Albuquerque Housing Market: Rapid Price Appreciation Favors Smaller Homes

Albuquerque Real Estate Talk #441 – April 8, 2023

Apr 8, 2023 | Albuquerque Real Estate News, Albuquerque Real Estate Talk, Real Estate Market Reoprt

Welcome To Albuquerque Real Estate Talk, the go to radio show for all things real estate in the heart of New Mexico. I’m your host, Tracy Venturi, and alongside me is my fantastic co host, Tego Venturi. We’re with Venturi Realty Group of Reel Broker, and we’re coming to you this week, Tego, on show 441.

Wow, that was a beautiful script you just had there. I love that.

Yeah, we’ve been coming to you for nine years on KIVA Radio at 1600 AM.

If I’m fantastic, you’re fabulous. The fabulous Tracy Venturi.

Thank you, Tego. So together, we’re your guides in all things real estate for here in central New Mexico. Whether you’re a first time buyer or a seasoned investor, just curious about the market, we have got you covered. So sit back, relax. Let’s dive into the latest news right here on KIVA 1600 AM and also on Facebook, YouTube, all of those online things. Be sure to give us a like or follow and let us know what else you want to know about Albuquerque Real Estate. Tego, what’s on store for.

Today’s show? What’s on store for today? Well, we just got the March data on the Albuquerque housing market. We can talk about that. There’s some national news just relating to the health of the housing market and what’s going on there. We had a question that came up this week. What’s up with septics and septic inspections when a property sells? We wanted to talk about that subject. I almost used another word in there, but I’m not going to do it. Good. I’m not going to do it. Let’s see, what else, Tracy? Property taxes. Property taxes. It’s that time of year. We wanted to talk about that. In fact, we got a call from the Bernalillo County Treasurer who wanted us to make sure we talked about it on the show, and we appreciate Nancy Bears. Yeah, Bears. I had to think of her name for a second. The Bernalillo County Treasurer. Let’s just start off there, Tracy, with property taxes because it is time for second half. Is that right?

Sure. As most of our listeners probably know, if you own property and you pay property tax, the taxes are paid in arrears here. So right now, we have not paid for the second half of 2022. Those are due April 10th. So right now…

Let’s see, it is April…

Actually, they’re due, but they’re not late till May 10th.

Got it. Is that what it is? Okay.

After May 10th, they’re delinquent, subject to interest and penalties. Now they’re due, but you do have a little leeway there, so it’s time to pay those. So if you have a mortgage on your property, chances are pretty high that your lender is paying your property taxes for you. They’ve been collecting escrows all along with every one of your mortgage payments. And when they’re due, they make that payment for you. If you own properties cash, free and clear type properties, you have to remember that you got payment coupons a long time ago, probably, that you use to make your payments twice a year. Some people, obviously, when they’re in cash, they just pay it once a year, which is fine. You can prepay before it’s due. But it’s one of those things where sometimes you forget about it. So if that’s you. And there are some folks with mortgages who pay their own property taxes. And if you do that, I’m sure you know that because you had to set it up that way. Or the way your loan was set up, you know that those escrows aren’t being collected for you. So there’s lots of ways to pay your property taxes.

You can get online and the website is out there on Bernalillo County Treasurer’s office.

Let me make a side note about that because, gosh, I guess it’s been about a year, maybe over a year now, that both Bernalillo County and Sandoval County, because I have some properties I need to pay taxes on in both the counties, they upgraded their websites so that it’s a much nicer, more modern dashboard for keeping track of property. Some of us that own multiple properties, it’s a nice dashboard. We can see all the properties you own, what property taxes have been paid, and which ones have not been paid. So set that up and get a login for that. It makes your life a whole lot easier.

Sounds great, Tego. So it’s not just Bernalillo County, right? We’ve got Sandoval, Valencia, Santa Fe counties all within our metro area here. Depending on the best way to pay those taxes. But I’ve seen that site you’re talking about, it’s pretty awesome the way you can just load them all in there and you can pay right from there, right? Yeah, it’s great. There’s also the ability to pay them in person at Rio Grande Credit Union, but otherwise it’s checks and they want you to put the property information on the check. So of course, they can affiliate it with the right property, something like that. So if you have any questions about that, we’d be happy to help 448 888 is our phone number and happy.

To help you with that. We get the lead off the show with exciting things that telling people that their bills are due.

