Albuquerque Real Estate Talk 427 Nov 19, 2022

Nov 21, 2022 | Albuquerque Real Estate News, Albuquerque Real Estate Talk

Tego (00:00):
We’re gonna talk about real estate, cuz this is a real estate show. There we go. I think we’ll talk real estate. So, Tracy, on the, agenda today, we, we want to, take a deep dive into owner financing or seller financing or real estate contract or

Tracy (00:13):
All the same thing.

Tego (00:14):
Yeah. All the same thing. All the different, um, ways to say that we wanna talk about do o m other in, in our world known as days on market and what is, and, and, and why that really matters when you are, first off, how to calculate it

Tracy (00:30):
As well. Days on market for a home that we have on the market for sale and how many days it’s on the market. Correct.

Tego (00:37):
Correct. So we’re gonna talk about that. Um, and then I, I I’ve dug out some really interesting data on homeowners and what the interest rates that people have right now. So we’ve had this unprecedented increase in interest rates, mortgage rates over the last, you know, six months. We went from three and a half to now, you know, got up over seven now to pulled back a little bit, but just where people are locked in right now and it’s actually really good news there, Tracy.

Tracy (01:04):
So it is, I think we’re gonna find a lot of people probably refinanced, right? Yeah, yeah. Um, also Tego, a few other things. You know, we always talk about homes of the week and open houses. Yep, I really wanna jump in right now on one house that came on the market this week. Perfect. So maybe more than one, Crimson Glory in Primroses Point. Beautiful Luxury Home. Opened today, Saturday for the first time. Went available today, opened from one to three today and tomorrow it’s 1,000,100. One of the most beautiful homes. Large lot in Primroses Point, which is a neighborhood up near Poeo and Tramway. Kind of a newer neighborhood, so to speak. Probably 15, 20 years old or more. Yeah. Yeah. Things time, time flies. I remember being in that neighborhood when there was just lots of lots, so, right, right. But it had different phases and built out.

Tracy (01:58):
But this house is really spectacular and some of the things that, um, our listeners are gonna wanna know about it, it’s a single story. 4,100 square feet, five bedroom, two living areas. And one of the bedrooms is actually a attached Casita with its own entrance. So it’s really nice. The lot is really big 0.44, so almost half an acre there is not a pool, but there is room for a pool. Um, just beautiful single story house. So if that’s, um, something that’s of interest, I would run to see it because it’s one of those that we expect a lot of people will, um, be interested in based on the phone calls this week while we’ve been in coming soon, I expect we’re going to be quite busy for, so

Tego (02:44):
That property, you know what’s interesting, I wanna just point out on that. I, obviously, I follow a bunch of real estate news and there’s been a few stories out there about multi-generational housing in, in, in like, what is multi-generational housing. And that’s where you have, you know, either parents and kids, living together, either, you know, in the kids’ house or in the parents’ house. And you have this gen, you know, multi-generational, situation with adults and it’s become much more common now where, where people are cohabitating together and this is a perfect type of property where you have a, a separate what they call in-law suite for just, just for that purpose.

Tracy (03:23):
Right. And a lot of times we’re also seeing Tego like siblings moving in together, not just the multi-generational, but there’s lots of reasons why people might need this floor plan. It might even be a teenager that you just wanna have their own space or whatever. But it’s just a really great property. Um, 12 0 9 2 Crimson Glory northeast. If you wanna Google it and take a look and see if it’s something that you might wanna call us to schedule a private tour of that home for you and your family.

Tego (03:52):
Yeah, the, the, there is, you know, there are a few new homes on the market this week. The, the number of homes overall in the Albuquerque area started to, to pull back finally, it’s, it’s pretty common this type of year, time of year, um, this week we’ve seen less homes come on the market as go off the market. So, um, we’re starting to trend down and that’s more than likely gonna consider, consider continue all the way through till the, end of the year. And then we’ll probably reset starting, at the beginning of January and, and see some people put more homes on the market. Of course, there’s always homes coming on the market, always homes going off the market too.

Tracy (04:30):
Right. And there is another one we put on the market. Great.

Tego (04:32):
Let’s talk about it

Tracy (04:34):
Just freshly on the market. 2,700 Vista Grande. Yep. It’s a town home,

Tego (04:40):
Town home,

Tracy (04:41):
Right. three bedroom, two and a half bath. It’s a, a split level floor plan. So you enter on the main level where the kitchen dining are, and then about three or five steps down to the living area with just beautiful mountain views. Um, it’s, it’s, overlooking the bluff and, um, close to I 40 and Coors. Yeah. On the west side of the river overlooking the river valley and the bluff there and the city. And that one’s 315,003 bed, two and a half bath, just completely updated. Yep.

Tego (05:12):
Very much. Completely upgraded. Brand new kitchen, brand new appliances in the kitchen. The bathrooms have been updated not that long ago. They’re not perfectly, you know, brand new, um, new laminate flooring and yeah. So anyway, it’s, it’s, um, it’s gonna be a good opportunity for somebody. And that one is on Vista Grande, 2,700 Vista Grande. So

Tracy (05:32):
That is an gated neighborhood though, correct. So best to call us and schedule a time. We don’t have an open house scheduled for that particular property just because of the logistics of the gate. It’s a little trickier. Yep. So if that’s, um, something that works for you, give us a call at that four four eight eighty eight eighty eight.

Tego (05:50):
Okay. Let’s get into some topics here. Tracy. Real estate contracts.

Tracy (05:55):
Sure. What is a real estate contract? Tego?

Tego (05:59):
Yeah, so real estate contract is actually the, the, the document, the vehicle for, um, spelling out the terms on, on a seller financing deal, meaning the, the owner, the seller sells the property, but instead of just taking the cash out from the property, they, they take payments and it could be, you know, an interest rate with certain terms, certain amateurization schedule. So, yep.

Tracy (06:26):
So owner financing is just another tool and a way for a seller to have an opportunity to just sell their property. Right. So it, it’s just, um, an op option. You can put a property out for sale using conventional financing, fha, VA cash, but you could also do owner financing. So owner financing arrangements, Tego, like you just mentioned, don’t have specific requirements per se, like getting a regular loan. Right. So we can think of, um, like a lot of things are credit scores, debt to income ratio, underwriting requirements, all these things that when you get a regular loan are taken into consideration. Sure. But if owner financing, a lot of times those things aren’t, aren’t in play. There’s not a general guideline. Um, owner financing arrangements can be used for an owner occupied property, residential commercial, or even raw land. Right.

