Is Albuquerque’s Real Estate market slowing down?

(Transcript Snippet): ” Tego: Tracy. I want to just go back to the thing about is the market slowing, because like I said, there has been some news stories out there implying that maybe the real estate market’s slowing down and it really isn’t even nationally, even in some of these other markets, because w th the story that’s actually out there is that inventory is starting to grow a little bit in some parts of the country. It’s not that the real estate market’s slowing down

Tracy:

Well, and I bet you have stats to prove what’s, you’re about to say, well, what I, I just, you know, it’s that time

Tego:

Of the month where it’s mid, mid month, I wanted to see where we were for July this year versus in particular July last year, because July last year, July, 2020 is when the real estate market just went nutty.

Tracy:

This was right after COVID right? So March, April, may, June, July, all those people, June, June is

Tego:

When all of a sudden everybody decided it was time to buy a house in there. We hadn’t had any listings in April, may of last year

Tracy:

Was pretty much shut down. So I didn’t say

Tego:

Any, it was half the number of new listings. Yes.

Tracy:

My point is July last year, despite COVID was a record month, it

Tego:

Was the busiest closing month on record for the Albuquerque area, July of 2020. Right? Right now, July of 2021, pendings are up 15% over last year, just in the first 15 days. And the number of closings is about equal with, with last year right now, the number of homes on the market, it’s down 23% just versus last year. So yeah, we’re less houses on the market. We’re it’s not slowing down. That’s

Tracy:

Not in our market. No, no. So,

Tego:

And there was you know, I don’t know, I know you saw Tracy, but you all might’ve caught it, that there was a story in the journal this week where Stephen Hanway does the real estate beat, I guess, if you would say, and he called me and got a couple, just, you know, put a few quotes on there. One of them was there’s, you know, like I said, the story that there’s more homes in the inventory starting to come in, and there’s more homes on the market and I cautioned him and I’m glad he printed it, that, that it’s maybe just seasonal cyclical that, you know, we’re going to have a little bit of build this time a year. And I think it’s gonna, you know, just kind of stay flat and probably declined throughout the year. So if you’re out there thinking of buying, if, if you’re thinking that you’re going to wait until more homes come on, the market later this year, probably not going to happen is, is my call on that. So I’ll just say

Eddie:

That. Yeah, because I mean, that wasn’t as clear as that I would like for it to be hearing you. So what you’re saying is cyclically every year about this more homes are basically delivered. They hit the market, but even though those homes are coming onto the market, it doesn’t mean that there’s going to be more opportunity, more houses, more inventory, necessarily that is going to get absorbed right away.

Tego:

It is. And I don’t see generally what happens. Inventory builds up until July, August, if you want to say that, right? So the number of homes available and then come July, August, it starts to drop off all the way through till February. And that’s just a normal seasonal pattern for our market.

Eddie:

Those are free. So I imagine those are kind of presale. Are they not reconstruction training? You brought on new con construction people on board. Several times, you’ve had several home builders who’ve come on. There’s like people beating down their door or something like that. I mean, this is something that you guys work on. You can take people to places where, you know, that inventory is going to be rolling out. And I got to, I got to say, that’s, that’s worth a, what do they say? A bird in the hand? You know, that really is a good opportunity there to jump in. And another reason to pick up the phone and call a Tigo and Tracy Venturi 4, 4, 8 88, 88, that’s 4, 4, 8 88, 88. And we are alive this morning. So if you want to know and get a heads up on where that might potentially could be and delivered, all depends upon the city of your city or Rio Rancho. Just go ahead and give them a call. Thank you for clarifying that. Yeah,

Tego:

No, no, thanks. And I want to just bring in one other stat. I don’t want to, I don’t want to confuse people, but, but again, this whole story of, oh, you know, home prices are going up way too fast, which I would, I would tend to agree with. And, and we’re going to have a bubble and prices are going to explode and go down. And one of the things we have to look at always is supply versus demand, right? That drives everything in, in pricing, on, on any, any product in, in homes in particular. And what I found is right now, we have about 1100 homes on the market in July of 2007. That’s when let’s say the bubble burst back in the day, when, when home prices started to decline in 2007, at that time, we, we didn’t, I’m trying to say this. So so it’s more succinct, succinct, and not, not complicated. There were S we had over 7,000 homes on the market, in the greater Albuquerque area in July of 2007, when prices started to go down

Tracy:

Another way to start to shift until we had over 7,000 houses.

Tego:

That’s a great way to put it. So, so if you were to just go with that, that one metric, and I know that’s just one thing we would need six times more inventory that was, we say, you know, homes available on the market than we currently have before we start to see a shift in pricing.

Tracy:

And we could see a shift in pricing well, before that, of course, but that’s what the history was. We were over 7,000 houses on the market before we started seeing prices come down. Yep. Back in 2007. And

Tego:

I’ve been saying this now for month and month, I keeps saying we could have four or 5,000 homes, 6,000 homes on the market tomorrow, and still not be in a, a buyer’s market.

Tracy:

And, you know, it could shift, let’s say we have 4,000 on the market, but interest rates change drastically. We could see price changes. We just know from what we hear politically through the economy that they’re not planning to do major changes in, in the interest rate. Right. So that’s part of our, where we were going. We’re going to talk a little bit about the second half of this year since we’re into it now, right?

Tego:

Yeah. And, oh my gosh, you know, how do we do this? We go so fast. We’ve just got so much to cover. So Tracy, let’s just talk about a few predictions from the experts. I’m going to say that the air quote experts. Yes. I think 2020 nevermind. I’m not going to go there. I was going to talk about experts in, in the year 2020. So what, what are the real estate, you know, prediction makers, you know, what are they saying about the market tracing? What are they saying about mortgage rates? Let’s say,

Tracy:

No, they say mortgage rates will likely increase a little bit by the end of the year, but a little bit, we’re not talking anything major. Right.