Well, let’s talk about another thing that’s happened right now. We’re getting… Same thing, right? The notice of values.

Yeah, the assessed values.

Assessed values. The notice of values just went out. Those are not tax bills. A lot of people get confused. They get this from assessed values from the assessor’s office and they think it’s a tax bill. That’s the notice right now that says this is how much we think your house or your property is worth that will result in a tax bill later this year based on these values. Right now, there’s very firm deadlines of when you would need to protest those assessed values. If you want to protest them, if you look at it, actually open that mail and look at the assessed value and go, Wait, my house isn’t worth that much, or My property, the neighbor just sold and theirs was less or whatever.

Yeah. One thing just to keep in mind on that, if you’ve been in the property and you haven’t moved, there’s a 3 % cap on that. But if you just purchased a property and when it transfers ownership, the assessor, which is different than the treasure, they’re going to reassess the value of the property when ownership changes. That’s when people usually get that big sticker shock on their tax bill because something that hasn’t been assessed at a higher value suddenly sells, especially after the last three years where we’ve had, let’s say, 30, maybe even 40 % home price appreciation in the Albuquerque area. Just be aware of that. Usually, though, and Tracy, we should talk about this because there is a statute in New Mexico when we as realtors help somebody purchase a home, we are required to provide them what the future tax bill could be.

Just.

So they understand that what they’re seeing right now as the property taxes for something they’re buying is not what the future is because that 3 % cap on an increase in your taxes for property taxes is only if you don’t sell the property. If you stay in it long term, it’s 3 % a year. But if it sells, they can assess it at the new value.

Okay, let me give some good news on taxes because all we’re talking about… Oh, I.

Interrupted you. I just wanted to say, if you need help with protesting, there’s information on the notice of value of how to do that. But if you think your property really needs extra help, there’s companies that can help you do that. I know Scott Clark’s Double Eagle Property Tax Consultation is one company is really well known around here to help people protest.

Property tax. The big place that comes in is commercial properties because that can be huge. Obviously, residential properties, which is our world, but commercial properties can make a huge difference.

But a big jump for residential can be huge for people, too. Anyway, that’s out there. Just want to mention it.

What did I start to say?

Something else about good news on taxes.

Good news on taxes. I was looking at one of the guys I follow that’s a housing economist. He actually happens to be in Texas. Just looking at what Texas tax bills and property taxes are much higher than New Mexico. Granted, Texas doesn’t have income tax, so it… But anyway, just interesting how high property taxes are in Texas versus New Mexico. T hat’s something people coming from Texas are like, Wow, it’s a lot cheaper.

Houses are more expensive oftentimes, though, here than many parts of Texas.

Obviously, it depends. It really.

Depends on where it is. If you’re Austin versus rural Texas.

Yeah. Austin is very different. Austin is the San Francisco from a housing economy standpoint compared to the rest of the country. Tracy, I wanted to talk about rental properties because I saw an interesting story about who owns most of the rental properties in the country. I thought that was interesting. But then it brought me back to this idea that last week we had one of our properties that we own and we put it for rent. Oh, my gosh, the frenzy of people that are looking for good rental properties right now, there is definitely a shortage of rental properties, especially… Well, I don’t know this for sure, but it definitely seemed like it when you’re talking about single family detached homes in a neighborhood. There’s not much out there. Rental prices have gone up substantially. I went and pulled this up because obviously there’s a lot of people talking about cost of housing in general and that home prices have gone up, like I said, maybe 35 %, 40 % over the last three or four years. Combined. Yeah, combined over that. A two bedroom in the Greater Albuquerque area now is, what they’re saying, median rent is about $1,400 for a two bedroom.

That’s a 24 % increase in a year. Wow. Now, if you look at a three bedroom, it’s not that much of an increase, but it’s about 12 % increase. This is from Zumpier, which is one of those rental listing websites and they track all this data. A three bedroom now, median rent is $2,000 a month. I remember when we were purchasing rental properties, maybe five years ago, a three bedroom house, $12,000, $1300 a month. Now, a three bedroom house, just your average three bedroom, two bath, two car garage house in many parts of town. Many parts of town. I mean, 1900, 2000 is like the minimum going rent now for a three bedroom house.

So eah, well, we’re not experts on apartments, but we do know some of the apartments around are that much for an apartment versus a single family home.

