The demand side: Why there are so few homes in the Albuquerque’s Real Estate Market?

The demand side: Why there are so few homes in the Albuquerque’s Real Estate Market?

(Transcript Snippet): “Tego:

Speaking of, of misinformation. I hear a ton of people going, oh, but the foreclosures are coming, the forbearance, the everybody’s going to be, you know, all these homes are going to flood the market. Well, one of the supply challenges has been that we’ve had this foreclosure moratorium since the beginning of the pandemic, which is great. I get it. I understand, you know, help people out that, that, you know, were basically unable to work for stuff out of their control. Right? We’ve got these forbearance plans, which are keeping people in their home that, you know, maybe would have been selling, but you know, on a forbearance plan, they’re not paying their mortgage. They’re able to stay in their home without a monthly payment. Now that’s going to catch up to them at some point, there’s going to have to make good on it at some point, but there are a lot of people that have been, been not making a payment for a year in or more so again, that’s another COVID related reason for the short supply as this, again, these foreclosures distress sales not coming on the market.

Tego:

There’s been a few, but it’s, it’s very limited, very, very limited it’s any of the mortgages that were backed by any of the, the government plans. Those homes are not being foreclosed. Okay. Let’s talk about demand. Homeownership rate dropped to a, a pretty big, low back. I’m going to pull up this chart here from the the fed they’ve do some great charts. And, and so in, just give you some perspective here in 2004, 2005, this was an all time high home ownership rate in the United States was 69%. That was a really high number. However, what happened was it dropped to a low in 2016 of 62%, which was really, it was a historic low. And I remember back at that time, there was all those stories, oh, these millennials, these young people, they are not going to want to own a home.

Tego:

They’re going to want to live in, in the city. They’re gonna want to commute to work in the Uber and they’re never gonna buy a house and they’re never gonna buy a car and they’re going to get their door dash delivered and all this. Well in 2016, we saw reversal and ever since then, we’ve had this increase in home ownership rate. People started to come into the fact that home ownership is great. You know, there’s tons of advantage, not just the financial, but it, you know, there, there is a lot of other reasons just American dream, that, that, that whole conversation, I won’t go into all that right now. But so ever since 2016, we have seen an increase in buyer demand around the country. Another part of this demand story is something I just mentioned, which is the demographics, the millennial generation is the largest demographic generation ever in American history, bigger than us boomers on what do I call myself? Uh, I’m a tailing boomer. I’m a little older, a little younger boomer, but anyway, they are the biggest generation ever. And they’re right now in their prime home buyer, first time, home buyer years. And there’s a Logan Mashami, who’s one of the, uh, economists housing economist. I follow. He’s been, he’s been talking about this for two years, that it’s coming come to 2020 through 2024. We’re going to have all this big, this big demographic of people coming into home by an age. And, and that’s, what’s happened. They’ve moved into home by an age, and that has driven demand a lot faces. Okay, let’s get back to this demand thing. So, um, I, the demographics thing I hit on that let’s talk about, um, the fact that there’s a lot of people that were on the edge of buying had kind of been on their list.

Tego:

Let’s say, you know, pre pandemic or pre March last year. And a lot of people jumped into the housing market that maybe thought it was a couple years out, low interest rates. Maybe they were renters tired of living in an apartment. You know, I’m sure living in an apartment during COVID was awful. And, and so they jumped into the market. So we definitely, there, there was a conversation and it’s still out there that we’re, we’re borrowing Iris from the future. That was, that was out there last year in there. And there may be some of that. But there’s still plenty of buyers out there. Another thing that happened obviously is, well, this is more pandemic driven. Well, definitely pandemic driven. You know, people are working from home, they’re schooling from home. They need more space. They want more space. They’re spending way more time at home.

Tego:

They’re cooking at home. You know, people are using their kitchen that maybe they never used before. You know, stuff like that. So that definitely created a need for people to move and a want for people to move so that that’s driven a demand. And that doesn’t get reported much. And I, and I want to talk about this is the second home sales and he, I don’t know if you knew this, but second home sales are booming in the U S right now. What, what happened? I mean, you think about this again, these low interest rates people, you know, the, the reality is people that are, have a better income, have a better job, have done better through the pandemic they can afford to buy the second home. Now they’re thinking about buying that second home. Let’s talk about angel fire, something.

Tego:

You’re very familiar with Eddie. I talked with the realtor yesterday that that works the angel fire market here in New Mexico. And he said, it is, it is like this weird. I mean, he, he, he said, as soon as a home comes on the market, he has 20 people. He could call in Dallas and they would make an offer on that home site and seen right now in angel fire. There are so many people that want a second home and angel fire is booming. Like it never has before. And that’s an, that’s an, a lot of second home markets, not, you know, that’s just one small example here locally.

Eddy:

Well, I’ll tell you, well, I own land up there and I have lots, and I’ve gotten several inquiries from people and I’ll tell you, well, I’m going to wait for the construction costs to just totally drop. And I’ll go build my house for 40, 50 cents on the dollar. And I don’t care if I have to wait a year or five years for that to happen. I’ll get to capture all of the value of the upside of what they bought their house for based upon where my lot is. I mean, and that’s a very lucky thing.

Tego:

Yeah. Yeah. Well, one thing that’s happened just recently in the last month is the Fannie Mae Freddie Mac, you know, who, who backs so many mortgages in our country, they’ve actually put a premium meaning they’ve increased interest rate for second home purchases. And when I say second home, it’s vacation home, it’s, it’s also investment properties. It’s, it’s, you know, people have jumped into the investment property world too, that that may not have. And we could talk about, you know, what rent prices have done. That’s a whole nother conversation that, you know, that, that has appreciated greatly as well. So it was a lot of information there about supply and demand and others do. One last thing is, you know, the old, the old catch 22 thing, right? Eddie, you know, you’ve got two contrary conditions. So, you know, this was a quote from what’s his name Ralph from how it was or how, how anyway, one of the Heath and other economists that I follow anyway, he so he said every additional home that gets pulled off the market, meaning, you know, somebody decides not to sell that in incentivize someone else not to sell their house because now they can’t find anything.

Tego:

So we are in this kind of, you know, self cycle where, well, I want to buy, but I can’t find anything. So I’m not going to put my home on the market, which will free it up for somebody else who wants to put their home on the market. So we’re in this, this, this kind of vicious cycle right now. I will tell you one thing, there’s been a lot of predictions that we will see an increase in the number of homes coming into later this year. Just this, this week, we, we did see a pretty pretty, I don’t want to say decent. Well, we did see an increase in a number of homes on the market, in the Albuquerque area, but I will tell you, it’s held pretty steady now for a couple of months, even where, you know, we’ve got whatever 400 or so on and 400 or show off every week in the Albuquerque area.