Tego:

And based on the announcement this week, it doesn’t look like there’s going to be much. I mean, I know that the fed rate is not necessarily tied to mortgage rates. It’s more about the 10 year bond yield that, that ties to mortgage rates. But, you know, as long as the 10 years, under 2%, we’re still going to see really low mortgage

Tracy:

Rates, right? Another end of year price appreciation, Tigo

Tego:

Price appreciation from a lot of the different groups out there. So Zelman and associates, which is one of the big consulting firms in the real estate space there, they’re seeing 10% year over year for 2021 nationally 10.6% mortgage bankers association saying over 10% national association of realtors, our association is saying 9% Fannie Mae and Freddie Mac. Fanny’s got it at 8% Freddie, Mac’s got it at 6.6. So, you know, everybody is predicting an increase. I saw some numbers from another consulting firm just this week. And they’re seeing 20% year over year increase in median price, which is a little bit different than total price appreciation, but you know, home prices are going up and, and, and, and back to that whole thing about the market and the market slowing, I think the one thing that will slow this market down is we just get way too far ahead of ourselves on home prices, where people can’t, you know, they just can’t make it work. You know it, and then you got this whole thing, Tracy, it’s like, well, everybody’s got lifts somewhere, either got to rent, or you’ve got to buy, or you got to live with family or whatever, right back to the whole conversation about, you know a multi-generational

Tracy:

Housing. Right. And what we know is rent, rent rates have gone up significantly too. So even though the home prices have gone up, it’s still mostly cheaper to buy than to rent for the same type of house. There,

Tego:

There is so much research and there’s so many good studies that talk about how, you know, home ownership, let me put it this way. Home ownership, owning a home is affordable housing compared to renting. Right, right. Plus building a nest egg.

Tracy:

What about inventory for the rest of the year? I think nationally, yeah. What the experts

Tego:

Are predicting is nationally that there’s going to be a slight increase in the number of homes coming in into the market. We’re, we’re seeing that in a lot of other parts of the country I’m going to make the call here locally that we’re going to go through the end of this month into August. Inventory is going to stay flat, maybe increase a little bit and then start to decline.

Tracy:

That’s my call. Okay. bottom line, bottom line

Tego:

Is that, you know, mortgage rates are going to stay flat or go up slightly, no big spikes in the future. Inventory is going to go up slightly, but, but not enough to really create a, a buyer’s market, you know, unless, you know, some, some places around the country, but we’re not seeing it here. And, and for the most part, everybody’s pretty optimistic about the real estate market.

New Construction: Are there enough Albuquerque homes on the market?

(Transcript Snippet): “Tego:

Tracy. Let’s talk about new construction and you know, people hear it. Well, there’s not enough homes on the market. And the first thing everybody would would assume is, well, why don’t we just build more? And, and we are, right?

Tracy:

We really are. A lot of new neighbors

Tego:

Say, we, I mean, we’re talking local, our community Albuquerque. There’s a lot of new construction going on. It’s honestly not as much as we probably need, but it is happening. So let’s talk about some of those communities,

Tracy:

Tracy. Sure. So a lot of new neighborhoods have come on. Okay. So, you know, we’ve got a lot of great builders, local and national. So we’ve got Dr. Horton. We’ve got Pulte, we’ve got Hakes brothers Twilight, LeBron ISO. Westway still Brook. I could

Tego:

Go on. I know you’re going to feel bad because you’re going to forget somebody. Yeah. They’re

Tracy:

All our friends. We work with new construction all the time, which reminds me. Of course, we can help you find new construction. A lot of times people drive, they see a sign, they stop at one, they buy a house, but they had driven a half mile further. There’s probably another builder there that they could have also considered. So always great to hire a realtor, to help you with your new home communities, as well as resale homes. So think about the different parts of town Tigo. I was in Northeast Albuquerque and still Brooke is doing a new neighborhood. That’s about to be online right at Alameda and Louisiana. Okay. Great location just west of the tin can alley area. Very close to middle and elementary and high schools that people really like. That’s coming online, new homes some others in the Northeast Heights that we know about for sure. The others we have

Tego:

Well, there’s the Abrazo community by the balloons.

Tracy:

Right, right. I was thinking of what, the name of that and still broke is Savannah. And I drove by the walls are up, it looks like the pads are ready to start construction. They have a, an, a model home office nearby. So you can stop in there, but there’s others. Right? So obviously one of my favorites is Dr. Horton’s doing a neighborhood infill project. So in Vista Del Norte day in north Rio, Rancho near 5 28, and Idealia right by the judicial complex Vista Del Vista and try to, as the neighborhood there, and it’s half acre lot,

Tego:

You said, Vista know like going, I got lost there per se. I know two different neighborhoods and

Tracy:

Try to north Rio Rancho, right at 5 28 and five 50, basically. Half-Acre lots underground utilities, paved streets, very quick to get out. Once the construction at five 50 and 5, 28 is done, it’ll be quick to the freeway. They have picked up a bunch of half-acre lots there and they’re starting in four hundreds on a half acre lot. And they have an amazing multi-generational floor plan, which we know has been popular. Lots of really great floor plans. They only have a few lots though. So if that neighborhood interests, you call us right away.

Tego:

You said that. So let’s just define that may be people have not heard that before the multi-generational home or multi-generational home designer floor plan. What, what exactly are we talking about?

Tracy:

Hello? Multi-Generational could be two generations of family living together, right? So you’ve got sort of a, a suite where maybe it’s a room for like living area, as well as a bedroom and a kitchenette in the same house with a full kitchen. It, they vary from floor plan and builder to builder. I showed some this week in Corollas and it was different, you know, custom homes, all with different setups of how it, how multi-generational works. It can be, you know, siblings of the same era that want to live together and both want to have their space as well as combined space. It’s, it’s been pretty common. Sometimes it’s grandparents living with their grandchildren or grandchildren living with their grandparents or parents with children or parents with their grandchildren, but it’s combining households under one roof.

