2021 in Review: A Banner Year for Albuquerque’s Real Estate Market

2021 in Review: A Banner Year for Albuquerque’s Real Estate Market

(Transcript Snippet): “Tego:

Needless to say, 2021 was a banner year for real estate in Albuquerque and New Mexico and the entire country

Tracy:

A banner year. For sure.

Tego:

And, you know, kind of the, the, the good, the bad, maybe the excellent few different, you know, things. If we look at it that way, I don’t think there was any ugly. The only ugly that I saw in, in real estate, at least in the real estate media that I follow are the, the, the crash people, you know, the housing crash, people that are just trying to get clicks on YouTube and trying to get everybody to believe the, that everything’s gonna fall apart. And that that’s the only ugly. If you say the good to bad and the ugly,

Tracy:

I think I would say there’s some ugly too, but it’s not just 20, 21, but you know, the affordability, the, the first time home buyers and ability to get an offer accepted when there’s maybe a down payment assistance program, a, a loan that’s a little bit harder for a buyer to get accepted.

Tego:

I was gonna call that one the bad. Oh. And, and to head there’s the bad. No. And, and I agree with you that I think that is probably the, the unhealthiest piece of the real estate market right now based on a, the, there’s a lot of different numbers that come at us and, and just depending on how we look at it, but if we look at annualized appreciation in the Albuquerque area, I’m seeing numbers anywhere from 10% to 18% over the last 12 months, right. That is not sustainable. We all know that the, the, the good news, well, and this is really part of the good part is, you know, people don’t buy, they, they basically pay what they can afford in, in the debt, right. They, they look at, okay, what, what’s the monthly payment? They don’t necessarily look at the top line price.

Tego:

I mean, we all do, but it’s about, you know, how much debt can they afford, right. And, and the fact that we had, you know, 3% interest rates for the most of 20, 21, we’ll get the interest rates in a moment here, people that have bought in or refinance in 2021, that’s the good, right. It’s very good. They’ve locked in their cost of housing for, let’s say the next 30 years, right. If it’s a 30 year fixed rate mortgage, and that cost is not gonna go up, that’s locked in. I mean, obviously the, the cost to maintain your home and all that stuff, obviously those things will go up with taxes, can change. Taxes will go, homeowners, insurance can change. Yeah. Yeah. All that stuff goes up, but you you’ve locked in your biggest expense for the next 30 years versus you know, the well, and, and I just wanna put, put it, I know you wanna say something, but just to understand, I mean, pay rates are going up, right. The it’s going up slowly, but, but actual wages are increasing, so wages are gonna continue to increase, but yet you’re locked in on your housing costs for the next 30 years. That’s my

Tracy:

Point. Right? Think about all the other things besides housing that have gone up in the past year that are gonna continue to go up. But for people who own a home right now, they, they own it at what they bought it at. Right. Right. They may wanna refinance at some point, if they haven’t, right. If you haven’t gone from a six or seven or 5% rate, or even a four and a half percent rate in refinanced, you should still be thinking about that lock in that lower rate. But it’s, it’s crazy to think of your housing cost is now pretty fixed except for taxes and insurance for up to 30 years. Whereas, I mean, lots of other things have gone up, you know, the minimum wage in Albuquerque in New Mexico went up on the 1st of January. Yep. Significantly, significantly, significantly. Yep. You know, it’s it locking in the rate is good. So the story I wanted to tell about this sort of, so we talk about our kids every once in a while. So our son who’s been living in Arizona for since 18, basically he’s 24 gonna be 25. Yeah. Since they’re in college. Yeah. Since he went there for college, but he’s been working for three plus years now. And he bought a house last year, actually

Tego:

End of 2020. It was in 2020.

Tracy:

Yeah. He was out during the worst of COVID when we didn’t really understand it and know it looking at houses and his realtor in Arizona as our brother-in-law. And it was not fun to go look at houses, but now he’s going, oh my gosh, I am so thankful that I bought a house that I have a low interest rate at the time. It seemed he didn’t get the best rate. He was like 3.3, five or something. Yeah. That was pretty funny. Yeah. Cuz it dropped right after down to under two, under three. But now he’s sitting on, in high in appreciation, a a really nice home with appreciation. And one of the things that we’ve told buyers for years Tigo and, and it sounds self-serving is buy as much house as you can afford. Don’t don’t under buy because the, your wages continue to go up over time in the next 30 years.

Tracy:

You’re not still gonna be making what you’re making today. Typically you, you would hope. Yeah. I mean, most people it’s worked out well. Absolutely. Yeah. When I see people who say, well, I can afford to buy a $500,000 house, but I only wanna buy a two 50. It, I feel like, you know, they’re kind of missing out because they’re probably gonna wanna buy another house down the road that better meets their needs and, and buying the house and getting the low rate and locking it in right now, being in the neighborhood you want and getting the house you want, that’s gonna serve you for a long time was a very good thing for our son. Yeah. We, we thought he was crazy, right. Because we looked at the price,

Tego:

He was buy, which, which is interesting cuz you know what you’re saying right now is a belief you’ve had for a long time. And I, I think part of it was just, you know, parents being nervous and, and, and we see that at, with, with parents helping out their, their kids behind the first house and stuff like that, you know, you wanna be, you know, we don’t want our kids to overextend themselves. Right. We want ’em to, you know, make good financial decisions. And we know that, you know, from our own experience in our early twenties, we didn’t always make good, you know, financial decisions

Tracy:

You might not have, but I did. Okay. So don’t lump me in there. Okay. Okay. But you know, we’re looking at our son, who’s now been a homeowner for a year and a half or just over mm-hmm <affirmative> and you know, he’s got 20% appreciation from the market in the home that they own right now.

Tego:

So the, the thing that’s interesting is, you know, we, we could say, okay, well, if he bought that home and a, at a different time that he wouldn to have that type of gain, obviously it’s been an extraordinary gain over the last, you know, year and a half, two years. And the, the, the, the part of it is though, it’s still understanding it’s, you’re just locking in your housing cost. And that, that brings me to the, one of the stories that really jumped out at me this week in, in the real estate world is rental prices of 18.7% in Albuquerque over the last year. So that is, I mean, that is real cost to, to live in a, basically for your housing, for people that are renting. And we talk about, okay, well, homes in Albuquerque have gone up anywhere from 10 to 50% 20, whatever it is, you know, rent have, have basically outpaced it. Well, the, the difference is people that are in their house, their, their cost did not go up, but people that are renting there’s a chance that, that their rent can go up every single year. Right.