Is Albuquerque experiencing another housing bubble?
(Transcript Snippet): “Tego: The quote that I’ve been repeating is from Laurence Hune, who is the chief economist at the national association of realtors. One of the guys that I follow guys and gals, there’s some great housing economists out there that,uI follow. And,uyou know what, they’re all on Twitter too, which is great. I can, I can get an update, you know, hear what everybody has to say. Anyway, his quote that’s been repeated quite a bit right now is this is not a housing bubble. This is just a lack of supply. And, you know, we were talking to some folks the other day, Tracy,uat lunch, you know, and, and they were like, well, you know, well, there were no homes built. Well, yeah, that’s part of it. Yes. We had very few homes built. Right.
Tracy:
We were down over a 10 year span by about 20 million housing starts, right. During the teen years of 2009 to 2019, right?
Tego:
No, no. Yeah, no.
Tracy:
Instead of 28 million houses built over that timeframe, there was about 6 million. So that was a huge number of houses that we needed to be built to accommodate what we need right now.
Tego:
Yeah. And here in Albuquerque, we’re actually behind even some of the other markets and Southwest in construction, we have not built at the same pace as some of the other markets. So yes, we were definitely behind in new construction. There, I mean, again, there’s, you know, it’s a perfect storm of things happening, you know, we’ve talked about the fact that a lot of people decided not to sell last year for whatever reason. Right. You know, w we, April, may of last year, half the number of homes came on the market that normally do
Tracy:
So April, may last year was the beginning of COVID. Right. We didn’t know what was happening. People were at home, they weren’t going out. And I mean, how could people decide to make their house available to be purchased or for sale during the beginnings of the pandemic? I mean, it’s, it’s easy to forget how difficult it was. Then we did not know people were, you know, not even bringing groceries into their house before they let them sit for a day or two or wipe them all down if they had some sort of disinfectant. So selling a house was not the top priority a year ago.
Tego:
Yeah. No. So, so that’s part of it. So we’ve never caught up from that. So we got me find the, the thing is, and I’ve said this many times is February of last year, 2019, 2020. We were, we already knew that we were going to have tight supply, you know, the, the pandemic just kind of exacerbated the problem that was already building and had been building. Right. The, the other thing you have to account for is the millennial boom, right? The number of people that are turning, you know, are in that age from the late twenties to early thirties that are doing household formations.
Tracy:
Yeah. It’s mid thirties, I think now, but yeah. And, and a lot of them that are still first-time home buyers or move up,
Tego:
No, the Z are the gen Z’s are what? Like under 25 now I think somewhere in that range. Yeah. Yeah. Anyway so yeah, there’s this whole generational thing as well. And the whole demographic trend that that’s, that’s driving the need for more housing, you know, we haven’t had, we haven’t stopped having babies. Right. We haven’t stopped, you know, growing in population. So we need more homes. So any way I think we’ve made the point, Tracy, that there’s just a lack of supply.
Tracy:
Right. And so what, one of the bullet points that Eddie brought up that we wanted to talk about is people are saying, Oh my gosh, there’s so many less houses for sale. And we said, well, it’s really not that different year over year. Right? We’re still have houses coming on the market. It’s just, there’s more buyers for those houses and they’re selling quicker. So really we’re not down significantly.
Tego:
Phenomenon has happened here in the Albuquerque area over the last gosh, it’s been at least six months now, as you know, obviously, you know, I watched this all the time is the number of homes coming on the market and the number of homes going off the market in our area. And when I say off the market, either selling or canceling or for whatever reason, it’s stayed pretty equal. And so we’re having homes coming on the market, actually having homes coming on the market at a fairly good pace. It’s it’s down. Let me pull up the number here, give you that data
Tracy:
Rancho, I know,
Tego:
Turn off your rancho. If we look at well, Eddie was talking about the, the, the number of their appreciation for Rio Rancho, which the number he quoted wasn’t quite accurate, but,
Tracy:
But that’s what the Rio Rancho
Tego:
But it’s confusing anyway. The number of new listings coming on the market, if we look at the last 12 months versus the last 12 months, previous to only down 1%, now we do have to account again for that March, April, may of last year, where we were down to substantially. Right. But again, we’re getting a lot of homes in the market. I mean, if we just look at April of, well, just last month, we are, you know, almost 15,000 homes came on the market. That’s a lot of houses. It is a lot of houses. One thing I wanted to just talk about this, you were talking about the underwriting standards and making sure that people have a job can pay their mortgage. Can, you know, have maybe even have some money in the bank. Some, some reserves as they call it, right. That wasn’t happening in 2004 or five six, you know? And, and, and, and the point I wanna make is that this is, again, one of the reasons that this is not like 2008, when we had that real bubble where people were buying homes that had no business buying a home, to be honest with you.
Tracy:
Right. And, you know, Eddie’s intro into our segment today, laid it out really clearly. And I wanted to point out that, you know, kind of made it sound like all the lenders were at fault for that, but honestly, all those lending programs were available. All they did was say, Hey, this program will fit what you’re looking for. We’re going to put you in that loan. And, and the buyer borrower is the one who qualified for whatever the loan was at the time. Right?
Tego:
Yeah. So
Tracy:
I, I blame the borrower, not, not a lender.
Tego:
There was, there’s plenty of people to blame for that. And you know, all the way from, from government programs and government pushing you know, homes for everybody. Right. And that’s true. But again, I mean, th there there’s a lot of stuff to blame there. You know, the wall street has culpability, you know, again, it goes on and on and on, but the, the takeaway though, is lessons learned, right? We we’ve learned our lessons, right. We have, we have much better. I want to say programs we have much better data into what’s going on in the housing market, as well as you know, how to deal with it. Right. We didn’t have four Barron’s plans back in 2008 and nine. Like we do today. That’s helping people get through not being able to pair it, pay their mortgage. Right.
Tracy:
We didn’t have the government stepping in quickly and supplying funds to people also just to keep the money flowing.