Tego:

So Tracy, there is just to wrap up this conversation about new construction. There is new construction,

Tracy:

Sorry. There’s a couple new neighborhoods I really want to talk about. Right. I know we’ve got time. So last Luna’s right. Leslie, this has been very hot houses selling quickly there. There’s a new neighborhood also Dr. Horton. Yep. West of I 25, basically across from all the Facebook buildings. Yeah. So right. When you get off the freeway at the main exit for Las Las Lunas and you go west on the south side, there, we have a neighborhood, right. That’s very established. And then just past that, we have Jubilee, which is the active adult 55 plus. And then if you go west just a hair further, we have the new Dr. Horton neighborhood with some beautiful home floor plans, brand new, just breaking ground. It’s a brand new community. You know, really quick to the freeway going to be great. Also building there’s several other builders building in Los Lunas from Eastland Hills to right off the freeway to the west. Hakes civic homes, D R Horton, lot of, lot of different builders right there. Another one is Mesa Del Sol, which has really taken off lately Tego and Mesa Del Sol is just south of the freeway. So a lot of people that work downtown, uptown, the hospitals, UNM really liked Mesa Del

Tego:

You know, what’s interesting, Tracy is you think about Mesa Del Sol and Mariposa, you know, extreme geographically, you know, in, in our community. But those were, were big master plan neighborhoods that were done, you know, kind of toward the, the end of, of the market, boom, back in 2000

Tracy:

Early two thousands.

Tego:

And, and, and so for the most part, like Mariposa, you know, there hadn’t been a lot happen in there in the last 10 years, same thing. It Mesa Del Sol. Now that we, we have a renewed demand in housing, not enough supply, these neighborhoods are really, really kicking in Mariposa in particular,

Tracy:

Right? Oh my gosh. I’ve been out there quite a bit lately, which is Northwest Rio Rancho by the armory sort of, and, you know, Mariposa was developed by the same developer that did high desert in Northeast Albuquerque really well-planned with a beautiful community center, different neighborhoods within the neighborhood. So they have a state properties where you could buy a piece of land, an acre or more and build your estate home. Dr. Horton’s there twilights there Poltys there, I’m sure there’s others, but you know, it’s some great views back to the mountains in the city. You know, if you’ve never been in north Rio Rancho to look back at the San Diaz, you’re missing out. I know when we’re in the Northeast Heights, we think we have the best view of the mountains, but getting to the other side of the river and looking back can be pretty spectacular.

Tego:

There’s some, there’s some gyms all over for sure. Tracy,

Tracy:

The trails, we’ve got a lot going on there as well. Hakes brothers Dr. Just picked up some, Poltys got a new neighborhood coming a couple. So, so if you’re thinking new construction, it’s a great opportunity for buyer fatigue. So I just want to tie it up with that. Right. getting a new home, being built for you, gives you the time to know I have a house that I’m moving into and then we can time the sale of your home to coincide. And we have arrangements with most of these builders where if we guarantee the sale of your house, they will move forward with building your new home contingent upon your house selling. And we have a program where we can do that for people. And it’s worked very successfully.

Tego:

Okay. Now to wrap up the conversation about new construction, if you visit our website at welcome home, abq.com, we do have a search on there. If you click the search menu, there’s a place for new construction. You can see all the neighborhoods and communities around the city and general price

Tracy:

Ranges. Exactly,

Tego:

Exactly. And, or probably the best thing to do. Just give us a call. 448-8888 Venturi Realty group with Keller Williams Realty. And we can help you look at all these different communities in and see what is going to work best for you.

Buyer’s Fatigue: How it affects the Albuquerque Real Estate market

(Transcript Snippet): “Tego: For sure. So the Tracy let’s, let’s talk about this term. That’s now kind of come into the mainstream is buyer fatigue, right? When we’re talking about real estate sales, and if you guys haven’t been listening to us, oh, by the way, we’re in show three hundred and seventy three, three seventy three. You know, it’s interesting because of course, when we started the show, the market was a very different market than it is today. You know, it was definitely a sellers excuse me, a buyers market at the time,

Tracy:

Eddie was a lot different radio station then to think about how his station has grown and his listenership and his just everything about what he’s done socially on social media and affecting our market.

Tego:

Things change a lot in five years, six years, seven years, eight

Speaker 3:

Years. How long your, I don’t remember how long.

Tracy:

I think it’s almost eight years or something. Yeah.

Tego:

So by fatigue. So this is a new term, you know, how terms come up and all of a sudden, now everybody’s saying it it’s buyer fatigue, where, where buyers are frustrated, they put in multiple offers, right, Tracy. Right.

Tracy:

And it seems like, you know, they might have missed out on three or four houses so far, and they’re thinking I’m going to just throw in the towel and wait for the market to shift. And we’ve been talking about this with our team, with the whole real estate community. Don’t throw in the towel. If you’re looking to buy a home, don’t throw in the towel, don’t let it frustrate. You, let’s get you into a house. And there’s some of the things that we do to help buyers. And we’re going to talk about one of those things, which is new home community. Yeah. We’ll

Tego:

Get into that. There were the, I was in a mastermind group here earlier this week with a bunch of other realtors and, and there was a conversation cycle. The market’s slowing down. We’re only seeing five offers, not 20 offers. And, and, and that may sound a little funny, but I think what’s also happened in our market. Tracy is both the, the buyers that are, that are out there are a little better educated, kind of understand what’s going on in our market now, right? A year ago, 10 months ago, you know, things were pretty, pretty frantic. And now everybody’s a little more up to speed on how to work in this particular market condition, including the real estate agents. And there are some real estate agents that maybe hadn’t dealt with as many transactions as we see in how to work through, you know, what’s going on in our market, where we have super low supply, super high demand. And you know, people really want to get into a house and they’re having a hard time finding it because there’s just not enough homes on the market for there are for the number of buyers that are out there. Right? So I don’t buyer fatigue is, let me just wrap this up. I don’t think, I think buyers are understanding what type of market we’re dealing with in right now. And if, and if you want to get a home, you’re going to have to adjust to the way things are right now,

Tracy:

Those things are to have already started working with a great local lender, have already had your credit check tab, had your employment verified, have already supplied some documentation. So the letter you get from a lender is a very strong lender letter, not a based on what they told me. They appear to qualify.

Tego:

They’re basically pre-approved versus pre-qualified

Tracy:

Very different things. A very strong lender, typically local that has a reputation to uphold is holds a lot more weight than an out of area lender, for sure. But there’s lots of things. So we’d be happy to talk with you about it. If you want to know how to position yourself to be a strong buyer, besides just, you know, money wise and price wise, right.

Forbearance ends: Will Albuquerque homes come out distressed?