I think that’s the big story in real estate is just cost of housing in general. People talk about how much home prices have gone up and people are getting priced out and mortgage rates went up. But it’s the same in the rental market, too. And that’s the only correlation I want to bring into this conversation is it’s not just buying, it’s also renting that’s gone up substantially. And unfortunately for a lot of folks, you need to live somewhere. Anyway, just wanted to bring that one up.

Good. So March, I know my Statomatic Tego, my Statomatic. I’m sure you want to share some of the March data with us now that we’re into April.

I did a video. It’s on YouTube. It’s on… Of course, I put it on course, I put it on Facebook, too, and you can find it. Again, it’s the Tego Venturi or Venturi group. You can search us or Venturi Realty group in Albuquerque. You’ll find it. It’s out there. And I did a March update. I looked at the data that just came in for March for the Albuquerque MLS. A couple of things that continue, I guess, as a trend is low supply, just not very many homes on the market, not very many people listing their homes for sale. This time of year, right now, on a seasonal basis is when we generally see the biggest surge of people putting their homes on the market. We’ve got a few more weeks here before that really kicks in. Usually, it’s mid to late April is when we see a big surge.

Well, and usually it’s a lot warmer by now. And when it starts warming up, it seems like the real estate market heats up. And so our houses coming on the market seems to be following a little bit of the cool weather we’ve been having.

Yeah.

But it’s else. That’s my nonstatistical input to your story.

Yeah. And I think obviously the school year has a lot to do with that, too. Definitely has a lot to do with that. So yeah, just low number of homes on the market. Every week, we’re seeing about, let’s say, 250 to 300 homes come on the market and about 250 to 300 homes to go off the market. So we’re just keeping this even level of number of homes on the market. It’s not going up, it’s not going down. You have a better sense of this than I is, you’re seeing the number of people that are reaching out to us saying, Hey, I’m looking for a home. You’re seeing that. That’s what you do. That’s what you’re watching. That’s what you’re doing is helping our people on our team help these people that are looking for homes. The flow of that has increased, right?

It has, yeah. We’ve got plenty of people are looking for homes, yes.

There’s no shortage of that.

There’s not a shortage of home buyers.

There’s definitely a shortage of home sellers. Homes on… Would you say there’s shortage of home sellers or it’s just more limited than normally what we would see in Albuquerque?

I think that’s the same. Both of those options.

Well, no, no, no. Okay, yeah, I hear you. Okay, all right. I accept that. I accept your opinion. You’re so funny. We’re married. Okay, so anyway, so that’s the big thing. Then the other thing is home prices. I went into this a little in depth on the video I did, and you can look at it. I’m showing you the charts and what’s happened. I’ve been seeing this all year. Home prices peaked in May June. They pulled back all the way through December, and then they started to go back up. When I say pulled back, it’s a couple 3 % just depending. It wasn’t this huge move. It’s quite common that we see home prices peak in the late spring, early summer, and then just be flat or pull back slightly through the winter. This year, it was a little bit more pronounced than years past. I’m 100 % sure that has to do with the interest rate issue that we had last year, where we went from 3 %, 4 % at the beginning of the year to 7 % at one point. Just on a side note, we pulled back a little bit. We’re in the low to mid 6 s right now.

Not great, but better than it was.

I’m sorry, but I still think 6 s is great. I don’t think we should tell people it’s not. I think about my 20 year career in real estate so far, and 6 s . Back when I first got in real estate in the early 2000s, it was seven, seven and a half for probably my first seven years in real estate. So it’s still pretty darn good. Cheap money, really, when you think about it, especially when you look at the rental information that you just brought up. When you think about how much it costs to rent, you might as well be paying down your own mortgage for the same amount of money. If you’re going to be paying 2,000 a month for rent, you might as well be buying a home.

Anyway. 100 % agree. Of course, we’re a little bit biased, but we’re real estate investors. We believe in it. I think it’s an asset class that everybody should be participating in.

You can say we’re biased, but, Tego, we really believe in home ownership, not for us, but for the people, for clients, for the public, for the world. It’s not we want to sell a house. It’s for the joy and the satisfaction we get helping somebody with home ownership.

I saw a chart and I don’t have it in front of me, but it was a stat talking about how much net worth… Let me rephrase that. Of people’s net worth, how much of it is their real estate? Needless to say, most of people that have some substantial net worth or any net worth, basically they’re not in debt upside down. It’s their real estate. It’s their.