Tego (07:23):
Very common with, with raw land, because many times for raw land, especially undeveloped raw land, meaning there’s no utilities or anything on the property, you really don’t have an option for bank financing on

Tracy (07:36):
There. There’s some out there now, but it’s not necessarily the best. Right. Yeah. Um, so borrower and seller can come to agreement regarding the price of the property, the time of the loan, the period of the loan mm-hmm. the down payment and the terms regarding the agreement. So the terms would be the interest rate, um, when the note would be due. So it’s great, but there’s no mortgage insurance on it. Lots of reasons why it can be a good option. So Tego, why do you think somebody would wanna consider selling a property and offer owner financing or a real estate contract?

Tego (08:10):
Well, it, it’s actually a very, solid long term investment. If you are, um, somebody that doesn’t need to have all the cash out from your sale of your property, it’s a great investment. So let’s say you have two, a $200,000 property and you’re, you can earn, you know, 6, 7, 8, 9%, you know, interest on the, your, your sale of that property. Um, that’s a pretty darn good return Right. On your money.

Tracy (08:37):
So for some people, rather than sell the property and have the money and not know where to invest it because they don’t need to put it in another home, they might say, well, I can put it in a bank or a, a CD or something at 0.5% interest, or I could be the financier of this property and get 6, 7, 8, 9% interest, whatever people agree to. Right.

Tego (09:01):
It’s, it’s actually a pretty popular investment for savvy investors that, that are looking for a place to park some money. They will actually even buy the loan from somebody and just have it as a long term investment. Very common to buy, real estate contracts from somebody that holds it and just take over that, that, you know, basically cash somebody out. I’m, I’m confusing. You’re way ahead of I know. I know, I know. Okay.

Tracy (09:27):
Okay. Okay. So yeah. Reasons why a buyer might not qualify a reg for regular financing and why they might want owner financing. Sure. Lots of reasons, right. So sometimes, um, people think that there’s a red flag if somebody can’t qualify for regular financing, and there’s so many reasons. So one might be they just change job careers, it’s a new job industry mm-hmm. and they haven’t been there for two years, right? Yep. So a lot of lenders have some stability on the type of job you’re in because they want to make sure that you’re gonna make it in your new career. Right. Sometimes somebody just opened a new business, right. And they don’t have the financials yet to show that they can afford it. Um, sometimes self-employment.

Tego (10:13):
Yeah. Well, in, in one thing is that, you know, credit underwriting, the, the standards that that people must meet to qualify for mortgage per purchase became really, really tight in 20 2009, let’s say. And they’ve been relatively tight since. So Yeah. You know, the lending standards are very tight and there’s certain situations where people can definitely afford a property, but they can’t, um, qualify under the, the, the normal terms of, financing. Right?

Tracy (10:45):
Right. So self-employed individuals often have a lot of write-offs or deductions that might make it look like they don’t have the money to pay for a house Right. Loan. Right. Um, so owner financing can be excellent for that. So other things, sometimes people don’t have the credit score and sometimes it’s, you know, really close where their credit score is for some reason been hampered. Sometimes it’s because they co-signed on a loan and somebody else didn’t do their financially responsible thing. Yeah. Right. Yeah, totally. Um, also, a lot of times there’s borrowers with no credit, whether they’re young or somebody who just has always believed in paying cash for everything. Yep. If you don’t have credit, that can also keep you from getting a regular loan.

Tego (11:30):
Yeah. So there’s a lot of advantages on the, the, the homeowner seller side and there’s plenty of advantages on the buyer’s side. Right now in Albuquerque, as we sit here today, there’s 66 properties that are, have real estate con contract offered as a, as a financing option.

Tracy (11:50):
So this seller is offering to be the finance Correct. Like the bank for that property.

Tego (11:55):
Correct. Correct. You know, the, the thing is a lot of ’em are actually manufactured homes. Not unusual because ma a manufactured home, many times can’t qualify just for a lot of different reasons. We don’t know need to go into detail on that, but there’s a lot of reasons a manufactured home will not qualify for traditional, mortgage financing. And so that, that’s a, a pretty common one that we see.

Tracy (12:19):
So we can set up a search of homes for people if they wanna buy Yeah. Using owner

Tego (12:23):
Financing. I’ve actually got it on our website. There’s a link on there for homes with, seller financing available. We,

Tracy (12:28):
And we can set up a search for them. That’s very narrow, right? Yeah. To different neighborhoods and different things. So if something pops up in an area you really are interested in, you get a specific reminder of that. For sure. So other advantages we talked about, um, that maybe you don’t need that cash and you might get a higher interest rate on it by selling the property and being the lender. There’s also other things, sometimes people get a higher sales price because they’re offering owner financing. Yeah. Um, sometimes, you know, there’s no appraisal unless the buyer requires one, in which case, you know, that can happen. Um, a lot of times, you know, there’s a good down payment that that gives you some cash now and then you get monthly payments until you pay off the loan. One of the things that’s good to know about, owner financing is that all the terms are negotiable between buyer and seller.

Tracy (13:21):
And the realtors help facilitate that and make the offer and, and figure out the terms. But a lot of times people might say, I can do owner financing but only for two years. I can do financing for you, but only for five years, 10 years. Typically they don’t go 30 years. Correct. Correct. You know, it’s not a 30 year loan, it’s people say, yeah, for a few years while the market shifts this or that. I I don’t need that money, so I’ll do owner financing, but we’re gonna have a call or a balloon where the, the full loan is due in five years say it’s all negotiable. Yep. But that way you can maybe know how many years down the road before you get paid off. And so some people like to have 10 years because they just want what you call mailbox money. Right,

Tego (14:07):
Right, right. So mailbox money is a, a term that’s out there where it’s, you know, I sold the property and I’m not, I’m not a, a landlord and you know, I’m not renting it

Tracy (14:16):
Property responsible for taking

Tego (14:17):
Care of it. Yeah. I, I’ve sold the property, it’s, it’s in their name. Um, and just collecting, payments on that. So that’s a good option. So go, go ahead.

Tracy (14:26):
I was gonna say, um, the, they really do become owners. It’s a sale. You are like the bank. Oh yeah,

Tego (14:32):
Yeah, yeah, yeah. For sure.