(Transcript Snippet): ” Tracy:

We look at a lot of indicators. Right. And the thing came up yesterday. Someone asked the question about all of the homes in forbearance and that one. Yeah, there’s that one too. That whole question of all of a sudden a forbearance. And are we going to have a ton of houses come on. The market distressed? And our answer is

Tego:

No. In fact, the latest stats that came out this week on the whole forbearance and forbearance plans at down below 2 million, it was almost 7 million. At one point. Now it’s down to 2 million, probably going to have a lot more drop-off because there’s a bunch of them that expiration that expire in the next few months. And so either those people will you know, go into loss mitigation, meaning they’ll go into some sort of you know, foreclosure, or maybe you do some sort of workout with, with the bank or they’ll just pick up and start making their payments or they’ll refinance or they’ll sell. It just looks like most of those people that got into those forbearance plans are going to be able to come out of them without much difficulty, if

Tracy:

You’re a listener and you’re in a forbearance plan, you know, and you have questions about it, give us a ring Tigo, or I would be happy to talk to you, you know, call the four, four eight, eight, eight, eight eight number. And just say, you want to talk to us about it because most people that are in forbearance, their house value has gone up over the last two years, year and a half.

Tracy:

You know, if, if you’re not going to be able to pay for your mortgage, you know, you probably have equity that

Tego:

We could help you with. And, you know,

Tracy:

There’s a lot of options to one of them and just real quickly as it might be that investor could buy your house and you could rent from them and not even move and have some cash in your pocket from selling your house. And we’re seeing that happen

Tego:

In New Mexico in the last year on average homeowners gained $26,000 in equity.

Tracy:

Where else can you get that? Right? You don’t get it by putting it in the bank.

Tego:

And, and so anyway, that’s that, that was just, you know, one thing to bring up.

The skyrocketing cost of building a home in Albuquerque

(Transcript Snippet): ” Tracy:

Right. But what we do know too, is there are a lot of new neighborhoods. We have a lot of new homes available right now and coming and a lot of new neighborhoods that they have now got ready, that they’re ready to start building. And it’s in all areas of town. Right. We know that they’re still building by the base you know, at the end of one to bow by the Kirtland air force space and [inaudible]. Yep.

Tego:

Yeah, no, there’s a lot in the pipeline and there’s definitely new construction. I, I will say. And I, I mean, this isn’t anything about the builders. It’s just, people are going to have sticker shock on what things are, because I just saw a study the other day, where they looked at a building costs in the last year, about 22% increase in just the cost of materials to build a new right.

Tracy:

And you know, we’ve talked about it on the show, the cost of materials that jumped way up, especially lumber, stucco, concrete, whatever.

Tego:

Well, everybody talks about lumber. Cause that’s, that’s the

Tracy:

Commodity that goes on the commodities exchange that they can really track. What really well,

Tego:

Here we go. Tracy. Here’s okay. So you have a chart. I’ve got a step for that. I didn’t even know that. No. So, okay. So we were talking about lumber, right? Lumber, 115%. Everybody kind of knows that story, but everything steel aluminum up 27% windows doors up 13% flooring up 8% appliances up 8% concrete up 10% brick stucco up 11% drywall up 14%. I’ve heard that one drywall

Tracy:

Framing block up 36%,

Tego:

36%. So, you know, anything that’s concrete stucco that stuff’s gone up quite a bit. Of course, anything that’s wood-based has gone up a bit.

Tracy:

This is a year over year, raw material and labor cost. So we know labor has also gone

Tego:

Up. Yeah. So just to bring that back to the, the positive is there are a lot of new home construction options out there for folks right now. And you know, there, it’s just, the, the prices are higher. That’s just the way,

Tracy:

Right. The good news is, you know, you’re getting new, your repair costs over the next 10, 15 years should be very low. You’re getting energy efficient. I don’t know that any of those new home builders, aren’t building more energy efficient Greenbelt, whatever than they were 10 years ago or whatever. I think most of them are doing a very efficient, you know so that the utilities are less, the home can be more comfortable than maybe it is now.

Tego:

So I think the, just to kind of bring this back, I mean, well, I want to try to tie this together. This whole story about the lack of supply costs have gone up substantially, right? Not, not on just, you know, resales have gone up, we’re tracking somewhere around, you know, 12 to 15% here in Albuquerque year, over year. New construction has gone up even more than that. Interest rates are still down at 3%. But this lack of supply nationally in, in here locally as well, it doesn’t look like it’s going away is what I’m trying to get at.

Tracy:

Right.

Tego:

If you’re waiting for the market, the crash, I’ll just say it. I, I think you could be waiting a long time or waiting for never happened. I mean, there’s always going to be a pullback, right? That’s going to happen, but a market crash doesn’t look like it’s in the cards anytime soon, right?

Albuquerque’s Real Estate Market: It’s still frantic out there!

(Transcript Snippet): ” Tego:

It’s still pretty frantic out there in the real estate market. Is that a fair word?

Tracy:

You know, Tego? I didn’t think we were going to talk about this, but let me tell you about Wednesday this week. Right? So we had, well, Wednesday and Thursday, we had four open houses, midweek for homes that had just gone on the market with us. I’m on two, three of them were in the Northeast Heights. And one was in far Northwest. We Rio Rancho on Thursday from four to six. Okay. And the Wednesday three open houses. I was at one of them and other agents from the team were at others. The house I was at had over a hundred visitors now, individual groups. Sometimes it was one person, three people formed with their realtors. Some without some have realtors, but were on their own, whatever, just coming to see the open house. Well, and it was

Tego:

The first time in and we’ve been doing this, right? Yeah.

Tracy:

It was the grand open house. First time anybody could see it. Yeah. I’m sure we had over 60 individual, not individual, 60 groups of people through. I mean, it was well over a hundred people at the house that I was at. The house Jane was at same thing over a, well, over a hundred people through that open house. Corey held a house open on Saint. She’s the one who started this conversation among our team. And she was like, we had over a hundred people there. I’m sure of it. So her seller went to the ring doorbell and literally counted all of the people. And the seller says they had 500 people through their house that day. Corey said it was crazy. And luckily one of our title reps stopped by to give her some bottles of water to hand out and he stayed. So she wasn’t there alone. But even though one in Northern Meadows, which is far Northwest Rio Rancho, you have to want to go there. You don’t run into those signs. Right. The reason

Tego:

That one was in such high demand is it was, it was a lower price point. And definitely below the median, you know, our median is now up over $250,000. So,

Tracy:

So in any event she was exceptionally well attended as well. So what, what does that mean? We still have a lot of buyers in the market. A lot of people looking for the right house. Yep. And you know, it’s interest rates are low. There’s a lot of reasons we talked about them last week,

Tego:

As demand has not dropped off,

Tracy:

I would say in our market, based on this week and the number of showings we’re having on houses, we’ve listed, demand is not dropping.

