Geographically Albuquerque: If We Build It, Will They Come?
Transcript Snippet: “Eddie:
And giving him some nice surprises. He wants to talk about more homes on the market. So let’s bring that into, into this portion, which is geographically Albuquerque. Will we, if we build it, let’s do a field of dreams. If we build it, I know you’ve brought ins. I know you’ve brought in a lot of other home builders into your show over the last four eight shows. If we build it, will they come? I think this is the, the thing. And so Todd, Todd Clark, you know, Todd Clark, New Mexico department advisors, great pillar in the, the apartment. You know that that’s his world. Is he a New Mexico apartment advisors? He ha he did a presentation. That was, well, we are both panelists there. I did my presentation on residential housing. He did a presentation on what’s going on economic development anyway. Sorry, what was the question?
Tego:
Oh, the, the more houses, more houses, right? You said policy makers. Yeah, yeah, yeah, no, no, no. What, what you, what yeah, you said if they build it, will they come well, this is the problem they’re coming, right. When you look at, so he, he, he put together a an analysis between what’s going on with Amazon Facebook Intel who else here do we got coming? NBC universal fidelity investment Netflix. Right? All of that stuff that the New Mexico and, and Albuquerque economic development has done such a good job, bringing those industries in those people are already coming. Okay. And that’s a problem. We don’t have the housing for those people. We do not have enough housing for this PE those people based on his analysis. And, and I, I and when I say housing, I’m not just talking about what we do, which is, you know, single family, residential sales, we’re talking about rentals.
Tego:
We’re talking about everything. There isn’t enough housing for the people that are coming. So when you say, if we build it, will they come? No, no they’re already coming or they’re already here. Okay. That’s why we’ve had rent increase, you know, 15% in the last year. That’s why we’ve seen home prices go up 15% in the last year. So if we had a higher supply for the accommodation, the people who were moving in from out of, out of town from California in the movie industry, from other places and Washington, you’re telling me that we would have a much more improved affordability index for the mid to lower tier home buyers. Well, absolutely for sure. I mean, we have accelerated our home price. Acceleration. Let me give you, let me give you a really good stat on that. So there’s it’s Wells Fargo, home builders, Associa national home builder association.
Tego:
They do this, this thing where they say, okay how many homes in a particular market are affordable to the median income for that market? Right? So it’s, it’s looking at affordability, it’s looking at medium incomes and it’s looking at medium home prices. We dropped to the lowest level, which was 61% in the fourth quarter of 2021 for our market. So, but it was still 61%, which is, which is better than other markets like Phoenix, like Houston, Austin, definitely by chance. Do you happen to have Phoenix? Do you happen to have Houston? I do. I do. I do. I do. You’re gonna have to gimme a second to make the greater point here for why folks, you guys are in such a good position. And let me couple it, couple it well done. Let, let me say it this way. We are, we’re, we’re compatible with Tucson from affordability standpoint, we’re compatible with El Paso from an affordability standpoint.
Tego:
You were just an El Paso. You love El Paso it’s and Tucson and Tucson. Right? we are, we are definitely better. Let me find the Phoenix number, but we are definitely better than, than Phoenix. Better than other markets in Texas, Texas is an interesting thing when we try to compare to our markets. Yeah, yeah, exactly. Like Lubbock is more affordable. Waco’s more affordable. Right, right. But, but you live there unless you, you know. Yeah. Right. I mean, there’s like moving to a foreign country.
Eddie:
And Tego is looking at the housing market cause nobody transacts more business or real estate, which is like, Hey, how many bench presses did you do today? How many how many squats did you do if you’re not doing squats and benching and working out, guess what? You’re not doing it. You’re not a real estate practitioner. It’s literally being a realtor is an everyday thing. I always used to tell when I was in real estate and I’m gonna be in real estate again, is it’s a verb, not a noun. You’re not a realtor. Yeah. You’re realing and do it. And if you’re not doing it every single day, you’re not a realtor like today, you weren’t a realtor because you didn’t sell something. I, I, I’m gonna, I’m gonna, I’m gonna say something. I, I usually don’t you slam my colleagues, but there, there are definitely people in this business that play real estate that, that have a license that do real estate.
Tego:
And no, this, this is a full-time, this is a full-time gig. I mean, there’s so many different things that we need to know in this business, but let me, let’s go back. Let’s go back to this affordability thing. So wait, wait, wait takeover. Before you make that. Okay, go ahead. I’m telling people one more reason why you need to be in Albuquerque and why it’s good to be in Albuquerque. And the upside of doing that is we, since that insulation from the government, that’s gonna be about two to two and half years. So we benefit in the city of Albuquerque and in the state overall from whatever befalls or befalls the rest of the country, it will hit everybody else first. And just like natural disasters, hurricanes, volcanoes I don’t know earthquakes, all the natural disasters, those hit every other place, but New Mexico.