Tracy (14:33):
And the deed and all that. So the one part I wanna get in before we finish this topic is we always suggest that um, you have a third party that’s like an escrow company, right. That is the company that’s holding everything that the new buyer pays them. Who pays you just to keep it real clean for both buyers and sellers and real

Tego (14:56):
Safe. A hundred percent. No doubt you

Tracy (14:58):
Wanna do it direct and give each other direct and have to prove that no, you were making payments and

Tego (15:02):
Things. No, no. You don’t. You don’t want to go there. You definitely need an escrow company.

Tracy (15:05):
And some of the downfalls of owner financing, if the buyer defaults and stops paying. Yeah. I mean it could happen, right? It’s a risk. Um, one of the good things about that is typically to take back the property is easier than going through a foreclosure in New Mexico. Yeah.

Tego (15:23):
So in New Mexico

Tracy (15:23):
You could have to do that.

Tego (15:24):
Yeah. So in New Mexico, it’s a judicial foreclosure, um, which is a long process on a, on a real estate contract, type type deal. It’s, it’s actually a much simpler process. So, I mean, we’ve only talked about this for about 10 minutes here and there’s so much to it. And so if you are, you know, either thinking about buying a, a property, using, seller financing or selling a property, using seller financing, reach out to us. Be sure you’re, you’re, you’re working with a realtor or professional that really understands all the ins and outs of this cuz there’s so much to cover. Um, we have a great book that was written by, Terry White here in Albuquerque. He’s the owner of, sun West Escrow was Yeah. Was No, he’s still involved. He’s still involved. Yeah. And, and it’s called, um, you know, it’s just a book about real estate contracts and we have copies here if anybody’s interested to learn about that. But there’s a lot of good information out there and just, just give us a shout if you want to talk some more about it.

Tracy (16:21):
Let’s talk about days on market,

Tego (16:24):
Days on market.

Tracy (16:25):
Dom, do you know, in our, in our system it’s dom, but really it’s days on market and the days on market for homes being listed for sale has shifted a little bit as we’ve come into fall and interest rates have jumped up. Do you have some statistics on that? Yeah, my, my

Tego (16:42):
Matic Yeah, of course I have stats on that. So, you know, days on market is a, an interesting gauge for the, let’s say the health of the real estate market overall. You know, as average days on market go up means that demand has, has slipped a little bit. Um, you know, as home sell faster, we know demand is stronger. And, and what’s happened over the last, let’s say a few months, days on market have, creeped up a little bit because demand has pulled back a little bit because of the, the higher mortgage rates. Um, the thing is, it’s historically it’s still very low. I think right now we’re about 21 days as average days on market or for homes that, that go under contract

Tracy (17:24):
This past like March, April, may. We were down to like two days, three days. Oh yeah. The most of them, most homes were selling in under seven days on market. Right.

Tego (17:34):
Yeah.

Tracy (17:35):
And, so now we’re all the way up to like 21 days on market

Tego (17:39):
On average. Yeah. There’s

Tracy (17:41):
Depends how you

Tego (17:42):
Look at it. It depends how you look at it. It depends if we’re talking about median or, or mean or median or average, right? So, but anyway, we don’t need to go there. But the, the thing really I wanna address here is I think most people that have ever shopped for a home recognize when they’re out shopping, they see homes, oh, it’s like that home’s been on the market for 30 days, 60 days, 90 days. What’s wrong with it? It’s the first thing that comes to mind. And so that’s why say right here,

Tracy (18:07):
Of course, so speaking of real estate contracts, someone on our team was writing an offer, um, today on a property that’s offering owner financing, it’s been on the market 102 days. What does that mean to you?

Tego (18:22):
It means that there’s couple things, right? That you know, it, it, I always go to why do homes not sell? Right? And there’s, there’s multiple reasons. The the most common one, the most obvious one is it is just the price prices above what you know, the market,

Tracy (18:39):
The price for the condition and location.

Tego (18:41):
Yeah. So it’s price, condition, and location. Right. Right, right. And so, you know, you, if, if you can’t, obviously in most cases can’t adjust condition or excuse me, can adjust location, sorry, I said that wrong. Um, and, and generally you can do something about condition. Um, it just, it just depends if, if, you know, doing the updates makes sense. If if it needs it.

Tracy (19:02):
So today’s market 102 days on market when the average is about 21 Yeah.

Tego (19:08):
It’s 21 right now make

Tracy (19:09):
You go, Hmm, something is not right for the, for that property.

Tego (19:12):
Yeah. Yeah. So, um, the, the thing to think about if, if you’re, if you are putting your home on the market, you don’t want to get those high days on market because that can be a red flag for, for buyers. Maybe it’s not rational, maybe it’s not true, but it can be an issue if, if you do get ahead of the market on price, maybe the home isn’t ready to be shown and you start tick off those days on market, it can, it can affect the, the sale and the, the actual actually in the end, ultimately what, what you do sell the property for

Tracy (19:46):
10 years ago, you know, five months on market was not unusual Today that would be very unusual.

Tego (19:53):
Well, you know what’s interesting, if we go back to, so right now, October of, of this year, 20 22, 22 days on market is the average days on market. If we go back to, um, October of 20, let’s say 2019, which is let’s say call that the last normal market, it was more like 30 days, right? 35 days, 40 days. But if we go back to 2018, it was more like 50 days. So, you know, we had just an extraordinary market over the last two years where we saw homes, you know, half of the home selling in four days or less. And, and that’s change. And that’s, that’s good, that’s good for buyers because now they have a little bit more time. They don’t have to just, you know, make compromise on, on what they’re buying and not take just whatever is available. And, and in some ways it’s good for sellers too. It’s not quite as frantic. You’re not getting a bunch of offers. Um, the home prices are still, holding in steady. And so it’s, um, you know, you just, just wanna be aware of that one.

Tracy (21:00):
So let’s talk about interest rates. You did some interesting stats and posted on your Twitter, which you have a great following on Twitter, and you’re known for your stats. And actually you were featured this week on a panel with the home builders. Yeah. Congratulations. As the person giving all the stats for our market, which was awesome. Um, so you did a little, post about interest rates and how, how they break down among our

Tego (21:25):
People. Yeah, so, so there’s been a lot of conversation about, okay, mortgage rates went from, you know, 3% to 7%, 7.5% in some cases. And, and again, they pulled back a little bit, but you know, how many homeowners out there right now have really good interest rates on the homes that they own and that they’re in right now? And so I did a whole bunch of digging and I came up with the stats in New Mexico, 82%, almost 83% of homeowners have a mortgage rate of 5% or less, which is still, you know, let’s say two points lower than what the going rate is today. Um, almost 60% of people have a 4% or less, and 19% of people have a 3% mortgage or lower in New Mexico. This is New Mexico stats.