Tego:

And the reason I say it that way, I’ve seen a lot of national stories lately where they’re talking about, oh, it’s starting to slow down. Or the, you know, number of homes on the market is starting to grow substantially, stuff like that. We’re, we’re seeing a little bit of increase in the number of homes on the market, but it’s still nothing significant.

Tracy:

So take a last, we talked, I think maybe there were around 900 houses on the market, in our MLS. Where are we at right now

Tego:

As of today, just over a thousand. And that’s in Metro Albuquerque. That’s not the entire MLS because I don’t want to look at grants and Santa Fe and some of those other markets. So, you know, just Metro Albuquerque, it’s about, it’s just over a thousand homes. And to give you an example, you know, earlier in the week, I think it was Wednesday when I looked, it was about 900. So it ebbs and flows every week. You know, number of homes coming on, number homes going on,

Tracy:

But we haven’t been over a thousand for a long time.

Tego:

No, we, we really haven’t done that. That is kind of, you know, a, a milestone. The thing that’s curious about that, and I’ll be curious to see here in the next few weeks to a month, what happens? It’s very common that this time of year is when we peak in the number of homes for sale in the Albuquerque area and starting, you know, August, September, it starts to drop off all the way through till usually February that’s normal seasonal trends.

Tracy:

So what we know this date opened up this month, July just a week or so ago, right? Just over a week ago. And the last year COVID right. We had this huge drop-off of people putting their homes on the market. So this August, September won’t be the norm compare. I mean the August and September from last year, won’t have been the norm statistics, but we have 30 years of data. Right. So generally we see things start to pull back a little bit, but we don’t expect that to happen this year. Well, I mean, with the state opening up and people feeling like they can get their house on the market and have it shown and yeah, I

Tego:

Think, I think the takeaway Tracy, is that, yeah. Okay. We’re going to get a little variable. We might get a little increase in the number of homes on the market. The thing is, this is still a very, very strong seller’s market. Right. And it kinda doesn’t matter what price range you’re in. You know, there’s always going to be those anomalies where, you know, there’s just something about the home that makes it difficult to sell, but for the most part, everything is selling. If it’s in the right price range,

Tracy:

Right. For the condition and location. Yeah.

Tego:

And this way it keeps saying, I’m going to say it again. We could have 4,005,000 homes on the market and a greater Albuquerque area tomorrow and still be in a balanced market and not, not in a, not in a buyer’s market. So

Tracy:

One of the things that you talked about at our team meeting was home builders and how many houses they could build a year and still not be caught up to the demand nationally. That was a national

Tego:

Number. So, so let me just back up a little bit, the national association of realtors did a, a recent study and let me pull it up here. I wasn’t ready for it. Sorry.

Tracy:

I just, I think it’s really interesting. Well, it’s, it’s,

Tego:

It really tells the, of our housing market. And we’re going to get to this story in the Atlantic here in a minute to just we’ll skim on it because we don’t want to get too crazy politically. And it’s the Atlantic too. I know listeners of Kiva probably go in the Atlantic. You believe anything from the Atlantic, but actually they, they really hit some really good points about the housing shortage nationally. But what happened was national association of realtors brought in a consulting group to do a study of, you know, what’s going on in United States with housing and what they found, it was actually not too difficult to figure out was you have so many what they call household formations, right? Basically people that are starting a house that are buying a house in, in the number of houses needed is, is one number. Your next number is how many homes were actually built. Right. And what they’ve calculated is that I forget the timeframe. I think it was 10 years that the United States overall nationwide, we are not, excuse me, there’s no timeframe involved with this. I’m sorry. We are somewhere between four and a half and 5 million homes short of what we could use for the demand that’s out there. And then what they said was if, if we were as a country in the entire country to build 2 million homes a year, it would take, what was the stat

Tracy:

10 years, 10 years

Tego:

To get back to, you know, what the demand is calling for. So we haven’t

Tracy:

Had to 2 million homes built a year in a very long time, or no, since 2004, since 2004. So it’s the peak of the building years. And so to 2 million a year would take 10 years to get caught up with the shortage of the homes on the market in this year.

Tego:

I think they’re talking, maybe we’ll have a million nationwide. I believe that was the number if I’m not mistaken. And so to bring that back down to local, yes, I know these are all national stats and national data. The thing is we’re seeing the exact same things here in Albuquerque. We know that there’s way more supply than there are, excuse me, way more demand than there are buyers. We know that then there are for sale. Then there are for sale, man. I’m just saying that all wrong, talking fast. I know. And, and we know, you know, based on talking to builders and developers, that they’re just not able to, to bring product online as fast as the demand calls, right.

Cash Home Buyers & Equity: What the stats are saying

(Transcript Snippet): ” Tracy:

Speaking of cash offers, Tego. I was saying, we talked about this on the show, but I want to bring it up again because it keeps coming up. People keep saying, oh, there’s so many cash buyers and they’re just beating us out. And oh my gosh, all the cash buyers narrative. And, you know, we’ve, we were hearing that. And of course, you know what I did, Tracy, I know you went and did the stats, but you know, we, we, as a team have closed over 250 houses this year already. Right. And we’re going well, let’s look at it. And, and really, yeah, there are some cash buyers out there, but that is not different. Right. Do you have a stat for it?

