New Home Construction in the Albuquerque Area in 2021

Let’s let’s talk about what we were just covering building. So we were talking about land and there’s a lot of information out there, new home construction, right? Of course we work with builders. Of course, we work with new home builders like Abrazo and bolt D and VR, Horton, and Twilight, and all the other local and national builders. And what we know is land’s hard to find. Albuquerque is landlocked. We have Indian reservations on two sides. We have a mountain on the other side going West, the only direction we still have a lot of land. We’ve got issues there as well. I mean, we can go a ways, but we’ve got volcanic land. We’ve got a scarp mints. We have individual ownership. So assembling a parcel, large enough can be difficult. We have Rio Rancho, which we a lot of land, but again, unless it’s, Amref, that’s still owns a big parcel. It’s individual owners that are all over the world that people bought the land in the 1950s and 1960s. And they’ve passed it down. So now six grandchildren, or great-grandchildren own one lot. And the lots of joining that lot are owned by other grandchildren from all over the world. Right? So putting together a big enough parcel for like a Dr. Horton or a Pulte or a big builder to do a neighborhood.

Well, and let me just add onto that. It’s not even the big builders. It’s like, if you own, let’s use rear Rancho, for example, because a lot of people own a lot in Rio Rancho, right there they’re half acres, there’s 88, 80 some thousand of them, right?

Some of them are buildable. Some of them have utilities or utilities near

The key is some of them. And so the reality is that the is not the problem.

The problem is the infrastructure, right. Is, you know, gas, electric, water, sewer roads. Yeah.

They scraped roads back in the fifties. 1950S is now like 70 years ago. But most of those grape roads, you can still see where they scraped.

Yeah. So, so that’s, that’s the challenge. And so a good buildable, I say, good, good in the sense that it has utilities it’s ready to build on, you know, or that utilities may be not be a big challenge. Like let’s say, take North Albuquerque acres. For example, too, we were just talking about, you know, those are our eight, they call them acre, but they’re 0.8, nine. And they generally have your, your electric, your gas, not always. And not always a lot of them are on propane, but then you’ve, but you know, water can be a challenge and sewer can be a challenge. A lot of those are on septic systems. There’s, septics, you know, doing a septic system, as long as you have enough land, it’s not a big deal, but it’s going to be an eight to $15,000 expense to put her in a subject

Depending on the soils and the drainage and all that. Yep. Yep.

So, so, you know, it’s, we’re we keep hearing are I keep seeing all these national stories and we’re now locally, there was a story in the journalist week about the lack of number of home from the market. And then people just go, well, let’s build some more, let’s build more. Well, it’s just not that easy, just like we were talking about it’s a two year process, if you’re going to do a subdivision, for example. Right,

Right. So let’s talk about how 2020 changed things as well. So 2020, we have all these builders that are working on subdivisions, buying the parcels, getting them zone, getting them subdivided, thinking about how they’re going to put in streets and an engineering of it. And the utilities and along comes March. And what we know is March, lot of people like us and other businesses just stopped. We didn’t know what the implications of COVID where we cut back everywhere we could, which is what builders did. We didn’t know if people were going to buy homes. So by the end of March, a lot of the developments that were coming stopped. And once the builders started to feel confident, again, that there was still demand for new homes. A lot of the government agencies were also trying to figure out how they work from home, how they set up people to have secure computers at home, how they were having their phones from office ringing to people at home. So a lot of the public was, or a lot of the employees needed to do permitting or to do the community. Sinuses of development were also not available. So we see, I saw a graph about, about it and it just dropped, right. It took a couple months for people in the building industry to have that confidence that they needed to keep going on, developing those lots and those neighborhoods. And then there was also the extra delays of the government entity.

We went from the standard build time for a new home from six months to now, we’re seeing eight, nine months.

And across the nation, not just locally builders are limiting the number of homes. They will even sell a month because of their demands. They’ve got contractors who are not available. The industry is very busy, but then they have to deal with just like the NFL. They have to deal with people getting COVID here and there, and a contractor’s not available and it causes another delay. And so it’s, it’s right down the line, how COVID has impacted new homes.

Yeah. And, and I think, I think you, you bring up a really good point in, in, let me, let me package it this way is with COVID with everything that’s happened this year, the demand for housing increased. I think there’s no doubt about that. Right. I mean, you can’t, you can’t argue. I mean, there absolutely demand increased and there’s, there’s a bunch of reasons about that. It’s not just interest rates.