Eddie:
Yep. Guess the same thing, real estate. Market’s gonna hit every other place, but New Mexico, you’re gonna get about a two year head start at least 18 to 24 months before it hits New Mexico. And guess what? We can actually prevent that that thing happening this next time around, unlike the last time, remember the markets hit in 2008. Yeah. And New Mexico didn’t, didn’t get hit, start hit until 20 10, 20 11. When I’m sitting there on the court steps, waiting for people to say, okay, well, this property’s gonna be available. This property’s gonna be available. That’s what I was looking at in 2011, I was like, oh my gosh, why did it take so long where it had hit us in Vegas? It was like the, the fall of two, seven beginning of 2008. We were doing it three, four years ago. All right. So no, and I, and I remember that, right.
Tego:
I mean, we, we saw it happen in Phoenix. We saw it happen in Las Vegas. Those were the, you know, the big examples of, of home price depreciation. That’s where it hit first. And it took another year or so before it hit here and you’re a hundred percent corrected. It will not will see it if it happens before it hits us. For sure. I don’t think it’s gonna happen. Honestly, I even, even nationally, even nationally, you’re gonna have some, some pockets, like let’s say Boise, Idaho. Right. Which has seen just crazy price appreciation over the last couple years. Maybe, but, but again so, so let me, let me go back to this affordability thing. So if you look at Albuquerque and they, like I said, the, the way they calculate, this is how many homes, how many, what is the share of homes on the market that can be bought by people at median income and Albuquerque was 68% at the at the first quarter of this, this year.
Tego:
That’s so it’s pretty current. So it’s the most recent one. The only ones that are better in, in the west, the way they cut now, the west doesn’t include Texas, but it’s like Yuma, Arizona, Anchorage. Interesting. Oh, that’s cuz wages are so good there. Yeah. Yuma. Yeah. Yuma is better. I think that’s, it’s more affordable there. That’s awful there. I know Sierra Vista Douglas, which is basically the same. But but we’re basically equal with, with Tucson. Like I said like six there we’re at 68%. They’re at 66%, but Phoenix was 43%. And so Phoenix can buy house. Yeah. I mean, not, not,
Eddie:
So I’ve got one of my best friends. He lives in Gilbert and he’s, you know, he’s to married this year and you know, he’s been going through all this quote, unquote relationship stuff.
Eddie:
And he literally just called me again yesterday and every single time say, oh, I think we got it. I think we got it. Yeah. We put in our bid we’re, we’re anticipating putting 40,000 more than what it is. And he’s like looking for houses like in the 500,000 range. When I tell you about the 500,000 range at BFE, which is now Gilbert and green Creek, which is an hour’s ride at least to the airport. Yep. And, and I, and I, I, I translate everything as far as the airport. How far are you from the airport that tells me where you’re at. Because without being connected to an airport in my, in my opinion, it’s not worth it for me. That’s the way I see things. So he’s like, we got it. Then he didn’t, then he got it. Then he didn’t. Then he got it.
Eddie:
Then he didn’t every single time the seller of the house is breaking the contract across a penalty, even because they can’t go and find the house that they’re bidding on, that they are in the same exact situation. And they need to sell, to go find, they’re trying to get out of their house. And the, all the new house is already spoken for, which means it’s a pre and they won’t quote you a number to brother sold out, like, like, like, like a Tinder box. Like it just like sold out in two days. Like, yeah, we’re gonna put our deposit. We’re gonna put it down. We don’t care. We just need to be in the house. And I don’t want to be drive. And they’re all measuring their commute. It’s their pain threshold is their commute. Not how much money they have, because we’re all sitting on all this money that they’ve made during this time.
Eddie:
Exactly. His wife, his wife sold his house per house and made all this money. Meanwhile, the inflation is eating up all the value of the house. Do you know what, how much gas is in, in in Phoenix right now? It was probably five. So it’s for the very first time. Yesterday is over $5. Yeah. Yeah. Across the board. And now we’re gonna ship at 5 56 bucks. Does anybody know how long it takes to get from point a to point B into place like Phoenix that stretched out the way that it’s insane and you can’t tell a commute forever. So what’s, what’s what’s happening. This guy’s been telling commuting forever. Guess. He thought he had a house yesterday for the third straight time. The seller has pulled out after getting a bid more than what he is, because he can’t go and find the other house that he has also place a bid.