Tego:

Yes, I do. And so what I looked at was I looked at the first half of this year versus, well, actually it was the first I say the first half, it was actually the first five months of 20 17, 20 18, 20 19 and 2020. And then of course, 2021, because I just went, it went through through may. Yeah. So it was five years back. And I was trying to say, okay, of all the homes that sold in each one of those years during that specific period, how many of them closed where cash, how many were conventional loans? How many were FHA loans? How many were real estate contracts, which is, you know, seller financing. And then how many of them were VA loans? And that’s, you know, those are the kind of the big, the five big buckets. And the thing that was shocking was it in 2021, that the number of cash buyers was actually less than 20 17, 18 and 19. Now last year, 2021, it was actually even lower. But this year it’s bumped up a little bit, but it’s, but it’s interesting because we hear these narratives out there where, oh, well, all these cash buyers are just coming in and they’re from California and they’re buying all our homes and they’re displacing us. It’s like, no, no, no. It’s, yes. There’s some of that. And we’ve always seen that. Right, Tracy. It, it, it didn’t just happen since last year that people from other states are coming here and buy

Tracy:

It. Right. And when we had our team meeting, we asked our team, there was about 20 some on, on the meeting, right. Where are people coming from? Are you seeing them coming from California? Is that the overwhelming? And it was like, everybody’s like, that’s just what people are saying. There’s no, there’s no facts behind that. And now it’s like, no, people are move up. They’re from here, they’re coming back here. They’re from all over there. They’re moving from one house to another, within the city. They’re, up-sizing, they’re downsizing.

Tego:

A lot of, you know, household formation is what we call it where we’re, you know, people that have maybe never been homeowners or, you know, maybe two, two people coming together to, to start a home and, and, and be the first-time purchaser. We are seeing a lot of first-time purchases, but most of those first-time purchases are people from, I mean, they’re from here, they’re not from elsewhere. So that was anyway. That’s a little myth busting there. Cause

Tracy:

As for the stats, when people are throwing things around, I have my own Stat-O-Matic, so

Tego:

Conversation, I heard a conversation from a real estate training class where they were, people were just throwing data around and stats around and they had nothing to back it up. They were just saying stuff like, yeah, they’re all coming from, where does that? Where did you get that from? It’s like, well, that’s what I think. It’s like, well, anyway yeah, home equity that boy that is, that really hit the radar this week and all the economists that I follow re regarding real estate.

Tracy:

So let me just tell you, so we were meeting with the client last weekend. You and I, and talking about selling a house and anything and talking about where you can make money on your money. Right? We were saying, well, you could put it in and buy a CD or a treasury or this or that. And get, you know, right now they were advertising on a credit union last week when we were meeting that, if you wanted to put your money in for so many years, they were giving you extra. And it was going to be 0.4% interest, right? Could you imagine if the home equity was 0.4% interest? So when you think about wealth building and real estate this is where people build their wealth as a family. For the most part,

Tego:

It’s no doubt the number one wealth builder in the country, especially for the upper, or excuse me, the middle to lower class people. B because for the most part, people that are living paycheck to paycheck are not, they don’t have a 401k, they don’t have another savings plan, you know, but if you’re paying on your mortgage every month, you’re doing two things. One you’re paying down the principal every month and that’s forced savings. You’re also the, the equity in the home is growing over the longterm. Yes, we have ups and downs and there’s cycles and there’s going to be cycles and there’s always going to be cycles. I don’t think we’ll ever see a cycle. Like we saw from 2000, let’s say seven to 2010. I don’t think we’ll ever see a downturn like that. Again, there’s too many safeguards in place

Tracy:

Now. Well, do you think about when COVID hit or, you know, the stock market went down, but the value of my house didn’t right. Well,

Tego:

Values of homes have gone crazy in the last year. And so on the surface, you hear that and you go, oh, that’s, that’s a bubble, right. Well, okay. Is it, or is it not, let’s not go down that road, but, but for most part, most, not most just about any, you know, really reputable economists do not see a housing bubble, at least a price bubble. They do see an affordability bubble. That’s a different conversation, right? So anyway, but a couple of stats here average American, this is nationwide their equity, their home equity went up by $33,000 in the last 12 months in New Mexico. It’s $26,000. So you think about that, you know, every homeowner, if you just average it out in New Mexico that owned a home and there’s about a million homeowners in New Mexico, if you didn’t know that, I didn’t know that was a widow just shy of 2 million people, but there’s about a million homes in New Mexico. And that’s another stat I want to get to is how many of these people are finance and how many are free and clear.

Tracy:

It is an interesting number. How many people own their home outright.

Tego:

Outright. Yeah. Anyway, so, so and that’s, that’s figured into this average, right? So $26,000 gain in equity, but the number of people that, that have like, at least I think the number was the number of people nationwide that have at least 90, or excuse me I’m not, I’m not going to say this, right. There’s very few people that have less than 10% equity. Very, very few. It’s less than 10%. It’s very small.

Tracy:

I could see if somebody bought in the last year FHA with three and a half percent down. Yeah. That’s where that number is. Right. You know, if they bought three years ago, FHA with three and a half percent down, they have more than 10% equity. Yeah. Yeah. Yeah. And, and, and

Tego:

So one of the things that came up when I posted this on my, my Facebook is, well, how many people own their homes free and clear? And I thought, well, that’s a really,

Tracy:

And Claire is the term we throw around. Right. They own it out. Right. They have no mortgage on it, no mortgage. They own it.

Tego:

Yup. They own it. They don’t own anything to the bank on it or the own, you know, the bank doesn’t have a lien on it.

Tracy:

So what is the number? I want

Tego:

To say something, because I’ve heard this thrown around. It’s like, well, you have a mortgage, the bank owned your house. It’s like, no, the bank doesn’t own your house. You still own your house. It’s just that you have a loan from a bank or a lender that’s secured by your home. They don’t own your house. You still own your house. Anyway. I just, it’s one of those little things I see people say that just don’t make sense to me and it bugs me anyway. Okay.

Tracy:

So we’re all waiting on the number. I’m really in a mood today. Aren’t I? Yeah. How many people are owning their house outright, nationwide.

