.
“‘We didn’t experience the bubble that California, Florida, Arizona and Nevada did,’ said Thomas Thibodeau, a residential real estate expert at the University of Colorado’s Leeds School of Business. ‘Prices in Denver came down about 14 percent, peak to trough, and it now looks like the decline has come to an end.’”
In RE/MAX’s 2012 national housing report, Albuquerque was first among all 53 metro areas surveyed, with a 46.6 percent-increase in the number of year-over-year sales.
“But veteran homeseller Kurstin Johnson isn’t ready to say hard times are behind the city. ‘Last year was excellent, we recorded the highest volume of sales in three years,’ says Johnson, who’s parlayed 25 years of local realty experience into ownership of her own boutique firm, Vista Encantada Realtors. ‘This year’s been slow been to start — plenty of buyers but no closings,’ she says. ‘Everyone I speak with is experiencing a bit of a slowdown. People are sitting on the fence. There doesn’t seem to be anything to propel buyers to act. We have fewer active listings than we’ve had since 2006.’”
CNN recently reported that Santa Fe is seeing a median home price of $248,000, a 17.1 percent drop since the market peak in 2005. It forecast the city’s home prices would grow by 10 percent through 2013. “This state capital in the high (located 7,200-feet above sea level) country of central New Mexico wasn’t hit half as hard by the housing bust as some other parts of the nation. Helping to lift prices is Santa Fe’s thriving economy.
“With a population of just under 200,000, unemployment is at a low 5.5 percent, making it one of the top 10 metro areas for jobs. The city is also attractive for other reasons: It’s a center for visual and performing arts, with a major dance company and the famous Santa Fe Opera.
Several Greater Albuquerque area real estate professionals recently blogged about current market conditions on Realty Times. “We have hit bottom and are climbing back in terms of home prices and sales,” wrote Judy Pierson in early April. “The numbers of properties going under contract in ABQ continue on an accelerated track. For the past 24 months now the number of homes going into a pending status has realized a 15 percent – 35 percent increase over the same month of the previous year. We can point to continued low interest rates for mortgages actually having dipped below 4 percent during the month.”
“Our Greater Albuquerque area market continues to be a strong market, though it seems to have ‘cooled down’ somewhat,” wrote Paul and Judy Wilson in late February. “Our market has become a buyer’s market with inventory over 4500 homes available. The inventory of homes is over two times what was available 30 to 36 months ago. This has translated to a higher ‘absorption time’ and longer time on market, especially among houses that are overpriced for our market (most of them). We continue to find that properties that are priced right are on the market for no more than 30 days. Pricing continues to rise all over the metropolitan area, with “average” properties in the area valued at between $125 and $150 per square foot the rule now rather than the exception.”
The Wilsons continued, “buyers coming into the area, especially from ‘high priced markets’ such as California, Arizona, Nevada and the East Coast are surprised at the great values that Albuquerque offers. Local residents are at the same time surprised at the general increases in price across the spectrum of varying areas within the Metropolitan area.”
Meanwhile, in terms of commercial real estate in New Mexico, in a March 25 article “NM banks continue to scale back commercial real estate lending”), Albuquerque Business First wrote, “New Mexico’s community banks continued to decrease their dependence on commercial real estate loans in the fourth quarter, according to the Federal Deposit Insurance Corp.
“The state’s 48 community banks saw their median percentage of commercial real estate loans decrease to 195.73 percent of capital in the fourth quarter, down from 222.48 percent in the fourth quarter of 2011 and from 222.75 percent in 2010.
“Construction and development loans decreased to 35.6 percent of capital, a drop from 39.21 percent for the same period in 2011. Residential real estate loans fell slightly to 113.28 percent of capital from 113.66 percent in 2011.”