Tracy (22:16):
So really interesting numbers, Tego and, you know, we can make all sorts of surmise all sorts of things from that. Yeah. But really the people still need to buy and sell. People still need to move and it’s a nice stat, but I don’t think we wanna say, oh wow, I’ve got a sub three, I’m never gonna move again because we have life changes, right? People have reasons why they still need to buy and sell homes.

Tego (22:41):
Let, let’s, let’s all be honest here. We don’t, nobody makes decisions purely for financial reasons. I mean, maybe there’s some people and maybe people think they make reasons, you know, all their decisions based on, you know, good financial decisions. I mean, of course that’s part of it, but, but a home and a home purchase and a and a home sale, has so many other factors, around it. It’s not just purely the numbers, but yes. Somebody that has a 3% mortgage now saying, well, I wanna move or I wanna upgrade, or I want update to another home, or, or whatever, another part of town, different school district, whatever the reason is you wanna move, um, suddenly giving up that 3% mortgage and having to go for a six and a half percent or a six 7% mortgage Yeah. That, that’s, that’s gonna be, that’s gonna have an impact on the budget, no doubt about it. So yeah, it’s an interesting thing to pay attention to

Tracy (23:35):
Historically.

Tego (23:36):
So, yeah. Yeah,

Tracy (23:37):
Yeah. And rents, did you have some rent news?

Tego (23:40):
Yeah, rents, I, I did a short little video on what’s happened with rent over the last year in Albuquerque. And I think most people recognize that that kind of follow, you know, the economy and what’s going on is that, rent rents in Albuquerque and really around the entire country have really, grown exponentially since the beginning of the pandemic. Just like home prices for sale homes, rents have also gone up substantially. And in, just to give you an idea, go

Tracy (24:11):
Ahead. Two bedroom apartment?

Tego (24:13):
Yeah, just two bedroom units just kind of average. So, so the median, rent for a two bedroom unit in the greater Albuquerque area is now, about $1,300 a month. And that’s about 14% higher than a year ago. Over historically in Albuquerque we see three, 4%, you know, year over year appreciation in rent, you know, when you, when you, extended out. Um, so yeah, I mean, rents have gone up a lot and, you know, three bedroom now is

Tracy (24:43):
1900

Tego (24:43):
A month. 1900 a month mm-hmm. 1900 a month. That’s, that’s the, that’s the median in, in Albuquerque. So, you know, it’s that, it, it’s, it’s frustrating because we know inflation has hit everybody and it’s hit housing and it’s not just the price of homes, it’s not just the mortgage rates, it’s, it’s also the rent, unfortunately. And, and the, the, the thing is, I mean, we still have a shortage of, of properties in the Albuquerque area, both for rent and for sale. And so that has been, been driving up, um, prices and, you know, who knows where this is gonna end up, but, but right now, um, it’s, they’re, they’re, they’ve gone up a lot the last year.

Tracy (25:25):
So last week we were talking to a rental property manager that does apartment has a specific apartment complex. Yeah, actually that was at bowling. Were you there for that conversation? Yes, yes. So, um, occupancy rates, you know, for a while there, there wasn’t a apartment to be found for rent in Albuquerque. Everything had a waiting list. Sounds like that might be loosening up just a little bit. Yeah, they’re more at like 90, 95% occupancy now. Um, so that’s good. There are at least some apartments apparently available. I know that particular complex was, um, the one right behind Sprouts ATS Road and Yeah. And Alameda, very large complex. Um, but you know, they come at a price, so we are always like, is there a reason that you’re not buying? Yeah. Right. Yeah. It’s hard to pay, you know, if you need a three bedroom to pay that much, I mean 1900 a month, you think of the property somebody could own. Yeah. Or 1900 a month.

Tego (26:24):
Yeah, no, the, the, the the, you know, the thing on rent right now, the data is showing it that may, we may have plateaued a little bit, just like home prices have plateaued, right. Um, we haven’t really seen a pullback in either, , for sale prices or for rent prices, but they do seem to have plateaued, which is actually healthy. Um, you, we, we just, we’ve been just going up so much so fast over the last few years.

Tracy (26:46):
It’s seasonal too. Yeah, absolutely. I mean, this is normal right now for us to see that everything level off for the next two or three, four months until about March. As soon as we get those warm days in March and grass starts greening up. So we’ll heat up the real estate.

Tego (27:01):
We will see for sure. You know, the big, the big question out there, um, you know, are, are mortgage interest rates gonna keep going up? Are they gonna plateau where they are right now? You know, in the high sixes are they gonna pull back and there’s, you know, people predicting both, of course. Yeah. Right. Some people think it’s gonna go up, some people think it’s gonna go down. Some people that I follow that have been pretty accurate on predicting mortgage rates do expect actually a pullback in, in the first quarter. But we’ll see. It really has to do with whatever happens with inflation and if they can get inflation under control, mortgage rates will, will more likely, um, start to pull back as well. But

Tracy (27:44):
Well see. I, mentioned that you were on a panel with home builders this week. So was, Paulty, Brazo, Dr. Horton and Westway Homes. Yes. Yep. Really great panels. So if you’re interested in new construction, we’ve got lots of the latest and greatest information on that too.

Tego (28:03):
Yep. Lot of, still, still a lot of homes, you know, being built in Albuquerque, which is, which is a good thing. We need them

Tracy (28:08):
And a lot of great incentives from the home builders right now. If you’re in the market to buy Eddie or anybody, you know, it’s great time.

Albuquerque Real Estate Talk 427 | November 19, 2022

Nov 20, 2022 | Albuquerque Real Estate News, Albuquerque Real Estate Talk

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Eddy (00:00):
Tego and Tracy, here’s the KIVA this morning, giving you some real estate advice, talking you through it. They are here every week, rain or shine, letting you know what’s going on because real estate is a 24/7, 365 day decision. It’s where you wanna live, and they’ve been providing all that information to you now for over eight plus years. And they’re here in the Kiva. And all you have to do is take their phone number down, make that phone number ring, get some expert advice, consultative advice. These are your real estate counselors here, Tego and Tracy Venturi, 505-448-8888, 505-448-8888. Welcomehomeabq.Com. Welcome into the Kiva. Guys, good morning.