Tego:

42% of people own their home free and clear

Tracy:

And down the city block. And I see all these houses for four out of 10 houses on that street. They just own it. They don’t even owe a bank. Yup. That’s incredible. Isn’t it? Yeah. Yeah. And probably they’ve lived in that property a long time or a family member lived in that property that right. Especially

Tego:

Here in New Mexico. Right. We see a lot of that here, right. Yeah, for sure. For sure. Which

Tracy:

Is why people build wealth through home ownership. Right, right, right, right. And

Tego:

So, yeah, it it’s a, it’s a pretty oh, here’s the stat that I was talking about. Only 7% of people have less than 10% equity in their home. Very few numbers,

Tracy:

Very few numbers. Very, very few, very small. Wow. I don’t know too much coffee or I think

Tego:

It’s one or the other for sure. That, that goes to two. Well anyway, sorry, go ahead. You had something else you wanted to share.

Tracy:

Yeah, I’m good. I was, I was looking at the stats of the different types of loans that you had pulled up for us to see in front of us where you were saying the 17, 18, 19, 20, 21, the types of loans the different types, you know, VA FHA owner financing, you know, the biggest by far was conventional that’s our market. And so when we put a house, we, when we sell a house here in our multiple listing service, we then go in, when we close it and show it, we put in the, the details on it and we put in how it was sold type of financing or cash. Right. Yeah. And so you went back and figured out how to run those numbers. And by far conventional loans was the biggest and conventional is typically somebody with higher credit that might put more money down. Right. And then there was FHA and VA, which were much smaller. FHA tends to be maybe a first-time buyer, three and a half percent down. Yup. Right. VA obviously we really appreciate our veterans who are eligible for VA. That’s a zero down loan and it’s the best loan you can get. If you’re eligible. If you’ve done some military service and honorably discharged and qualify for it by far, it’s the best loan out there.

Lease to Purchase: How Albuquerque Renters can become Owners

(Transcript Snippet): ” Tracy:

Speaking of renting. So we really wanted to talk about a program for people who are renting or want to be renters that want a path to home ownership. Basically. Now there’s lots of ways that we can use this program, but we have a program to help people who are maybe not ready to buy. For some reason, they need to get their credit score up above bed, or they need to be in a career for a little bit longer than what they have been before they can get the loan that they want. Lots of reasons why they might need to rent a little bit before they buy. So this program is very much like a lease purchase.

Tego:

Yeah. Let’s talk, lease purchase or lease purchase is something that’s been around forever where it’s okay, I’m going to lease it for this amount of time. And then at a future date, I’m going to purchase

Tracy:

It. Right? Yeah. Then typically that purchase price is pre-determined. At the time you put the lease together, sometimes the amount of what you’re paying monthly, the person who owns the home will give you like a hundred dollars credit for each month you’ve been a tenant there and kind of hold that and help you build your down payment. There’s lots of ways they’re done, but this is a little bit different than that.

Tego:

It’s a program that’s available to really anybody that maybe they’re not in a position to purchase right now for, for whatever reason could be credit, could be just not sure if they want to commit long-term they, they want to rent. Maybe they want to try out the house for a little

Tracy:

Bit out the neighborhood or quiet the mountain. Exactly. And so what this

Tego:

Program is, this is a group that we, we have partnered with that allows the, the person to go pick out a home

Tracy:

That’s for sale.

Tego:

And this group will buy the home as an investment and they will turn around and either, well, not either they will rent it to them, but every year after that, that first year, the person that’s renting the house, they get the option to continue to rent, or they get the option to purchase a home. The rent and in the purchase price in the future is predetermined at the time that you go under contract in this. So it’s, it’s a way for somebody, we get a lot of people, Tracy, that call us in, in, let me just set up the scenario. Cause people may not understand somebody. They just moved here. Right. And they’ve just been in the job for six months or maybe their, their, their, their credits, eh, it needs a little bit of work and they know they can get it back. And you know, they’re working with a credit specialist like Michael Wright where they’re they’re, you know, they’re, they’re getting it better, but it might take them a year to get it back to where it needs to be so they can get a good, a good loan. Right. So those are the scenarios where it may make sense. Right?

Tracy:

There’s a lot of scenarios where it may make sense, but yes. So the way, you know, it’s, it’s really cool because you can, as a renter, go out and look at houses that are for sale and choose the house you really want to be in. And the one you want to make your roots in and eventually purchase, but if you don’t purchase it, that’s fine too. You can continue to be a renter in that house that you’ve selected in the neighborhood that you’re interested in. Right. When

Tego:

We first learned about this program and that we had it available here, we’re like going, well, this is, this is like a win-win win, right? I mean, it’s the company that’s doing. It’s good for them. It’s an investment, right? They’re earning money on their money. That’s what their job is. Right. But it gives the, the, the tenant slash potential purchaser, the options in the future to either buy the home or just move on. Right. And, and it’s, it’s a really, really great program. So if somebody’s interested in learning more about this Erin and rose and Zach on our team, who, who handle the phones and, and talk with people on the phone all day are very versed at this and can give you the information on how to learn more about it.

Tracy:

Call us right, 448-8888. And we would be happy to talk more in depth about this program and how to apply. And there’s just a few little criteria about what, you know, you for your qualification. But one of the really cool things about this is that the company that, that does this, that buys the home and then puts together the lease and how much it would cost you to buy the house. Year one, year two, year three, year four year five. They’d have, you know, a tiny little bit of appreciation in there each year, assuming houses appreciate three to 4% a year. They buy the house that you pick out with cash. So they make it a very competitive, you know, in today’s environment, their, their chances of being able to buy the house that you want to buy eventually, or that you want to live in are very high.

It’s tough out there! Frustration for Albuquerque home buyers

(Transcript Snippet): ” Tego:

This kind of the, the, the underlying conversation that we’re having in the real estate market right now, right now, which is frustration for home buyers. You know, there it’s, it’s really, it’s, it’s tough out there for, for home buyers right now. There’s very limited choices. There’s, you know, people are really wanting to get, get a home. They want to lock in these low interest rates. And so there’s a lot of frustration. And so w w we’re going to keep coming back to the, this right now, because this is really the, you know, top of mind for everybody right now.

Tracy:

Yeah. We talked about this a lot on last week show and what we want to say this week, again, is just hanging in there. There’s a lot of reasons to hang in there and just work towards getting that home, right? The interest rates won’t be this low, forever, and locking in that rate. Even if the price for the house seems a little higher, you’re still locking in a really good monthly payment. Right. Which isn’t going to happen if you’re a renter long-term benefits certainly outweigh the short-term wouldn’t you say?

