Albuquerque Housing Market: Things have shifted in a seismic way
Transcript Snippet: “Eddie:
Very important. Cause things have shifted seismically and we knew this was coming and the thing is, is what is it? Pigs get slaughtered used to say it all the time. And you know, there’s a lot of know part ate everybody. And there’s a great scene. I was telling my friend he’s in the commercial real estate business in in Phoenix. And I was having a conversation with him. I said, you know, when people really get made, cause now you have people who really are millionaires. You have people who are really truly worth something. You know, one of the things that I missed is I missed the fact that there’s actually really rich people and that there’s really poor people. You know, I, I, we don’t have that anymore. It’s like, everybody’s rich, everybody’s poor. Everyone’s got something it’s all suspicious consumption. You can’t tell who who’s he what it anymore.
Eddie:
And so we have this sort of, this level of everybody deserves as an entitled to, and everyone’s got a million dollar house. I mean, if you drive through queen Creek in Gilbert, Arizona, it’s like, oh, I, I can hear the pop already. The pop has already ha happened in my head. Right? And it’s like, these people are walking around like zombies. They have no idea what, what is, what is going on behind him? And there’s this great scene in this movie called margin pole. And it’s has this CMBS in the back. And that’s why I said Tego, this article this morning is about, well, they thought that there would never be another housing bubble. It’s just not a housing bubble. It’s something completely different. It is, it it’s an equity bubble, which means you still have a house it’s still secure. You have the best interest rate of your life. Aha. But there’s something else here that’s absolutely key. You might end up owning your house for the rest of your life.
Tego:
No, no, no, no. And, and I, I, I think this, this is the, the elephant in the room. When you talk about the housing market right now, right. It’s, you know, I, I did a presentation Eddie for the realtor association here last week on how to look at what’s going on in the housing market. Okay. And the thing, the thing that I found, so you get this. So I, I, I just did a quick search, just a new search in, in the main, you know, Google search for, for news real estate. And these are the headlines I saw us foreclosure activity sets, post pandemic highs for the first quarter of 2022. Okay. So, so that was, that was the headline actually read the story it’s yes. We had a foreclosure set a new high because, well, there were zero foreclosures last year. Right. So, so anyway but, but it’s stuff like that. Right. You know, us housing market has, has peaked. That was from the Atlantic. I know. That’s your favorite art paper to read. Oh,
Eddie:
Love it.
Tego:
Yeah. Yeah. I know that’s favorite. But Albuquerque journal just last week, less house, more money. And that’s true. I mean, that that’s, to me, that’s the story in housing right now is, is the affordability crunch and, and it’s not just purchase, it’s also rent. We, now
Eddie:
We saw those rents though, but the flip side of that which is something that if you were able to take advantage of, and you were a position of good credit, you were out able to buy up to 10 houses and you could have taken advantage of this and you would’ve loved the rent market. Right. Because rents in New Mexico climbed higher. Yeah.
Tego:
That’s me. Yeah. Right. I mean, that’s, that’s what I’ve done, right? Yeah. I’ve, I’ve maxed out the number of single family mortgages I can get at ridiculously low interest rates that we’ve had over the last couple years. Right. And, and I’m, I’m, you know, and, and I will say, I just, just so I can be, be key here. I am still optimistic on the housing market from a, a values standpoint. I do not see a pop coming to Albuquerque from, from a value standpoint. What I, the problem I have is the affordability and the fact that that first time home buyers are getting priced out of this market. And, and, and my frustration is with the policymakers and not realizing that this is a big problem in our market.
Eddie:
Let let’s go back because this is, this is really important. And we, we don’t hop into, and by the way, Tego, we’re gonna go all the way to 11 o’clock. We’re running through all the credit running over.
Tego:
Oh, no, man. Do I have that much content? I know I can talk for housing for hours.
Eddie:
Yeah. We’re going to this morning. Yeah. Great. So let’s, let’s sort of pick this stuff apart. This is super important. OK. So when we talk about the difference between Albuquerque mm-hmm and why you’re bull on Albuquerque is the very same reason I’m telling people don’t miss the opportunity. All right. There’s something else that New Mexico has that all the other things, all the other places that people Havelock to New Mexico isn’t Arizona, it isn’t Texas. It isn’t Colorado, but we’ve got a political ship that’s going on. Cause it can’t get much worse.
Tego:
Yeah. I’ve been to Denver a while, but I’ve heard salt lake city is, is,
Eddie:
Is it’s a livable. Yeah. But Mexico is livable. And as we change that around, we have the ability to make up the difference between, and it’s the same as El Paso between here and Phoenix and here in salt lake. And here, those home prices are gonna stay where they are, but they’re so much more expensive than New Mexico. Right. What’s affordable and everyone’s zooming and everyone’s going anywhere. So where all where’s all the money gonna be made right here in the state of New Mexico folks. Yes. That’s exactly one of the reasons why it’s so, and we have the four seasons it’s miserable in Phoenix right now. Absolutely miserable.