Tego (00:40):
Good morning. Good morning. Yeah, you know, it’s interesting. I, I was participated in a, a, an event the other day with a panel of realtors that all got into the business somewhere around 2006, 2007, you know, right before everything shifted drastically. And, you know, clearly we’re in a real estate shift right now, and it’s very different though, than back then. So we’re gonna talk about that and, and just where we are in real estate market and some tips and tricks. And, sorry, Eddie, I didn’t get to let let you finish, finish introducing, but

Eddy (01:11):
No, that was it. You guys take it away. Run with it. You only got 30 minutes.

Tego (01:15):
I know we gotta go. We got a lot of, lot to cover here.

Tracy (01:18):
I’m sure we have new stats, right? Tego for October. October. It’s October now that it’s November,

Tego (01:22):
October. Data is here. I just, it’s

Tracy (01:24):
Like the best time of the year. The month for you, huh?

Tego (01:27):
Yeah, I posted something on Twitter that you can see where I just kind of went through some of the data. I’ll probably record a video after, after this show and just kind of go through what I’m seeing in the market, but we’ll talk about it a little bit today as well. But I’ll put it out on my Facebook, my Twitter, and our YouTube channel on a market update. So

Tracy (01:48):
I know a lot of people like to follow that, and so they follow you on those, on those different avenues. So we appreciate that. I know a lot of, a lot of people follow listen and, and value your advice, Tego.

Tego (02:01):
Well, you know, I have realtors, pretty statistical realtors coming up to me all the time, you know, saying, Well, what do you think? What do you think? What do you think? And it’s like, Man, I wish I knew.

Tracy (02:09):
Oh, come on. You use real data though when you answer them, which is awesome. Yeah. So that’s part of the being a trusted resource. I,

Tego (02:16):
I have a, a gut feel where we’re gonna go. It’s, it’s an educated instinct on, on where things are gonna go here over the next six months. So it’s gonna be very curious. Obviously, we’ve got an election this, this coming week, and I think that alone is gonna settle down a lot of people’s nerves about the economy, the market, just, just in a course. You know, housing’s all part of that, that, and

Tracy (02:46):
Getting past

Tego (02:47):
That. Yeah. And just the uncertainty. I mean, that’s just one of those uncertainty that’s floating out there right now that, that anyway. Okay. Getting way off track here.

Tracy (02:56):
Let’s quickly go through what we hope to talk about now that we’ve already spent time.

Tego (03:00):
So there’s been a lot of, you know, let’s say, well, let’s just call it, you know, kind of bummer news about housing lately. Lately, right? I mean, it’s, you know, kind of some negative news about housing. And, and the question, you know, that’s coming up now is like, will my home sell in today’s real estate market? And so we’re gonna talk about that. Some, some, just some thoughts on that. The October data, we already said that. And then Tracy, we were gonna dive into what is due diligence in a real estate transaction, right? And that could be in a, a commercial real estate transaction, could be in a home purchase, it could be in a vacant land purchase. There’s this, this thing that we call due diligence. So let’s just jump right into that first, what, what is due diligence?

Tracy (03:44):
So due diligence is your opportunity to investigate the condition of a property that you are purchasing to make sure that it’s acceptable to you. You know, we talk about houses that are resale houses, and we are really buying them as is, right? We go in, we have the opportunity to look at it, We go, Yes, I want this house. So then we make our offer, we get it under contract, and we have, typically in our contract, we put in dates for our due diligence. And what’s due diligence also called inspections?

Tego (04:20):
Yeah. It could be inspections, it could be you could call it contingencies as well. Yeah. Cause

Tracy (04:25):
Contractual contingencies. Well, the, usually

Tego (04:28):
Not the same, but different. I mean, you, you have a contingency based on the due diligence that you do, right? Did that make sense? Yeah, sure. Yeah. .

Tracy (04:38):
So,

Tego (04:39):
So, so basically, so let’s go through the list. You’ve got a home condition mm-hmm. , right? So that, that could be, you know, some sort of due diligence. Due diligence. Due diligence.

Tracy (04:46):
Might have an appraisal. It

Tego (04:48):
Could, it could be an appraisal, right? Could be a should be a survey of some sort to actually, you know, do that. And, and then there’s also the title search, which is also a due diligence where you’re actually having the title company do a search on the property, ownership, record history, all that stuff.

Tracy (05:08):
Sure. Making sure they can convey clear title to the new owner. Yeah.

Tego (05:11):
Yeah. So that would be another piece that, that you go through as the process, right?

Tracy (05:16):
Right. And so all of those things together are due diligence, and it’s a part of the process. So a lot of times people really rely on us realtors to walk them through all of those steps, right? Because they don’t really know a home inspector, or they don’t know what to look at when the title company sends them a binder. You know, a lot of times people who wanna sell their home by owner, which is great, if they do, they, they oftentimes end up relying on a trusted realtor to help them through the paperwork of it and the due diligence of it, because it can get very difficult, right? Yeah. So one of the questions that I get sometimes, Tego is when you’re buying a brand new, newly constructed home, should you do inspections?

Tego (06:00):
I, I mean, I, I’m, I’m never gonna say, don’t get a home inspection.

Tracy (06:04):
There you go. So, yes.

Tego (06:06):
Was that a double negative? No, that wasn’t a double negative. No, it wasn’t. Yeah. No. So I’m never gonna say no.

Tracy (06:10):
Yes. Even, even if it’s new construction, you have due diligence periods. And one of those I suggest is get a home inspection, get another party to come in and get their eyes on it, make sure that everything got buttoned up, because a lot of the builders are building multiple properties at the same time. And it would be easy to have an outlet not work or reverse polarity on a water faucet or whatever, but just good to, to have another set of independent eyes on things. You know, there’s lots of different types of home inspections, and we’re not gonna go into that, but, well, we’ve kind of covered the main things that are the big items in your due diligence

Tego (06:47):
Period. Yeah. There, there’s one more that I thought of as we were talking here, which was homeowners associations and or condo associations or CCNRs, for example, covenants, conditions and restrictions on the property. Those could also be a contingent thing and, and something you want to do d due diligence on. And in fact, in New Mexico there, there is a state statute that you, you know, home buyers are allowed to do or required to receive information about the homeowner’s association if it is in a homeowner’s association, right? Right. So they understand what’s going on with the budget and if there’s any, you know, what the fees are and how it’s managed and, and all that, all that stuff, right? So that’s another one.