No, no. And you know, let’s talk about that. So thinking about the demand, sorry. Right. By the mic here, the demand, people who are home more, right. And they’re going, I’ve got my kids at home, I’m doing school from home. I’m working from home. This seems like it’s going to last a while. I need a home to accommodate this and now’s the time. So there has been all of that demand in addition to a lot of people getting older and having more stable globs that, you know, the millennials. Yeah.

Well, well, th that’s what’s happened and there has been some, some analysis and talk about, okay, are we spelling first-time home buyer from the future? And I think the reality is, yes, we have stole some first-time home buyers from the future. But this demographic with this cohort of what the millennials that are, you know, moving into this late twenties, early 30 age group and starting families and settling down, that’s going to continue now for the next four or five years. So we’re, you know, even though yes, we’re still stealing some buyers from the future. Overall, the demand is going to continue. I want to get the supply side, but go ahead and talk about that. Yeah.

I also think we’re stealing first-time buyers from the past. A lot of people who should have been buying the last

Few years, you know,

They, they realize now, Hey, what am I doing renting in? And now I’m home more. And, you know, being in an apartment or having roommates and things, it’s just not working very well when you’re stuck at home with COVID. Right.

So they they’re, yeah. They’re there in the apartment. They went and did the math and said, let’s see for $1,200 a month that I’m paying in rent. Let’s see what can I can own at three, three and a half percent interest rates. All of a sudden you went, Oh, wow, look at that.

So I think all those people who should have been buying for the last five to 10 years are, might, might be moving forward and actually buying in. And we see that, you know, I don’t have to look at a national story to know that we talked to those buyers every day. Right. And by the way, Tracy and Tito Venturi, Venturi Realty, group of Keller Williams Realty, we’re so honored to be here seven, almost more than seven years strong now. And coming to you here at the end of 20, 20, another great year on the radio

Near the end of 2020. Yay. Yeah, no. W we’ll see. So 20, 21 in, well, let’s, let’s finish this conversation about the supply side in housing and what happened in 2021 and 2020. Yeah. I’ll get it straight. What happened? Not what’s going to happen, even though I got some ideas there, but in 2020, what happened was when, when everything hit in March, you know, obviously a lot of people put the brake on putting their home on the market. Right. And, and so there was quite a drop in the number of homes coming on the market as to be expected. Now, the reality is though, in February, even we were already seeing that we were going to have a shortage of choices for homes for sale in 2020. It was, it was already, it was already in the cards, right. It wasn’t like, Oh, that was the only, no, it was already there. This just enhanced it. And then what also a couple other things will happen. Obviously you talked, we’ve talked about the builders we talked about, the builders are, are also, builders are much more conservative, you know, especially the ones that went through Oh six Oh seven Oh eight Oh nine. Right. They’re very connected.

They don’t want to get stuck with land that doesn’t have income. Yup.

So everybody kind of put the brakes on. I think we, everybody put the brakes on in March and April. Right. And so that, that has something to do with, but another phenomenon that happened is, think about this. How many people you think move their elderly parents from the family home into a healthcare or long-term care facility this year.

I’ve seen a lot of news about that. And a lot of people did that right away thinking that was the safe place for them. Unfortunately, I think reality hit was not the safe place for them. They should have either stayed in their home or move in with their family.

So that’s what happened is these, these family homes, these, you know, the homes of the elderly folks that are not now moving in there, you know, I, I saw an article talking about the boom in in-home healthcare. In-Home health care is just gone crazy this year, as you can imagine for the elderly, because they, you know, people don’t want to go to those, those places right now. And so again, that’s also drew in the lack of, of people listing their homes for sale. And so that’s, I think the big thing then going into 21 is just the, the low level of number of homes to choose from lack of inventory as we call it. And I don’t see anything that’s going to alleviate that unless for some crazy reason. And I don’t know what it is that the demand drops off suspense substantially, but right now it’s steady as it goes.

She doesn’t make sense if it’s not going to drop off

Just the demographics alone. And the fact that interest rates are look like they’re not going to change at all.

It would take something catastrophic beyond a pandemic that we don’t know about. Right. And so we can say, it’s not going to happen.