Tego:
FIGO no, I, I, I, I know, you know, you know, I own a house in Phoenix and our son, son, and daughter-in-law live there and we get there all the time. And I mean, that’s why we bought a house there just cuz we do get there quite a bit. But yeah. I mean I, August no I’ll, I’ll pass, you know, I don’t wanna go, I don’t wanna go to Phoenix in August, you know? I mean it’s it’s but it is booming, you know, you go over there and that town is booming cranes, everywhere, construction everywhere, single family home construction everywhere. Let me just tell you a little story about that. I, I know I, I mean out Phoenix is like the poster child for housing. I, I, I hate to say appreciation depreciation, but it really has been right. It kind of has always led when things go up and it’s always led when things go down right. And
Eddie:
Las Vegas more than that, by the way. True. A little more or less to be in Vegas than, than, than Phoenix. But yes, go
Tego:
Ahead. Yeah. No, no, no, that’s a good, that’s a really good point. But, but, but what’s happening over the right right now is there’s, they’re building as fast as they can. And that’s true here in Albuquerque too, but it’s just at a much smaller scale. We just can’t scale as much as they can. There’s a lot of construction going on and people are very bullish on that market as well, but it has gone up a lot in the last couple years. Extraordinary amounts and, and much more than here, you know, the, the, and so I, I think the question is just, this is what I see when I hear, I hear people talking about the the bubble, right? The coming bubble in the housing market, they say home prices have gone up 30% in two years, home prices have gone up 40% in two or three years.
Tego:
It’s gotta pop. It’s like, well, you, you have to take the other things into the equation, right? You have to take the demand and the supply into the equation. The reason that home prices have gone up so much is there was a, a, a pen up demand. And there was a lack of supply for the last 10 years. And now we’re paying the price for it. And in the sense that that home prices have gone up very fast. The other problem I see coming, Eddie and you talked about this here a minute ago was we’ve got these people homeowners now that are locked in and at these 3% mortgage rates, let’s say, and how Mo and they’re locked and, and, and their home price is locked in now, right? Their mortgage payment is locked in for the next, let’s say whatever years they have equity in their home and their wages are gonna keep going up.
Tego:
So what’s their motivation to sell when they say, well, you know what, I, I I’d like to maybe move up to another house and suddenly they go, oh, shoot, I gotta pay five and a half percent mortgage interest rate. Now I’m not gonna sell. So we we’re, we’re seeing this. And I think it’s gonna get worse, which is the tenure in homes is gonna increase people. Aren’t gonna turn over as much. And I I’m concerned about that from a supply site. So I know I’m kind of all over the place, but there’s so much there. Yeah. Yeah.
Eddie:
So you’re, you’re dropping all this these brilliant points. And let’s talk about the benefits of somebody staying in their 2%, 3% mortgage. And let’s also evaluate which you can, because you’re thematic. We know that the average let’s start looking at the square footage of the homes that people have purchased.
Tego:
Right?
Eddie:
Yeah. People ask I’ll direct by asking you these questions. Okay. People over the last five years bought smaller homes or bigger homes.
Tego:
It’s. It’s actually been relatively flat. And, and, and what new construction though has grown slightly in the last few years.
Eddie:
OK. So, because
Tego:
They could,
Eddie:
OK. The size of a home has gotten larger. Right. And it has to do, and people have redesigned their home so that they can accommodate their new live work. Live work is no longer out there live work is at home with Amazon deliveries, with drone drops. And with the fact that we’ve got 2.9 let’s let’s design the future. Yeah. Yeah. I’ll tell you all
Tego:
The things we’re talking about Albuquerque. Let’s, let’s talk about Albuquerque, right?
Eddie:
I,
Tego:
Yeah. Yeah.
Eddie:
We have to talk about an overall perspective. Sure. So you already identified that Albuquerque is a market that people will invest in going into the future. Because one of the things that you have is, is at the bottom and it’s gotta level out with everything else, right? Phoenix, Las Vegas, salt lake there’s benefits from being this big hole in the donut, Oklahoma city, everything, all the rest of those places. Yeah. We have four seasons that are livable. We know that people by and large, 36% are, are, are have pretty stable jobs because of the state, federal, and local employment. Okay. And those aren’t going anywhere fast right now. Now we have something else that’s sort of factoring in. And that’s the fact that we’ve got this telecommuting trend, that being place, for sure. So owning a home for a longer period of time also does something else, which we haven’t talked about, which is the reason, the first thing a, a person asked you when they walk into the house.
Eddie:
I like the neighborhood. I like the neighborhood. How good is the, the neighborhood? You can’t talk to that it’s basically called red. You can’t speak to the, but it’s the very first thing that they want everybody to ask you now have the, of families, cultures, neighborhood parks. If you go any place in queen Creek or Gilbert or any place like that, it’s very interesting, right? They all have these common areas that are like, oh my gosh, this is like a water park in Albuquerque.
Tego:
Yeah. No it, yeah. Again, a lot, a lot to unwrap there. You know, I will say from an amenity standpoint, Albuquerque is lacking, right? When you, when you compare us to those, those places, like, you know, you go to downtown Chandler, downtown Gilbert, where they have, you know, those, those districts, you know, we just don’t have that. And I know, I know as long as I’ve lived in Albuquerque, which is 30, some years downtown is gonna get revitalized. Right. But
Eddie:
Right, exactly.
Tego:
Hey, I, sorry, I don’t want to go down that road, but the, the, the point is it’s like, yeah, we, we could have some more amenities. And I, I know that the, the, the thing I’ve always heard is when we get to a million population in the Metro Albuquerque, that’s the thing that’s gonna push us over the top and start bringing in some of those amenities, but it’s gotta be driven from the policy makers.
Eddie:
Yeah, well a little bit, but I think more, it’s gonna be a lot of good dumb luck by the fact that we’re gonna benefit that there’s.