Tracy (07:30):
So working with home buyers, we tend to give them a heads up of what to expect. And that typically, especially with inspections of the property things that come up that might be safety, mechanical or hazardous, are things that we typically see buyers wanting the seller to take care of. And we do typically have that opportunity to put together what we call a repair request. And it’s really just a, would the seller be willing to do this? And then we decide if we’re comfortable with the answer. Sometimes we go back and forth on it. Yeah. But sometimes we do our due diligence and whether it’s regarding title or survey or inspections or other things, we decide it’s not a good house for me. Right? Yep. And we need to not buy this house. And, and that’s a hard thing to do once people have put all this time and energy and love into the future in that property. Right.

Tego (08:26):
Well, and maybe some expense too, and some expense, maybe, maybe pay for a survey, maybe paid for some of those inspections. Yeah,

Tracy (08:32):
For sure. Right, right. So sometimes we, we suggest they not move forward with the house. It’s not what they were expecting, and that’s very sad emotionally, but a lot of times it’s the better choice, especially if they feel like it’s gonna cost them too much to do what they need to do to the house. Yeah. And they can’t make it what they want. So sometimes we don’t move forward.

Tego (08:54):
Yeah. And so I, I think the takeaway here is that, you know, due diligence and contingencies are part of every home purchase and home sale. Very, very common. Our purchase agreements, our New Mexico contracts that we use here in the state the the, the State Association of Realtors, you know, puts together the forms that we use. There are standard forms, and there are a lot of contingencies, a lot of due diligence options in there for buyers. And a lot of options. I, I mean, I have to say, we say this a lot ourselves, is that our, our purchase agreements definitely weigh in the favor of the buyer. There’s a lot of sellers that look at this and go, Wait, hold on a second. They’ve got all these different options to back out of the deal. But it’s, it’s that way on purpose to, to make sure the buyer has the opportunity to understand what they’re, what they’re purchasing.

Tracy (09:45):
So then from the seller’s side, we talked about the buyer’s side on, on the due diligence, on the seller’s side, the, the due diligence period items that come up. They don’t necessarily have to make repairs or fix things, but a lot of times they do. And because if this buyer goes away, they might need to do it for another buyer. Right? Right. And so it’s, it’s a kind of a precarious thing, but we, we try to warn sellers ahead of time of what might be coming.

Tego (10:16):
You, you always say that, Tracy, you always say, Well, we’ve got the negotiation on the price and the sale date, and the kind of the terms of the sale, but then we have the second negotiation, which is usually that repair request. If, if there’s some condition things that the buyer wants to get addressed. Right.

Tracy (10:32):
So, Yeah. So I know October’s over Yep. I know you’re dying to get to stats. We have other topics too, but let’s, let’s get to some stats now that we are in a new month.

Tego (10:44):
You know what I’m gonna do, Tracy, is I’m gonna just pull up my, my Twitter, my Twitter account, and the tweet thread that I posted the other day or Yeah, just yesterday. And, and what, what I, what I did is just to give a quick summary of what we’re seeing and, and let me just run through this real quick. So, October, home sales data, this is generally closed sales. This is an all closed sales. You’ll see what I mean here in a second. But it’s, it’s basically, you know, what happened in October in for single family homes and Albuquerque Metropolitan Statistical area,

Tracy (11:20):
Single family detached homes. Right. We’re not talking manufactured homes and we’re not talking condos. No.

Tego (11:26):
I just attached, I narrow it down to that cuz that’s the biggest bulk, that’s the biggest data set. So we can get some good statistical information out that, So close sales in October was 767 homes. That is a 33% decline from October of last

Tracy (11:45):
Year, month over month,

Tego (11:47):
Month, year over year, year

Tracy (11:49):
Over year. So year over

Tego (11:50):
Year. October.

Tracy (11:50):
October to

Tego (11:51):
October, October 21 versus October 22. Right. And so, yeah, 33% declined. So, you know, obviously the number of of homes selling and closing has declined a lot, especially since, you know, the, the mortgage rate push that we’ve seen here over the last few months. Yeah. Well,

Tracy (12:10):
If we were in a frenzy, I mean, think

Tego (12:12):
About, no doubt

Tracy (12:12):
About it, we were selling more homes than we’d ever sold. So now of course the numbers are a little different.

Tego (12:18):
Yeah. You know, the, the thing that’s interesting about that, I mean, if we look at that, you know, October last year was a record, record. Right. You know, but, but if I, I went back in time and looked at that, and that was equal to about 2017 something in there, you know, the number of home selling. So it’s, it’s, it’s not like this, It feels like it’s a drop off the cliff, but it’s not so much, it’s, it’s kind of normalizing to a certain extent. The Go ahead

Tracy (12:47):
Homes for sale, Tego, you know, the, there, there’s a lot of national news saying, Oh, more homes are coming on the market and flooding the market, or words like that, which is not the case here. Right.

Tego (12:59):
I heard a realtor say yesterday, Oh, all those bank owned and short sale homes that are coming. I’m like, Where did you get that from? And I’m like, Who is he listening to and reading or, or I, I just, I, anyway, sorry, I, I digress.

Tracy (13:18):
So

Tego (13:19):
It was, So Homes

Tracy (13:19):
For Sale has been staying steady for months now. Right.

Tego (13:22):
I kept my mouth shut. Okay. We’re

Tracy (13:24):
Up year over year, however, we’ve been staying steady for many months.

Tego (13:29):
Yeah. So there’s

Tracy (13:30):
Still way down. Yeah.

Tego (13:31):
28% more homes on the market October this year versus October last year. October last year was like an all time low though, right? Yeah. And, and, and the way to really look at it is month supply of inventory. So that’s supply versus demand, how many homes they’re selling versus how many homes are on the market. And historically, we’ve always said five, six month supply is a balanced market. Well, we’re at one and a half month supply. We still have a very, very low number of homes on the market. And like we talked about last week, Tracy, the city of Albuquerque, you know, came out and said, we’re whatever, 15,000 housing unit short in, in Metro Albuquerque. And that’s, that, that includes apartments too. But we, there’s clearly still a shortage of, of the number of homes out there,

Tracy (14:24):
Which a topic on the market, a topic we’re gonna be getting to is, you know, should people be thinking of selling that house right now during November, December, January. So we’ll get to that.

