Albuquerque’s Real Estate Market is Shifting Quickly

Albuquerque’s Real Estate Market is Shifting Quickly

Transcript Snippet: “

Tracy:

Our market can shift quickly and, you know, we’ve had that conversation and

Tego:

It feels like it has shifted quickly,

Tracy:

Right. It, I agree. That’s where I was going. So you think about last fall, September, October, November, it was not hot as hot as this February, March, April were. Right. Right. We felt a huge change after the first of the year in the frenzy of housing. Right. And people wanting to get a house or getting it sold for top dollar. We were getting a lot of offers. But last October, it wasn’t like that. I know I helped some people buy a house last October and we were able to negotiate. We were able to, you know, have the seller take care of what historically have been typical seller paid items. Right. We were able to do a repair request. We were able to, you know, have interesting, have the opportunity to write a buyer’s offer that wasn’t all trying to give the seller everything. Right. And then it shifted. And that house, those clients bought in October come March probably was worth a hundred thousand more based on how the market was. And now we’re feeling it kind of level out, I would say.

Tego:

Yeah. And I’ve heard a few stories and in, in these type of stories that are anecdotal or just that they’re anecdotal, they’re not data, but it’s, you know, where, where a home was under contract at a certain price, you know, a couple months ago deal fell through, went back on market and now, you know, they, they couldn’t, they couldn’t get that same price that they had it under contract for earlier. Now the

Tracy:

Momentum is shifted.

Tego:

Now the there’s usually obviously more to that story. Usually that means when during due diligence something came up like in, in inspections, it maybe there was some, some challenges and suddenly the home, you know, whoever was buying, it realized no, the value wasn’t there. So just cuz it was under contract at a certain price doesn’t mean that price made sense. There was a reason that person backed out of that deal. But there, there could be a lot, not there there’s a lot of reason,

Tracy:

A lot of what I’ve seen is financing changes. Yeah.

Tego:

Well the, the whole interest rate thing has been dramatic. Right. Right.

Tracy:

So, you know, speaking of, so just for clarity for the listeners, right. There’s people who put new construction homes on under contract last summer. Yep. Those houses are just being finished. Right. Right now the interest rate last summer that they used to qualify for that new home, that might be 400,000 or 500,000 or 350 is significantly different. And there are some of those people who had those houses being built that now, because of the shift in interest rates, don’t qualify.

Tego:

It’s interesting. I’ve talked to two local home builders that, that we all know. And they’ve one of them told me that a good portion, let’s say a third of their buyers are cash. The other one told me that a good portion of their buyers are outta state and, and, and or cash or, you know, whatever. So, so it’s, it’s interesting in the new construction it’s, it’s UN unfortunately it’s not the entry level homes for new Mexicans. It’s it’s well, I, I take that back cuz we, we know obviously of many cases where there was first time home buyers buying a new construction home. Right, right. I mean that’s, that’s clearly

Tracy:

Happening just first time home buyers. It’s people who live here that have decided they’re gonna get a new home. And

Tego:

I, I think the main point I think I wanted to make was that it’s it’s the new the new construction. It just doesn’t have the ability to address the, the,

Tracy:

A new Mexican first time home.

Tego:

No, not new Mexican, no, just a, just an entry level entry level, you know, sub $300,000 house. That is just not a thing that home builders can build anymore. Right. They’re just, they, they cannot build a home for under, under $300,000

Tracy:

Right there. Aren’t new construction here, Los Lunas, Berlin, even right. If you get one like

Tego:

It’s and, and I just wanna make one point on that. It’s not like they’re like jacking up their prices. Right? They’re they’re they’re margins. As I understand, based on some data I’ve seen the margins, the profit margins of the builders have shrunk because their prices went up so high, so fast on all of their stuff, labor materials, so on and so forth that they couldn’t pass all of that on. And, and so, you know, builders are behind the eight ball and I, and I don’t, that’s not against them. That’s just the way the market is. It’s it’s there. There’s so many things. I had a story up earlier. In fact, Tracy, where did I put that story? It’s like, you know, what are the things that home builders want people to know that might be thinking about buying a new home? And it was, you know, understand things are taking longer. We have a lot of supply chain issues. We have labor issues. We don’t have enough, you know, skilled trades people to, to build as fast as we’d like to things are taking longer. So, you know, it’s just, it’s all great. And you know, buying a new home is awesome. Just, just understand, you know, all the implications that, that comes along with that.

Tracy:

So in those conversations, Tigo with some of those home builders, what I remember you also telling me is they aren’t seeing cancellations because of interest rate changes. No, no, there’s not a lot. I, I know I’ve talked to one local builder different one and they’ve had a couple mm-hmm <affirmative> we’ve seen a couple come back on market, but they’re mostly houses in the four S you know, 400,000 and up. And they came back on market. Not necessarily because the buyer can’t qualify anymore, but it could be. But you think about last summer putting a house under market on under contract to be built. And it’s now getting close to closing. A lot of times people’s lives have changed in a year and maybe they don’t even, their job has changed and they’re moving or whatever. So there’s lots of reasons why that could happen.

Tego:

So my notes right here, Tracy, I’ve got a question and it’s, is it cheap since we’re having this conversation? Yeah. Is it cheaper to build or is it cheaper to buy existing? And I always joke with the, the, the, the new home builders always call them used homes, right? We, we call ’em resale homes in,

Tracy:

In existing resale

Tego:

Re resale homes. They call ’em used homes, but and I’ll, I’ll just bottom line. It, you know, generally a new construction home, when you compare it, you know, per square foot, you know, of living space, you’re gonna be 20 to 30% more

Tracy:

Than

Tego:

Resale than resale for new construction. However, there’s all those trade offs. It’s more energy efficient. It’s got all the new cool with bank stuff. You know, you got, you got the latest design trends, you’ve got the latest materials, you’ve got the latest appliances. So yeah. I mean, you get all that stuff. You get, you get that new home smell. Right, right. You know, you get a, you get a 10 year warranty, you know, you get, you do get a lot of good stuff if you buy new and pay that, you know, that, that more so it’s, it’s something everybody should consider when they’re out looking for sure.

Tracy:

It’s fun. Yeah. Getting a new house is fun, whether it’s a resale, well,

Tego:

It’s just like

Tracy:

Used house or

Tego:

It’s just like, it’s just like, it’s the same with the car thing. Right. I mean, we, we know we can buy a used car. Well, maybe not these days, but in general you can buy a, you know, one or two year old car that has, you know, already taken a big, big depreciation and save a bunch of money. But you know, it’s not new,

Tracy:

Right.