Real estate. It’s a huge percentage.

It’s a huge percentage. It’s a higher percentage on the lower income bracket than the higher income bracket because people in the higher income have the ability to diversify more and buy stocks and other types of assets.

But they still have a substantial portion of wealth through real estate, typically. Oh, of course. Even though they’re more diversified.

Yeah, absolutely. This actually, I’m going to backtrack a little bit because I forgot to mention the story because I found it interesting, but it ties in with this whole idea of a lot of Americans have a lot of their net worth in real estate and have done very well with it. There was a survey that the National Association of Realtors did, and what they were doing was looking at the rental properties in the country. What they said is there’s almost, well, it’s 49.5 million, let’s say, 50 million rental housing units in the United States. Nearly 46 % of them are small rental properties. So one to four units. Those are the small.

We’re not talking a huge apartment complex.

Yeah, we’re not talking the big apartment.

50 % of them are small.

Okay. Of those, let’s say 25 million, give or take properties that are the small, one to four units, 70 % of them are owned by individuals, not big companies. I bet it’s even higher than that because so many individuals have a LLC or a Corporation that they affiliate them through. There’s been a lot of conversation in the last two years about all these hedge funds and Wall Street money buying up all the houses. T hey’re buying the houses and renting them. T hat is happening. There’s no doubt about it because these big investment firms are saying, Hey, that’s a great asset class to own, and they’re wanting to buy real estate. T hey’re some of the smartest people when it comes to managing money and they like real estate too. But the highest percentage of rental properties are owned by the mom and pops, basically.

Right. And we know that locally. Well, we have a lot of friends who own a fourplex or a duplex or just small rental properties, and that’s part of their strategy and they love it.

And that goes back to this conversation about the lack of new homes coming on the market. People aren’t listing their homes for sale as much. I think somebody that looks at the numbers and crunches the number, they bought a home, let’s say, five years ago and they need to move, but they don’t necessarily need to sell to buy the next house or do their move. They’re looking at renting it instead of reselling it because when you crunch numbers and there’s a lot of different things to look at when you’re evaluating if a property cash flows and it’s going to have good internal rate of return over time, a lot of people are choosing to just rent their properties instead of selling it.

Because.

I go back to the whole conversation, the rental market is very strong in Albuquerque right now, without a doubt. Tracy, let’s talk about this crappy subject. Okay, I got to do it. I had to do the joke. I couldn’t let it go.

This is a septic discussion. I thought we were going to do things on this show because it’s Easter week, it’s Passover week, and we were going to do things like, let’s hipity hopity into homes this week, or bunny something or other.

No, we’re going to talk about septic tanks.

But we’re going to talk septic tanks. Property Evaluations evaluations of September tanks? Let me.

Set this up.

Okay.

Question came up this week, property selling, and the buyer says, I don’t want a septic inspection. Well, I don’t want to get in the weeds on that, but there is a rule, a statute. I don’t even know if it’s actually a law or just a statute or what it is, but the state environmental department does have regulations on what needs to happen if a property has a septic tank when it transfers ownership.

Prior to the transfer of a property which has an existing onsite liquid waste system, the current system owner must have the system inspected and evaluated by a third party inspector, as described, utilizing a department approved form. It doesn’t really state who?

It has to be a licensed inspector, correct. They have to be licensed to do that evaluation. Yeah.

It’s got to be certified by the national… There’s a New Mexico certification or a national certification is the way it looks. So yes, we are required upon sale, to have a septic system inspected and it should be properly permitted and be working properly. And septic systems vary. There’s several different types. There’s the system that’s pretty low tech.

It’s basically a big tank.

Big tank with an overflow for liquids to flow off into a drain field. And when they inspect that, they inspect both parts of that. So sometimes the tank can be fine, but the drain field isn’t draining. Or the other way around. The drain field is working, but the tank is broken, cracked, the concrete’s whatever. Usually when we see it unearthed and the lid has a bunch of vines coming out of it, we know it’s probably not a valid working tank. Yeah, if.

There’s something growing inside there, that means there’s a crack. Or if the water is basically the liquid is very low, that means it’s probably leaking.

Then there’s the engineered system, which is better for a rocky area, the side of a mountain, or in granite, or bouldery area.