Tego (14:36):
Yeah. And then, and then this is the one that I’ve really been watching now because it’s been trending in a interesting way, which is number of new listings, new homes coming on the market. These are people that are putting their homes for sale. We’ve seen a 23% decline from last year. So the curious thing, or curious, I dunno if that’s the right word, but the, the thing is, you know, it’s like, yes, we’ve had a decline in a number of sales. We’ve also had a, a decline in a number of new homes coming outta market. So our supply demand ratios are still very, very tight just because of that. It’s just less people are wanting to sell

Tracy (15:13):
Their homes right now. And from the sales side of the business that I work in mostly, Yeah. Yep. We are still seeing the nice homes priced Right. Get multiple offers.

Tego (15:23):
Yeah. And what I’m seeing is I don’t know what the nice word is, marginal homes, you know, homes that maybe need a little bit of work that are, you know, kind of, kind of,

Tracy (15:33):
They have a reason that Yeah. Yeah. They’re either on a busy road or they are not pristine or they’re not priced right. Yeah.

Tego (15:40):
A little, little ahead of the market on, on price. Those homes are taking longer to sell. And so when we talk about days on market, median days on market was 11 days in October, meaning half home, half of the homes that came on the market were under contract within 11 days. Wow. So

Tracy (15:59):
Still amazing.

Tego (16:00):
Yeah. I mean, that is, that is, you know, if we were to go back to 2019 and say 11 days on median days on market, we go, That’s just crazy. You know, we hit five last year,

Tracy (16:11):
So what was it in October of 19?

Tego (16:13):
Yeah. In October of 19, it was , excuse

Tracy (16:17):
Me, that was 18

Tego (16:18):
Days

Tracy (16:19):
Pre pandemic,

Tego (16:21):
Pre pandemic

Tracy (16:22):
18. So that was a more normal market. Yeah. 18 days on market versus 11 right now. Yeah. Yeah. So tell shows you the market is still pretty strong,

Tego (16:31):
You know, in, in, and really the take is, you know, clearly the, the number of home selling have slowed a a lot. And, and, and yet we still have less supply coming on, which means our supply demand ratios are still very tight.

Tracy (16:46):
We haven’t talked about prices. Yes. And I know everybody wants to know about prices.

Tego (16:50):
Prices year over year. Home prices are up, median price is up 15 and half percent October last year to October this year. We had,

Tracy (17:01):
When, when did they peak though?

Tego (17:03):
Unprecedented increase in home prices This from, from, for the first half of this year. So that 15 and half percent is mostly from December of last year to May of, of this year.

Tracy (17:20):
And then since then, they’ve been saying sort of steady, not going up

Tego (17:24):
Pretty much steady, pretty much flat, maybe a little, you know, me, May was a, was a peak pulled back slightly a percent or so, and it’s just been kind of flat. We haven’t really seen much decline, but we’ve seen a little bit of decline since then. And, and the take there is, if you are listing your home right now, you do have to, to listen to the market and not try to, to price ahead of it. Because right now, prices are not increasing. They’re not really decreasing either. They’re just kind of steady. I would suspect we’ll probably see home prices pull back a little bit through winter, which is, which is very common seasonally. And then we’ll see what happens in the spring, because that’s usually when we get the, the big bulk of price appreciation is in the spring. So,

Tracy (18:13):
Okay. So that was a lot. That was, that was good stuff. It was very accurate, which is always helpful to have real data. So we have quite a few open houses this weekend, houses that we represent as well as open houses around the city. I know it’s not the best weather weekend, so maybe it is a good time to be in your car and go see some open houses because you know, when it’s beautiful out, you wanna be doing other things sometimes, But, so open houses, you have a, a link on our website, Tego to all open houses, not just vent realty groups, open houses. So welcome home. Abq.Com is where you go for that. Under

Tego (18:57):
It’s just on a, on our website, so yeah, just under the home search, there’s the open houses. Yeah. Great.

Tracy (19:03):
So we have Giselle Drive Northeast. It’s 500, I’m sorry, three hundred and twenty nine nine in the 87,109 neighborhood. It is open both Saturday, today from one to three and Sunday from 12 to two. So both days to see that one. There’s also in Edgewood, we have 46 drive in Edgewood. It’s 393,900. It’s open today from one to three. That particular house is new on the market. It’s 2000, just over 2000 square feet on 1.36 acres. Three bedroom built in 2002. Really beautiful home there in Edgewood for 3 93 9. We have a couple other open houses. I know that four Quail Meadow Road in UHS is open this weekend on Sunday from one to three. That’s a spectacular property for six 50. It’s a house in a guest house, so that one’s very close to the main road through Placitas, just off it a couple blocks. Yes. So it’s really easy to get there. Yeah. I went out there last weekend to deliver some flyers mm-hmm. , and it was just beautiful setting. I I really enjoyed that drive. It’s, Yeah. It’s so easy, you

Tego (20:30):
Know? Yeah. It’s, it’s beautiful out there in,

Tracy (20:32):
In Yeah. Cafe along the road there had a ton of cars. It was Friday, late afternoon, early evening when I went by there. Yeah. And lot of people were there. Yeah. Which was nice to have the community. Anyway, several other open houses get on the website, That’s the easiest. Yep. Just find the link on our website Yep. To all open houses and you can plan your route. Absolutely.

Tego (20:54):
Right.

Tracy (20:54):
Yep. A couple new properties on the market this week, and easiest just get on our website. Tego has this really great link that’s newly listed so it lists the houses we’ve just put on the market as well as everybody else. Yep. So you can kind of get the fresh things right away. So if you’re looking for something special, you might see it before others.

Tego (21:14):
Yeah. You know, and, and it’s curious to say that because you know, you think about, okay, six months ago in March, April of this year, we, you know, it was a frenzy, right? There was, you know, homes were going under contract and meeting the same day, same day. And we think, okay, well it’s slowed down now, but like I just said, you know, half the homes are still selling and going under contract within 11 days, which means there’s still demand out there. Right. And that’s what I wanna segue into our next story here, Tracy, which is, should I sell? Right.

