Barker Realty offers a quarterly, comprehensive look at the Santa Fe real estate residential market derived from the industry’s most extensive database of transaction data.
A Shift In the Market // It’s not your imagination; the real estate market is going through a transition. Like our dramatic swing from a hot and smokey June to a cloudy and wet July, we are seeing signs that the market is leveling off and recalibrating to the current economic climate. We are in unprecedented waters, however, and while we admit it is impossible to predict the future we can look at key indicators, historic data, and our brokerage’s shared knowledge to try and make sense of the current market conditions. One could argue this shift is long overdue and will help bring needed balance to our market.
Over the winter we felt a little cooling take effect. Some homes sat on the market longer and prices seemed to catch their breath. That reprieve was short-lived, however, as we enter the traditionally most active buying and selling seasons: spring and summer. Our market is beginning to show some changes where buyers are choosing to sit by the sidelines as sellers push the boundaries of pricing. Distressed properties – once too undesirable for investors or DIY’ers – are finding new life and buyers are evaluating areas not traditionally sought after, much to the benefit of those localized sellers. Here at Barker Realty, we’re meeting with our brokers and clients daily to evaluate strategies, negotiations, and expectations as the market changes.
Santa Fe has more buyers than homes. Mortgage will play a critical role in the coming year. According to Bankrate, mortgage rates have reached their highest levels since April 2020. Given the two previous years’ appreciation and the potential for higher interest rates, now might be a good time to evaluate your real estate value and adjust your strategy and thinking as necessary. At Barker Realty we have more than 70 real estate professionals who can help you think about your real estate strategy for 2022.
At the end of 2020, we thought we had seen it all, but 2021 proved us wrong. The rate of change in our real estate market has been hard to quantify but here we have some standout numbers: an increase of nearly 12.5% in the number of sales and a massive increase of 32% in total sales volume over an already record-setting 2020. Santa Fe is a popular destination for many Buyers. We saw continued interest from major metro areas with inbound buys coming from Los Angeles, Dallas, Denver, and Seattle. We expect this type of demand to continue.
Elation or frustration? We’re at risk of sounding like a broken record in reporting new record averages and extremely low inventory, yet here we are! The unpredictability of the current market continues to surprise even our most seasoned brokers. Some trends have remained steady, however: move-in ready homes in desirable neighborhoods continue to attract multiple buyers and command a premium, buyers continue to flock to Santa Fe for its quality of life and to take advantage of their newfound career flexibility, and until current construction catches up with demand we will see prices remain high.
After 2020 we thought the average price would continue to creep upwards as demand never waned. Now in the final months of 2021, that prediction still holds true. Buyers need to be ready to pounce and to be creative in their offers, while sellers enjoy the benefit of this bounty, they too need to proceed cautiously as we are starting to see buyers balk. Working with the right broker in today’s market will be the difference between elation or frustration.
Spend a summer evening in the Railyard or downtown and it’s clear that Santa Fe has emerged as a top destination for both tourists as well as new residents. It should be no surprise, then, that our average and median prices are the highest we have ever experienced. There are signs, however, that we may be nearing the high-water mark as some properties are requiring price changes and days on market increase ever so slightly.
Buyers continue to be well qualified, staving off concerns of another housing bubble. The city and community partners have been working hard to address affordable housing needs and new homes continue to trickle into the market – hopefully providing opportunities for first-time buyers and relieving some of the pressure the unprecedented demand has created.
Will the residential real estate market slow down anytime soon? It seems unlikely.
Santa Fe has long been a tiny blip on the radar screen as a place for those looking for a new home in the U.S., typically attracting an older semi-retired demographic while our youth moved elsewhere for jobs and excitement not found here. This has dramatically shifted as we see the average age of those moving here dropping. The job market here together with a high quality of life are driving this change of our in-migration and provides our community with a new set of opportunities and challenges. Local political leadership is astutely managing these with sensibility and a balanced agenda.
What a year we had in real estate for 2020! We’re entering 2021 with record low inventories and our December average sales price was up a whopping 25% over where we started in January of last year. Construction costs have been increasing the past several years nationally by about 5% per year but local contractors will tell you it’s certainly more than that in Santa Fe. With little inventory of resale homes, we’re finally seeing a marked increase in new construction in both housing and apartments. That’s good because we need more options for buyers. Transactions of vacant residential land sales increased 77% between the 1st and 4th Quarters while the average price was up only 5.5% to $154,000.
There will be no diminishment of out of state buyers coming into Santa Fe; we’re seeing a younger demographic moving here and a higher percentage of them making Santa Fe their permanent residence as opposed to a 2nd or 3rd home. All this bodes quite well for owners of a residential property but makes it more challenging for the first time home buyer.
2020 has proven to be the year of the unexpected and our real estate market is no exception. Where we feared a crash due to the pandemic, the opposite has proven true: sellers are enjoying competing offers and record-high prices, while buyers are needing to make quick decisions while also being patient. Typically the election would also play a factor by slowing the market down, but this is an atypical year and we do not expect these market conditions to change anytime soon.
We certainly have never been through such a challenging and uncertain time as we are experiencing socially, economically, and politically both locally and worldwide. We are sensitive to the pain we are witnessing and remain steadfast in our belief that we will get through the pandemic while our economy goes through its major shifts and begins to slowly recover. New Mexico continues to do a good job containing the fallout. Santa Fe residential real estate is again proving to be strong, reliable, and safe. We continue to find many opportunities in our market for buyers and sellers alike as we carefully navigate through this.
Our Country and our World were not prepared for the challenges we now face. Circumstances change quickly as this unseen enemy passes through and the personal tragedies and economic hardships will be life-changing. Thus far, Santa Fe and New Mexico appear to have avoided the brunt of this and with safe practices, we can only hope that will continue. Not surprisingly, we are seeing many more of our transactions take place with local Santa Feans. And the pace of our transactions, while evidencing some slowdown, has shown remarkable resilience. We believe the residential real estate market will come through this strongly and serve as the backbone for economic recovery on the other side.