Well, yeah, the advanced treatment system is almost like a mini water treatment plant. They’re a lot more expensive, but basically your water coming out of that, the liquid coming out of that is in much better condition and you don’t need as much space. That’s really the big benefit. You don’t need as much room to do it. So if you are a home seller and you have a septic system, would you advise that they get that inspected before they put it on the market? What’s your thought there?

Personally, what I would do is I would start right away getting it on the schedule to be inspected because we know that the regs for septic inspections changed a few years ago. They’re pretty stiff. A lot of them are failing, older tanks are failing. Even not that old of a tank is failing because of the new regulations and they have to open up both ends of the tank or whatever, depending on the type of tank. And it can take quite a while to get on somebody’s schedule to.

Replace it. We need Sean Benavidez with your grand septic here with us to give us all that.

Well, I’ve been to a lot of inspection.

There’s a lot of good people that are real experts in this. But one thing interesting, just this week, Tracy, we had to get a septic inspection scheduled in the East Mountains, and we couldn’t find anybody. Everybody was two weeks out. That’s the other thing. So if you have a property and you’re getting ready to sell it or you’re just putting it on the market, I agree with you. I would say get that inspection started earlier than later. You’re going to have to do it anyway. We have seen a lot of deals, let’s just say it, fall through because of it, because it got put aside. And then during the due diligence period, you finally get the inspection done and realize there are some issues and the seller really hadn’t considered that additional cost. Getting it done up front is going to put you ahead. Now, the other thing, Tracy, is there’s a timeline. Once that inspection is done, it’s only good for a certain amount of time, right? Yes.

I was looking for that in my notes here. I think it’s 180 days, which is six months.

That’s what I remember as well, six months.

If your house isn’t going to sell quickly, it’ll have to be reinspected if you get it inspected and it’s more than 180 days from that date. Or you can provide, if you had to put a new one in, you can provide that information. There’s databases you can look up. We have found that here and there, the septic tanks don’t have a license. They aren’t registered. They need to have a permit versus a license. It’s a permit. There’s databases at the New Mexico Environmental Department to look up permits, and we work really hard to help the septic companies, our clients find those permits because sometimes the legal is there and not the address or the ad.

Another story just in this last week where Trish who handles our transaction and all those crazy details that have to happen during the contract to close period. There was a septic system in this property. They couldn’t find it. They couldn’t find it. They couldn’t.

Find the permit online.

They couldn’t find the permit. They knew that it was done, but they couldn’t find it. Anyway, long story short, it was on a different name. The naming never got transferred when it was sold before.

It had the wrong property address on it.

That’s what it was, wrong property address. If you get that stuff done ahead of time, it’s just going to put you that much further.

Ahead when you’re selling. There’s enough moving parts in selling your home. You have a septic system that getting this taken care of timely on your timeline, less stress involved at that.

Well, there’s a lot going on if you’re getting ready to sell your home. We know that. This is just one of those things that you can maybe just overlook because you got a thousand other things that you’re trying to do to get the home ready to sell. And a.

Lot of times if you have a septic tank, you might also have a well, which is another thing. Wells get inspected. Usually buyers want them inspected. There’s not a state regulation, but we suggest to home buyers that they get the water tested in addition to the well equipment to make sure that there’s no bacteria, E. Coli or Coloform or other things. I guess some people do lead even testing, making sure that the water to drink is safe.

That’s a.

Whole another topic.

That’s a whole another topic, but it’s a good one. Tracy, it’s time to wrap up. It’s already been a half hour. We’ve been talking and talking and talking and covered a lot there. But this is Albuquerque Real Estate Talk.

This is what we do. We’re on KIVA, 1600 AM. We come every week with our banter back and forth, and we love it because this is what we do anyway.

Yeah. If you tune in, you’re listening to us and you’re… Give us a like, give us a share, or subscribe on YouTube to help boost message and get good information about there for homeowners and home buyers and home sellers.

And if you want to buy a house with us, sell a house with us, give us a call at 448-8888, and we’ll get you well taken care of with our great team. And if you’re.

Interested in careers in real estate, we can talk about that, too. Absolutely. We have some opportunities there for people that are interested and even people that are experienced real estate agents would love to talk to you about what we can do there.

So have a hippity hoppity Easter and we’ll see you next week. All right.

Thanks, Tracy. Again, Venturi Realty Group with Reel Broker. We’re at 505- 448-8hippity-hoppity888. Have a great Easter weekend. Take care.