Is Albuquerque’s real estate market anything but normal? Here are 5 reasons why
(Transcript Snippet): “Tego:
The real estate market has been anything but normal. If you know, in, in, honestly in the years, many years we’ve been in real estate business, it’s never normal. Right.
Tracy:
I think that’s always changing.
Tego:
One of the things, You know, I think I kind of enjoy about the real estate world. Is it, you know, there there’s always something rolling, right? There’s always something changing and evolving and the way we do business and just the market dynamics are very fascinating to me. But right now we are in an extraordinary time in the real estate world. And so there’s, there’s kind of five things that we identified as, you know, th that make it very different than air quote normal. And so, you know, first off, Tracy, do you want to take that?
Tracy:
Well, the first one is the mortgage rates. So when you look at 30 year rates by Freddie Mac, you can see the averages by the decade takeout. And it’s interesting because we’re on your eight right. Of being on the radio. And I think back to Eddie’s first studio, where we would go on San Pedro
Tracy:
Or Carlisle anyway,
Tracy:
San Pedro in any way, and what we would be talking about because the rates were probably in the high-fives or six something probably fives. Yeah. Yeah. So in the seventies, the average was 8.86, right. The eighties 12.7. And we know that it spiked a lot higher than that. Yeah. I remember, you know, I think I’ve told this story before, too, how my sister in the, I think it was 1980, two-ish where she slept overnight and in front of a bank, because they were going to be releasing first time buyers money at 12% interest. And she slept overnight to get that 12% interest. And it was regularly like 18 then or 16 or something. And, you know, think about that now, you know, people should be sleeping out overnight to get this 3% interest. But anyway, that was the 1980s, 1990s. The average was 8.1, 2% for mortgages
Tego:
I Bought was in the nineties. And I, I think it was around 7%. I was thrilled to get like a 7% mortgage. Again, this was in mid nineties.
Tracy:
So the two thousands, the average was 6.3%. So when I first started in real estate Tigo back in 2002,uway before you, by the way,uinterest rates were routinely around seven and a half percent. That’s what we were seeing all the time. And at that time at seven and a half percent, most sellers were contributing 1% towards the buyers,udown,uloans so that they could buy it down and, or buy points to, to get maybe a quarter percent better rate full 1% of the loan amount or they were contributing. But that’s, that’s the two thousands, 6.3%, 2000 tens, our average 2000 tens average 4.09%. I’ve heard it called the odds, the odds just over 4%. Right. And let let’s think about the twenties, right? The twenties aren’t on that, on the chart,
Tego:
But we’re, we’re 2020,
Tracy:
2021. We know we’re sub four closer to three. Most of the time, three and a half,
Tego:
We’ve been hovering 3% plus or minus for, you know, almost two years.
Tracy:
And right now it’s back to those lows of typically just under three for somebody with decent credit. Right. So, so that was
Tego:
A long way to say that the one thing that makes us this real estate market very well,
Tracy:
So we’ve got five points. I just like spent our whole show talking about point one.
Tego:
Perspective on mortgage rates is really important. And, and, and I know, you know, people say 3% money that doesn’t make any sense. It’s crazy. And, you know, it’s, it’s lower than inflation. We don’t want to go down that road. We’re not going to go down that road, but more than likely interest rates are lower than inflation.
Tracy:
So point number two, home price appreciation.
Tego:
Yep. So you put those two things together. You look at the Albuquerque market, we’ve seen appreciation in our market, depending on what you look at anywhere from 14 to 17% annualized, when you, you know, look at a 12 month rolling. And that is extraordinary because over, you know, historically home prices run anywhere from three, maybe 4% is kind of the number that, that, that, you know, would, would be an ideal situation because it’s not, it’s still ahead of inflation, but not too far ahead. So, you know, th there is some concern about how much home prices have gone up in the last year. And honestly, there is no indication of that slowing down. It does appear that that home prices are going to continue to go up just because the salon supply demand ratios are so high.
Tracy:
Tego, we should do a show on the Santa Fe and Los Alamos home prices maybe next week. Because I think when you look at it, their appreciation is actually up higher than the Albuquerque Metro area. I’ve seen numbers is high. Yeah. Yeah. Well, let’s, let’s save that because I think, you know Eddy station goes to Santa Fe and Los Alamos. Let’s do that next week and talk about those markets specifically. So let’s get through these five things. Yep. So one is mortgage rates to his home price appreciation. Yeah. And the other thing that makes it not very
Tego:
Normal is the thing I just mentioned is they’ll the supply of homes on the market. Very, very low supply, just looked at the August data. And we are in, in overall in our market where at 0.7 months supply, which is a very, very, very, very, I mean, just extraordinary, a low number of homes available to purchase compared to historical a quote balanced or a healthy market should be somewhere around five, six months supply. And we’re at 0.7 and that’s an all price range has to be get down in the two to 400 price range, which is, you know, the really, you know, the sweet spot in our market. It’s more like 0.5. So
Tracy:
15 days supply. Yeah. And so number four days, it takes to sell a home is very out of the ordinary, wouldn’t you say, in Albuquerque,
Tego:
Median days on market in August with four days
Tracy:
That lane you know, a stat for everything I throw out a headline. Yeah.
Tracy:
The so four days, what that means is
Tego:
50% of the homes that went on the market in August sold within four days, the other 50% took longer than four days. Average days on market was right at 17. Oh man. I see, see now I blew it. I don’t mind, I don’t have it in front of me, but I do have it right here. Average days on market for August, with 12 days
Tracy:
12 to the whole market for the entire market. 80% of them though were four days or less. Yeah. So
Tego:
Days on market, again, extraordinary, very different than any historical data.
Tracy:
Right. Fifth, fifth thing. The number of offers per listing. Yeah. So
Tego:
Tracy hit on that one. I mean, back in the, you know, mid, early summer, we were seeing some crazy things in our market, like 20 offers on homes. Yeah.
Tracy:
I, I definitely worked one where I had 21 offers and two more came in after we’d already decided on somebody. It was crazy 21 offers to sift through all the bullet points and help the seller determine which one was going to be the most stable and best one for them. That was a lot, I think now what we’re seeing Tego is still multiple offers, but not as many right. As we’re going into fall.
Tego:
Absolutely. And I hear people in the, in the real estate business saying, oh, it’s slowing down. And it’s like, well, yeah, it’s slowing down. It went from insanity to just kind of really busy.
Tracy:
Well, and it’s typical this time of year. We’ll talk about that, but it’s typical. So there you go. Anyway, those are your five reasons
Tego:
That the market is very different than it’s ever been before.