Albuquerque Housing Shortage: Why and What’s Going On and Challenges in New Construction

Albuquerque Housing Shortage: Why and What’s Going On and Challenges in New Construction

(Transcript Snippet): “Tego:

Any stats or anything else out of the convention in Orlando that jumped out at you, national convention, you know, thousands of real estate agents from all over the country.

Tracy:

I, I don’t think any stats that you haven’t already talked about on our show before, some of it was, you know, the housing starts and why, how many millions of houses were behind in, you know, housing for people.

Tego:

Did you set that up on purpose? Yeah, just like that. I did. So, so I wanna segue into a little bit different topic, which is, you know, you start talking about this housing shortage, right? We’re short, so many homes in this country and people are like, well, why what’s going on? Well, don’t we just build more? Why don’t we just build more? Right. and so I wanted to go on, go into some of the stuff that’s going on. Some of the trends in the new construction, as well as you know, some of the opportunities as well as some of the, the, the down, you know, the, the, the, well, let’s just say

Tracy:

The hard parts,

Tego:

The problems, right. I, I, I was gonna say, I didn’t wanna use the word problems, but it kind of is I’ve heard different analysts that, that specialize in the housing world. Talk about the number of homes we are short in this country. I’ve heard. What did I say the other day? The woman chief economist from realtor.com. I think she said 5.8,

Tracy:

5.8 million million

Tego:

Homes short in this country. And that’s been building and building and building that, that, that shortage over the last 10 years. One of the, the, the charts we saw at the, the convention, Tracy was, you know, showing how many homes are built year over year. You know, obviously we had that huge spike up until 2008, and then it dropped away to nothing. And so what’s happened now home construction is just falling behind the, the household formation, which is, you know, the thing that a couple interesting stats. So I saw in that Tracy was one is that there are less people per household than there used to be, which also makes it that we need more houses. Does that make sense? Sure. another thing I, I saw was homes are getting bigger. So this was a trend I, I hadn’t really thought was a thing.

Tego:

So here’s the chart, Tracy. And so it after 2009, when, you know, basically the, the, the faucet just got turned off on new construction, right. Homes had, had peaked out somewhere just over 2,500 square feet on average. Right. Big. Yeah. Yeah. And then dropped down below 2,400 square feet. And then what’s interesting is it started to peak back up all the way till 20 15. But you think about that, that were people, those were people, you know, most of that construction from about 2012 to about 2015 were custom homes because there wasn’t a lot of big production starter home communities going, going on. Most of that building was custom

Tracy:

Homes or smaller builders maybe.

Tego:

Yeah. Yeah. And then and then we saw, so that trended up over 2,600 square feet came back down, but now just in the last year, homes are getting larger again.

Tracy:

So more in that 2,500, they dropped down to like 20, 23 50.

Tego:

Yeah. Somewhere in there. Yeah, yeah, yeah. So they, they, they, but now they start to go up and it makes sense. You think about the pandemic and the work from home and all that right.

Tracy:

Extra space for being at home more and working from home, for sure. Yeah. That one extra room, you know, that could be 12 by 12, you know,

Tego:

I mean, builders are gonna build what the product that people want and what people want right now is a home office.

Tracy:

And we’ve seen that in floor plan adaptations from the new home builders in our market.

Tego:

And what about the, the multi-generational too, is that that’s still going, right.

Tracy:

It is still going. So multi-gen where there’s like an extra Cita within the house, you know, maybe a private door, a, a sitting room, a bedroom, and a, and a little kitchenette sort of separate from the rest of the house, but still a part of the house. We’re still seeing that. Yeah. Still, still a thing for sure. Yeah. I think it’s a great idea. I mean, no,

Tego:

It, it

Tracy:

Is, it’s a great floor plant. Some of them that I scene are really nice.

Tego:

Yeah. I mean, there’s definitely no doubt that the, the pandemic, the way we live in our homes, the way we use our homes changed everything forever. Let’s say, you know, well, until it changes again.

Tracy:

Yeah. Which happens,

Tego:

I love saying stuff like that. Okay. So the other thing with the new construction is obviously prices, you know N a and the national home builder association, they say the average new home in the United States went up $36,000 in 2021.

Tracy:

And I’m sure it did. I’m sure it did. Yeah. You think about labor costs as well as material costs and material delays in the, the cost of money while they’re building it, you know, just takes a lot longer right now. Yeah. We know a lot of people we have working with us and we thank all our home buyers that are waiting for their house to be built. And it’s exci exciting and it’s fun. But it’s taking longer. We have folks that are, have put a house under contract fall that are hoping to be in by like June.

Tego:

So, yeah, I mean, so let’s, you know, just some of the challenges with new construction and the reason we don’t, we’re not just build baby build. Right. We’re trying, you know, the, the builders are trying to do as much as they can, but there’s a lot of challenges, obviously, supply chain issues, right. We’ve all heard about supply chains. We’re not gonna beat that, but you know, we hear stories about garage doors taking six months.

Tracy:

It’s always different. Every month you talk to a builder Tego this month, it’s windows last month, it was garage doors. Now it’s AC units. Or, you know,

Tego:

I talked to Richard Medina from fellowship homes the other day, and he said, black windows, that used to be, you know, it’s kind of a design trend or black, you know, black frame windows, 18 months to get black windows,

Tracy:

I guess that’s not gonna be the,

Tego:

Trend’s not gonna be the trend. Yeah, yeah. Not gonna be doing black windows this year. So yeah, that, that’s one of the things they’re having to do is kind of change some of their design, design ideas, you know, to

Tracy:

Adapt to what we can and get

Tego:

Appliances, you know, appliances have been a challenge. So you know, the supply chain issues definitely are there. They’re better, but they’re still, they’re still there for the builders. The other one, like you said, was labor, right? Just not as many,

Tracy:

Well, the cost of labor too, because yeah. Now to get that labor or to your job site and debt as someone else’s, you’re competing a little more.

Tego:

Yeah. So we went to that talk from that the economist from Wells Fargo a few weeks ago that fidelity title put together and he was talking, it is an interesting stat, cuz it said there are more homes under construction in the United States since 2006 or something like that at the, at the peak of the boom. And you hear that at first glance, you go uhoh here we go again, we’re gonna over build, we’re gonna have too many homes. The pro the thing is, is that they’re, they’re just taking longer, so much longer to build now

Tracy:

To get the permit, to get the land subdivided, to get the infrastructure in. Yeah. Everything’s taking longer, not just build time.

Tego:

And, and that’s the other, one of the other big challenges here is just getting buildable lots, ready to go. The timeline takes a long time. So, but all, all indication is that demand for new construction is gonna stay there. It’s gonna cost more for new construction. There’s no sign that it’s gonna, you know, prices are gonna go back down because the demand is still there. However,

Tracy:

We have a lot of neighborhoods that have come on the market in the last couple months by a lot of big builders here. So we have homes in the pipeline. So if you’re thinking of getting a new, newly constructed home call us, and we can tell you where those neighborhoods are. Because a lot of times, you know, you go drive around and you stop at one builder, but you might not know that a half mile, the other direction. There’s another home builder that you can consider. So.