Tracy (21:44):
I just wanna finish that, say, Oh, yes. The best way, of course is for us to set up a customized search for you for sure. Based on what you’re wanting, and we can set it up so you get anything new coming on the market immediately, or only one email a day, whichever you prefer. So you can get an email every time something comes on during the day that matches, or one a day to summarize if more than one, Come on. All right. So,

Tego (22:09):
And, and let, let’s just address one thing, which is kind of the elephant in the room, is that yes, home prices have gone up a lot over the last couple years for sure. And, and interest rates now have gone up more than double since the beginning of the year. So affordability is definitely a challenge. It’s the, the thing is, it’s, it’s not just Albuquerque, in fact Albuquerque’s in a better position than many markets, especially in the Southwest from an affordability standpoint. So, you know, it’s it’s an interesting time for sure because people are like, Well, should I buy, you know, I don’t, I’m, it’s

Tracy (22:50):
It’s tough. It’s a conversation.

Tego (22:51):
Yeah. It’s a conversation. And, and you, you have to make the decision that’s that’s right for you and your long term plans.

Tracy (22:57):
And if you’re thinking of buying, at some point we should talk because right now there are several new home builders who are offering a low interest rate. They have bought a bulk of mortgage money at low rates, and when it’s gone, it’s gone. And we, we know who those builders are. There’s also a few loan programs out there that are offering lower rates. And

Tego (23:17):
We gotta talk about the MFA targeted areas program

Tracy (23:20):
Really

Tego (23:21):
Quickly, really quickly, I know we’re running outta time mfa, Margaret Mortgage Finance Authority, this is a New Mexico program, and they have what they call the targeted areas program. These are are certain census tracks part, you know, neighborhoods around Albuquerque where you can buy a home and potentially get a three and a half percent, three and a quarter percent mortgage rate still right now, that’s only good for a few more months because what’s gonna happen is it, they can only go back, they go back 12 months and whatever the best rate they had available on that program they can give you that. So right now, the best rate in

Tracy (24:02):
The past 12 months is what they’ll give you, but a couple months from now, we’re gonna lose those three and four centers. Exactly.

Tego (24:08):
So Exactly. So Tego Yeah. And that’s on our website mfa, targeted areas, homes, you have the search setup. Yep, yep. Lot of choices.

Tracy (24:16):
Will my house sell in today’s market?

Tego (24:18):
Yeah. I think that’s a, a conversation. A lot of people that want to sell our are asking themselves. And so first and foremost, I want to talk about foot traffic or what I call foot traffic or, or showing activity. You know, how many people are out there looking at homes and Tracy, you know, because of what you do is we still get in lots of inquiries every day, every week of people that are, are looking to buy a home. Right? I mean, it is not like they, that that’s gone away.

Tracy (24:51):
Right. There are still plenty of people in the market to buy a home

Tego (24:54):
Yeah. And,

Tracy (24:56):
And life changes happen. Right? Right. People may not know today that they are gonna be selling their house tomorrow, or people might not realize that somebody might help ’em with a down payment and they could buy a house right now if that’s their goal. Right. we know that people have job changes, they have marital changes, relationship changes, empty nesters, new babies, you know, combining households, all these reasons why people still need to buy a house. Yeah.

Tego (25:27):
So yeah. And, and, and it’s the same again. So if you’re saying, Okay, well my house selling this market, well, first off, do you know is do you have to sell right now? Do you have that three and a quarter or 3% mortgage that you know you’re not gonna get again, probably ever. Right. You know, and so you gotta ask yourself all those questions. The thing is the, the number of people out looking at homes, one of the things I have data on is the number what, what I call foot traffic, I started to say, which is how many times properties are being shown to potential buyers

Tracy (26:00):
Based on lockbox

Tego (26:02):
Activity. Exactly. So this is real data on, you know, who, how many people are going into properties in October of this year was down 27% from October of last year, but October of last year, again, was kind of off the chart. You can’t really compare it to it. But if I compare it to October of 2019 it’s very similar foot traffic. Actually. It’s up 20%.

Tracy (26:28):
So, so there are more buyers right now out looking for homes than there were pre pandemic October 19. Correct. So there

Tego (26:36):
You go. That’s interesting. Right. That’s

Tracy (26:38):
Very interesting.

Tego (26:39):
And

Tracy (26:39):
That would, that would, we didn’t, if you’re ready to sell, there are buyers more than there were even three years ago.

Tego (26:45):
You know, to be fair, we didn’t have seven and a half percent mortgages, you know, back then either, but

Tracy (26:51):
No, but that’s more of the norm over history, right? Yeah. When I started in real estate in 2002, the interest rates were seven and a half. Yeah. Sometimes people were getting a, sometimes a little lower,

Tego (27:04):
But, but lemme push back on that. We didn’t have 35% home price appreciation over two years before that, though, either, which we’re dealing with now, that’s why affordability is, is definitely a challenge right now. The question is, are price is gonna decline to bring affordability back down or our mortgage rate’s gonna decline? And, and right now the jury’s out on both of those, and

Tracy (27:26):
We have our beliefs on that. Of

Tego (27:28):
Course, I definitely do. But the bottom line is, you know, buyer demand has not disappeared. It, it’s definitely moderated this year versus the last two years we’re, we’re just off the hook. But you know, if you, if you, if it’s the right time for you to sell, let’s talk, right? Yep. Give us a call. How do we get people, get a hold

Tracy (27:45):
Of us. Sure. 448-8888. Simple number, give us a ring and we’ll, we’ll be happy to help you and talk through whatever works for you. So Eddy, another another show in the books

Eddy (27:59):
There it is, I think what you guys are talking about specifically, and instead of the stats, it’s belief and it’s expectations, then I think it’s important. Again, we get into this thing where you’re working with people who are transacting business and doing it often, and one deal differs from the next. And it’s important to understand what’s happening with those market conditions and what’s able to actually be sort of you know, achieved. And I think that that’s so important. I think with what people, what might think is a difficulty is, you know, it’s a real opportunity. And I believe that that opportunity is there because you’re seeing more people deciding to sell their homes and they want to catch it because we know that interest rates are gonna go up and continue to go up, but that doesn’t mean in a market like New Mexico, the prices are going to come down. That’s happening other places. But New Mexico’s one of those places and you’ve listened to that. Wells Fargo economist Tego, we are protected and that’ll happen for the next couple of years. So it looks pretty good and I’m happy to hear all of this this morning. I feel very well informed when it comes to the real estate prices.