Albuquerque Housing shortage: Why Not Build More?
Transcript Snippet: “
Tego:
Why don’t we just build our way out of this housing shortage. Do you want to tackle some of the challenges there?
Tracy:
Sure. So some of the challenges is land, right? Getting land that’s buildable and getting it ready to build
Tego:
It. It’s crazy. Cuz I, I get into these conversations on Twitter with people around the country that, that talk about housing and it’s like, well, New Mexico, they got tons of land. Why? You know, why can’t you just, you know, there’s so much land here. It’s like, yeah, we have a lot to land, but we don’t have a lot of buildable land with, with services and utilities. Right.
Tracy:
Right. So we have a land problem even though we’re the wild, wild west. Yeah. We have lots of land. We just don’t have land developed, ready to go and assembling those parcels big enough for some of our bigger builders can be difficult and it can take two or three years. So they are working on it and there are parcels in the works. Right. But then in addition to that, just the process of getting plat approved, getting house prices, getting plans, getting everything permitted, getting utilities in place, building the infrastructure takes a long time.
Tego:
And, and what I’m hearing is, you know, to actually get a lot that’s ready to build on in a subdivision. We’re talking, you know, a, a, a, let’s just call a track neighborhood. I don’t like that term production production neighbor. That sounds better. You know, those lots are 80 to a hundred thousand dollars just once, get it ready before you even start building anything on it. Right. You know, so you have that embedded cost before you do anything.
Tracy:
So the builders have to wave. If the land itself is gonna take me this many years of outflow, right. Money, you know, tied up money and outflow of money to get ready to build. And then the build time, what is the house price that has to justify the cost of that land? And is there a market for it, right? Yeah. So they don’t wanna get too far ahead of themselves because their investment is large.
Tego:
And the general rule in the building industry is, you know, you have to sell the home to three to four times more than your land cost to make it economically feasible. You know, as a, as which
Tracy:
Brings it up to high threes, four hundreds and up
Tego:
Which, which is what we’re seeing, which is what we’re seeing right now,
Tracy:
Right? The days of new construction being 200, 250,000 are long gone.
Tego:
No, the, the starter home in Albuquerque. Now, if you guys haven’t heard <laugh> is about $320,000 in, you know, greater Albuquerque. There are some very outline areas. There’s that, that are a little bit less, but, but not by much. So we
Tracy:
Used to say, we can go to Los Lunas and find you a house that’s new construction for 2 75, 300, and now that’s not
Tego:
Possible. Well, Los Lunas is booming. Talk about, you know, economic development. Right. But anyway, that’s yeah, right.
Tracy:
So there we go. So Tigo is a good time to be a home seller.
Tego:
Yes. And I think there, there’s a couple, couple opportunities here. If you are a landlord and you have investment property or properties that you’ve, you know, had for the years, and maybe you’re kind of just don’t wanna do that anymore. You’d like to just take your, your profit, which you’re gonna have because we’ve had such, you know, good appreciation over the last few years. Well, we’ve had good appreciation. We’ve had steady appreciation since 2012 and
Tracy:
So 10 years.
Tego:
Yeah. It was just steady three, 4% a year. And of course in the last few years we’ve gone, you know,
Tracy:
And if you’ve owned it for 20 years, you’re in a really good
Tego:
Position. Exactly. You’re in a really good position. Right. You know, make that home available to the market, take, take care, take it out, you know, and, and, and be done being a landlord. So that’s, that’s one opportunity. And those rental properties, especially the multi, you know, like if you have a, multi-unit like a fourplex, duplex, you know, duplex or something like that, those things are getting crazy multiples these days. Not crazy. That’s the wrong word, but you know what I mean? It’s, it’s, they’re at a premium. Yeah. They’re at a premium, people are paying a lot for investment properties right now. Right. the other, the other, well, why would you say it’s a good time to sell?
Tracy:
Well, I would say it’s spring, well, summer, right? School’s out
Tego:
High
Tracy:
Demand this week, high demand. We typically see if you look at like a 10 or 20 year chart, as you normally do, Tigo, if you look at price per square foot, we’re coming into the peak time of year to get the most price per square foot for houses. And then between now and December, you know, June, July, we’re good. They start going down,
Tego:
You know what that means
Tracy:
Sound like you,
Tego:
You, you actually hear what I say sometimes.
Tracy:
Yeah. Not very often, but yeah. You heard that. No, I listen. You heard? So
Tego:
No, no, that, that is absolutely true. I just wanna reiterate that is that, that, that prices, you know, when you look at price per square foot, we kind of peak out just about this time of year. And then it pulls back into
Tracy:
July, August. Yeah. And then through the end of the year, and then we kind of start the year over the whole cycle, but,
Tego:
And it’s not a huge difference just to make that clear, but, but it’s a, it’s a consistent cycle.
Tracy:
So we, we just finished school for most children in our communities. Yep. And what we know is historically, this is now people will done their graduation. We’ll see some of that this weekend it’s Memorial weekend. People are gonna be picnicking and enjoying that school’s over and doing some things. And then in the next week or so we’re going to see a lot of buyers out looking. So if you’ve been thinking of putting your house on the market, call us now and let’s, let’s see how we can help you with that.