Eddie:
And he needs to close transactions have, are, have so much hair on them and it’s not, it’s transactional. It’s not based upon everyone’s qualified. Everyone’s running around with seven 50 credit scores, you know, piles of money in the bank and willing to pay more. Yeah. The problem is it’s not the value of the house because the value of the house is not gonna appraise for what it needs to and that’s what’s happening in those markets. So what, what are those people think, Hey, what’s it like over there? Or I might just get a double wide at this point and keep the rest of the cash. Oh, you can’t buy those either, by the way, there’s shortage of those, by the way. Right.
Tego:
Yeah, no, our, our there’s a, a, a housing analyst that I follow his name’s Logan Mota, Shami, and he’s with housing wire. He, he, yeah, he is a great, and, and he’s very charismatic and stuff. So he is, he’s fun to listen to. And his, the, the, the term he’s been using now for a few months is the housing market is savagely unhealthy right now. And, and what he’s saying is we’re not talking about this whole, you know, the, the, the, the whole bubble thing with, and that’s what PE first people think about is like, oh, no, the housing market’s gonna suddenly crash. No. What he’s saying is that we have a, a broken housing market from a standpoint, we have so few homes on the market. We have so many people that want homes. We have just literally a shortage of, of places for people to live.
Tego:
And so it’s kind of just locked. It’s locked it up. And that’s why we have these, what we’re calling bidding wars, where, where things are getting bit up, you know, we have multiple people wanting homes. So yeah, we he’s, he’s been actually cheering on the higher interest rates because he, he sees as, as an, as an economist is we need this housing market to slow down and, and, you know, that’s what the fed said, right? The fed said, we are gonna kill this housing market. They, they literally not, I that’s, that’s a, that’s an exaggeration, basically. They, the fed said, yeah, no, no, they, they want, they know that we have to slow this down. We cannot continue this double digit home price appreciation, because at, at some point you just get to a point where nobody’s gonna want to sell. And there’s nothing for first time home buyers to buy.
Tego:
The only people that will be able to buy are people that have all this equity in their homes and are able to just roll it into the next property. Right. So the, the, the housing market does have some challenges. And it’s not that it is building up to this huge bubble it’s that we, it, it needs to slow down. And the rate of appreciation has to slow down because we can’t keep this up forever. Or then we really run into some other who knows what happens then. Okay. So lemme throw something at, yeah, but couldn’t ay bubble also be, you just don’t call it a bubble. It just means that you can’t sell what you have and the equity that you have in your hat that you can tap into in your house doesn’t really exist either because everyone’s sort of in the same boat.
Eddie:
So you could say your house is worth a million, or you could say it’s worth five. This is not talking about Albuquerque talking about in general. Yeah. Yeah. Couldn’t just say that you trapped into your house where you’re, doesn’t that just sort of keep this, the reasons you to hunt people it’s profile. Well, I’m, well, can’t sell another property, so yeah. Yeah. It’s, it’s, it’s gonna be the, the people that can sell because they don’t need the property. So, and, and actually let me address that. Sure. You know, we recorded a new ad for the station and we, we haven’t put it on yet. Cuz we only did 30 seconds and Eddie’s like, why did you guys only do 30 seconds? You guys do 62nd ads anyway. And we were talking about people that own rental properties right now. And as you know, cuz you’re, you’re a commercial broker guy.
Tego:
I mean the, the, if you’re a real estate investor and you own property, you aren’t an amazing, good position right now. If you’re looking to be done with being a property manager and owning rental properties. So that’s one place. We hope that we can get some properties coming on the market. Another place we hope we can see some homes come on. The market is I talked to one of the big property managers in town the other day and he said, we’re starting to see this whole eviction moratorium go away. And so there, so, so there are people that have wanted to sell their, their multifamily property or single family house, but they haven’t been able to cuz they’ve got a tenant in there that they haven’t been able to. So as my friend, I’m gonna stop you. And the I’m gonna there’s sometimes you’ve he goes one my best guy pick he’s somebody ask for, oh I’m in trouble. But as my friend I’m you’ll commercial broker residential I’m from having your ideas are so good and looking. So he doesn’t know that he’s probably helping his he’s believes in growing the I do. So we share a lot of, well, I taught a class to couple hundred realtors yesterday about the housing market. So yeah. Well, you know, the thing is one of those things, it’s only gonna be so much opportunity and I wanna make sure I.