Tego:

Yeah, I, I think you look at it’s tough. It’s frustrating. You’re, you know, maybe have, have had to make multiple offers. Maybe you’ve had to make some concessions that you really weren’t comfortable with making and being able to get a house you paid more than you think you wanted to, or whatever it is. Look at the long game, look at the long game and, and don’t give up, yeah. Lock, locking in the, those, again, the low interest rate and locking in you’re more than just a low interest rate. It’s locking in your cost of housing. You’ve now locked it in. If you’re making, you know, paying a mortgage, you’ve locked it in for a really long time. Versus if you’re renting, you know, it’s going to escalate every year, every year, every year, every year. Right. And so th th this is, you know, th there’s just so much going on there. And of course, that’s not even dimension the whole quality of life issues of, of owning a home versus,

Tracy:

Right, right, right. Which we’ve talked about all the quality of life. It seems

Tego:

Like we’ve beat this to death, but I know there’s a lot of fear out there around the market. And, oh, my gosh, home prices are up 25% in the last two years. And are we going to have a bubble? And, you know, am I doing the right thing? And, and I, I get all that. Those are all fair questions in this current market condition, because it is so frantic, right.

Kitchen rends and lumber futures: The lowdown in Albuquerque’s Real Estate market

(Transcript Snippet): ” Tego:

Let’s talk about kitchen to real quick. Oh, I, I brought up the wrong wrong chart. What did I do with it here? Did it go here? It went. Okay. So I love this the headline on this story, it was kitchens you know, stirring the pot COVID customer desires reveal, and then the S the sub-headline was something like spoiler alert, kitchen offices are out, which is interesting. And I, I know some people like them, but for the most part, kitchen offices are out. Cause now everybody just wants their home office.

Tracy:

Well, and they want space. They’re tired of being in the kitchen altogether. Right. We need to move around. Plus, you know, kitchen office kind of leaves a mess. Usually, at least for me, it would, I leave my papers all over the table and everything. Yeah. Unlike you who have a nice, neat clean desk. So, Tracy, what

Tego:

Do you see in kitchens that, that has been a big trend for this year and what people like and what people want.

Tracy:

Yeah. I noticed there’s been more of that darker stainless. I don’t remember what it’s called. It’s like a black stainless appliances. Yup. I’ve seen a lot of those. I’ve seen a lot more refrigerators that have computer door, you know, like a screen in the door where you can program it and you can have your Alexa or whatever, your whole house, your whole house automation through your fridge. I know, I know I said it and I thought, oh, ours is going to be saying, what can I help you with right now? But the screen where there’s like, you automate your home off your fridge and me personally, I’ve seen our friends have that. And I’m like, yeah, I don’t think I want to do that from my refrigerator door, but you know, whatever. What have you seen

Tego:

Big open kitchens, definitely the trend. You look at what the builders are building right now. You know, the production builders, you know, open, airy, open to a great room, open to a den, open to a dining room is definitely the thing. The

Tracy:

Other thing I’ve seen is bigger islands, bigger islands, more seating around islands, a little less, maybe even in live in dining space, like for dining tables, definitely not formal dining rooms, but more of a dining note in addition to a big island. Yeah.

Tego:

The other thing we see a lot of these waterfall islands, where they with the course are granted that that goes all the way down to the floor on the side. So that’s, that’s a big big trend for sure. And then, like I said, the desks are kind of out

Tracy:

Get that home office into a different place. Yeah, exactly. Yeah. I think, you know, we were still, Zoom’s not going away or all the other ones, Google meets all the different venues for online meetings. But we’re seeing everybody get a lot better at having like a set behind him. Like we have here, right. Where even if they’re in the bedroom, they’ve learned how to use the pretend you’re in The Bahamas or those types of things. So well, one

Tego:

Thing though, that, that did come up is when they were talking about that, you know, the built-in office or desk in the kitchen is kids spaces for kids, a homework station. Now I know like some homes we’ve seen here in town, like Hakes brothers has a model that has the home that has the kitchen, and then they’ve got just this little nook across the way. That’s like a homework station, which is perfect.

Tracy:

Does that too. Yeah. Yeah. So, so anyway, those are some, it gives you some counters up higher too. So you can interact with like, if you have kids there at that home office nook. But it kind of hides the desk itself, which is kind of nice if you’re like me. Yeah. So the other thing that happened this week, Tigo lumber, so lumber futures, right? We’ve been talking about the cost to build lately, get to a point where real estate agents

Tego:

Are talking about lumber futures. Well, here we are.

Tracy:

So four months now we’ve been talking about the rising cost of building a new home and lumber prices had shot up significantly. Right. And it was adding huge percentages to the build cost. In addition to other things there’s other things cement has gone way up, there’s other trades, trades people and wages and everything, but lumber futures in the last week or two have come down. So we’re hoping that, you know, down the road six weeks or whatever, that, that translates into better lumber prices. I know we talked to lawn Fon. Who’s a well-known builder’s lender. She’s very well known as a construction for her construction lending she’s with Flagstar bank. And you know, be curious to see what she’s seeing when she’s getting bids and things from builders are seeing what their bids look like for their loan. Right, right. To keep up with it and see if the lumber prices truly do come down based on what we’re seeing in the commodity market. Yeah. It’s like all these confusing thoughts going through my head.

Tego:

You know, it’s, it’s strange that we’re, we’re talking about lumber prices, but it really does impact as a huge impact on the cost of construction. And, and we’ve said it before, and we’ll say it here again, is it, you know, new homes, new construction homes in Albuquerque, you know, pretty the starting levels around $300,000.

Tracy:

Now it’s pretty hard to get something under two under three. And honestly, a lot of the new home builders pulled DDR Hart and Hakes Twilight Abrazo. I know there are others, you know, they’re not there in the threes, in the fours and the fives and the sixes and the sevens, you know, for, for new home construction, we’re not talking about custom, hire an architect, hire a builder, find a lot. This is just production or, I mean, they’re not all production. Some of them are kind of semi custom, local builders and things, but you know, used to be, you could find a Dr. Horton for 200,000, like a year ago, we looked at some that were being built by Cleveland high school in Rio Rancho. And they were around 225 to 235. Yeah. Now they’re 300.