NAIOP Group Presentation – First-time buyers are discovering the Albuquerque NM area

NAIOP Group Presentation – First-time buyers are discovering the Albuquerque NM area

(Transcript Snippet):

” Tracy Venturi:

So, Tego. You were on a panel this week for the national association of industrial and office properties group, which is, you know, the commercial brokers, basically

Tego Venturi:

Commercial broker, real estate commercial real estate investment folks. Yeah. Pretty, yeah, pretty good.

Tracy Venturi:

So it was a really interesting presentation and unfortunately it was on zoom, but fortunately it was on zoom because myself and many others who wouldn’t normally attend their monthly get togethers, got to listen in. And I know a lot of us, residential realtors and people listened and really interesting things. If you want to give us a few bullets of some of the top, top takeaways from,

Tego Venturi:

So Steven Hamway did an article, he put it out on Thursday afternoon after the I’m sorry, in the Albuquerque journal, excuse me. Yes. Thursday afternoon. And you know, he pulled a couple snippets out of there, you know, it’s really, I have to give reporters, you know, it it’s difficult because we had an hour and a half worth of content there and he had to, you know, put together a short little article and he pulled out a couple of snippets. One of the things Kathy Colvin is one of our colleagues, she’s this year’s Southwest MLS board president. I’m on the MLS board here too. But she, she said something that he really picked up on and it’s like he said, she said, we need to think and realize that Albuquerque has been discovered by a lot of the country. Would you agree with that, Tracy?

Tracy Venturi:

I would say yes. There’s still so many people that don’t know about New Mexico though, but you know, are we seeing more people from out of state coming to New Mexico? I don’t know if it’s a lot more, but yes. Yeah, yeah. And it seems like when people ask me, why, where are they coming from? And who are they? A lot of them are people who have lived here before, have relatives here and have visited or had been stationed at Kirtland air force base at some point. Right. But, you know, do we have others? Yes. Do we have somebody who works at Google in San Francisco that decided to move here? Yes. Do we have people who can work for home in flux? No. No. It’s not a mass influx. And honestly, a lot of our home buyers are people who live here that are changing and want a bigger house, a smaller house, a different part of town, a new home instead of an

Tego Venturi:

Well it’s it’s household formation also known as first-time buyers. A lot of first-time buyers know that are, that are local. One of the quotes that got picked up that I said is that, you know, $200,000 houses are kind of becoming extinct ein our market, you know, in, in the sense that you know, whatever it was 10, 15 years ago, I guess it was probably more like 15 years ago. You know, we used to have sub $100,000 houses all over them.

Tracy Venturi:

Tego. I remember a Christmas Eve. I had a buyer desperate to find a house. And that was that Christmas Eve. I remember that. Yes. Yes. And I actually showed three different clients’ houses that day. And Christmas Eve was at our house. We were serving most of the food and making most of the food. They wanted to under 100,000 and they needed a house right away and they were off and they needed to go look at houses. And I remember saying to Tiko, I don’t think I can find anything under a hundred thousand that qualifies for a loan that was at least 15 years ago.

Tego Venturi:

Right. Probably more like 20 years ago. You’re right.

Tracy Venturi:

And so we found him a house, right. But I today finding them a 200,000 that qualifies for the type of loan. That’s not a manufactured home. That’s not in Moriarty or blend. You know, you have to go a long ways out to get something today.

Tego Venturi:

And in the, I don’t like this term, but the reality is, you know, if you’re looking for a $200,000 house, it’s newer in pretty good condition, you’re going to be mainly focusing on the Southwest and maybe the Southeast part of it

Tracy Venturi:

Or Edgewood or some parts are less Luna’s that are further out

Tego Venturi:

Taking the tight in Metro Albuquerque. But yeah, definitely Los Lunas, for sure.

Tracy Venturi:

Yeah. So last week I’m thinking, what day is today? Was it this week or last week? I showed houses to somebody who wanted to stay in that one 75 range. Yep. And we went and looked at a house that came on the market in Rio Rancho West of uncertain, North Southern. So, you know, Southwest Rio, Rancho good area, right by the Walmart. And we got there within four hours of it coming on the market and looked at it. I had an offer in that night. So within six hours of it going on the market, and it was an above list price offer with an escalation clause up higher than that. It was a conventional buyer with 20% down, a very nice offer, solid buyer, very solid buyer, no closing costs, nothing on the seller that that the buyer could take on. And by the next morning there was many offers and mine wasn’t selected and I’m pretty good at being competitive. But my client drew the line and said, this is what it’s worth to me. And so the escalation clause, which was significantly above the one 75 was not selected

Tego Venturi:

That term escalation clause came up in our presentation on Thursday

Tego Venturi:

That’s Okay. Because I think we, we right in, in the business, we’ve got this lingo that we throw around and you say escalation clause and people like, I don’t know what that means. So, so what does an escalation clause? And, and let me just say, we’re seeing it all the time right now. Yeah. It

Tracy Venturi:

Generally, you’re not going to be able to be the one whose offer is selected unless you have an escalation clause or unless you just offer a flat rate, that’s significantly above list price, right? NSL escalation clause means I’ll pay X dollars over the next highest offer up to a certain price. So I will pay up to a certain price. But if the other offer is this is here, is lower. I’ll just pay a little above that other one,

Tego Venturi:

You make an offer at a certain price. So let’s use example it’s 200,000, right? Probably not a great example. How about 250,000? And, but I’ll put an escalation clause that says I’ll pay up to

Tracy Venturi:

I’ll pay a thousand dollars over any other offer higher up to two 25, or you said 200,

Tego Venturi:

Well, it’s 250, 260. You guys get the point, right? And so it’s a way to escalate their offer. But there, there is a ceiling on that as well, right? It doesn’t have to be true, true and weekly. We see a ceiling on it. We’ve seen some very, very high escalation clauses.

Tracy Venturi:

So one that was 101,000 they would pay more up to 101,000 over anybody else’s offer. Obviously that was a luxury home price that wasn’t a $200,000 house. So Tego back to your,

Tego Venturi:

So back to the, there was one other thing that, that jumped out and I was like, Oh, I’m going to get hate mail and calls on this one called Tego. Yeah. Call yeah. Call me. Well, at one point again, you know, you take one sentence out of a hour and a half presentation. I said, I said, we could actually use a little bit of a slowdown in the Albuquerque market. And, and in context, what I’m talking about, we were having a really good conversation or at least the narrative was around affordability or not housing affordability, but just affordable housing. And that, again, that whole 200 they’re going away, there’s not going to, you know, price prices are gonna continue to get pushed up. And my point was, you know, a little bit of a slowdown would probably be a good thing to slow down this, this really fast pace of market appreciation. So yeah, yeah. Yeah.

Tracy Venturi:

I think it was a, you know, in context, you know, one of the things you just mentioned is something else you talked about, which was home affordability versus affordable homes,

Tego Venturi:

Right? Can’t mix those two things. That’s

Tracy Venturi:

Two different things because we know that homes in Albuquerque are still way more affordable than almost any market around us. You go to Tucson or Phoenix or Denver,

Tego Venturi:

Colorado Springs, San Antonio,

Tracy Venturi:

You cannot buy a house for what you can buy it here. Plus what people earn their income wise versus how much they they need to spend monthly for affordability is, is at an all time.

Tego Venturi:

There’s one exception to that. And that’s El Paso. El Paso does have better affordability, home affordability numbers than, than our market. Otherwise we’re, you know, for metropolitan area in the Southwest where we’re still very, very strong.