Affordability? Affordable Housing in the Albuquerque NM area

Tego Venturi:

Tracy, I want to talk about affordability.

Tracy Venturi:

Changing the topic quickly.

Tego Venturi:

I’m changing the topic quickly.

Tego Venturi:

It’s interesting, cause there’s been a lot of stories out there talking about affordable housing and that is a conversation that needs to be,

Tracy Venturi:

That’s very different from affordability.

Tego Venturi:

Correct. Affordability, you know, when we’re talking about homes and in specifically compared to historically, so Tracy, there was a story that came out and a lot of people are seeing these headlines, Oh, there’s no affordable housing. And so all of a sudden they think, well, homes are not affordable. The reality is that homes are actually comparatively very affordable historically.

Tracy Venturi:

Totally. When you think about how much of somebody’s typical income needs to go towards housing these days, it’s very low compared to historical, you know, your percentage of how much you earn that goes towards housing has become much better.

Tego Venturi:

I got a stat for that. So there’s a couple of different things you can look at. So there’s, there’s this, National Association of Realtor does a whole housing affordability index. They’ve been doing it for a long time. If you go back to 1990 is the chart I have. And what they look at is, you know, the whole package, they’re not looking at just prices of home. They’re looking at they’re accounting for mortgage rates, they’re accounting for income. So they’re looking at median income versus what homes costs versus what the payments are, including insurances and taxes and everything. And the thing that’s fascinating is 2020 was let’s see one back to 1990. It is the fourth or fifth most affordable, year, the only years where it was more affordable where the, the post recession. So, you know, 2009, 2010, 2011, 2012, right? Those were the good years, right? We should have all bought more homes back then, right? Just like we all should have bought Bitcoin five years ago, but don’t get me started.

Tracy Venturi:

Hopefully when we used to talk about it a lot, some of the people that we mentioned it to did buy it and still hold it because.

Tego Venturi:

When we were doing the show, remember Tracy? We were doing the show back in, when did we start the show? Was it 2010? I don’t remember.

Tracy Venturi:

It’s been seven plus years. So 13, 14,

Tego Venturi:

And at the time we were saying, it’s the buyer’s market. It’s time to buy it’s time to buy.

Tracy Venturi:

That was a tough time to buy though because there wasn’t lending programs, right? The lending was very difficult because a lot of the mortgage programs had gone away.

Tego Venturi:

I’m gonna push back on that, the easy lending had gone away. But the people that could actually pay had no problem qualifying, right? It was just that the easy program went away.

Tracy Venturi:

All of the unique programs that catered to different scenarios were not in place. So,

Tego Venturi:

And the reality is those programs for the most part have not come back. A lot of those programs, you know, helps create the housing bubble back in 2008. So anyway, we’re getting way off track here, affordability. So the reality is, you know, right now affordability is at a very historic low. And also if you look at another piece of data, it’s a percentage of income needed for a mortgage payment. It decreased drastically in 2020. So historic norm is about 21%, 22% of your income toward your housing. And that could be rent. That could be, you know, a mortgage, however, so 21% as of right now, we’re at 14.9, 15%. So it’s a huge decrease in the affordability, even though home prices have come up.

Tracy Venturi:

So what’s helping that Tego is that interest rates are so low, you can afford more house. So because home prices are up, you can still afford them because of the lower interest rates.

Tego Venturi:

Yeah, absolutely. And so I just want to talk about that and just one other chart to talk about as the typical mortgage payment in, in 2020, they were saying it was $826. That’s just adjusted principal interest. And that’s, you know, for a very average home, right. In 2006, it was $1,300, right? So it’s substantial difference, right?

Tracy Venturi:

Interest rates were about seven and a half percent then because when I was a newly licensed realtor in 2002, we were typically in that seven and a half percent range. And then a few years later when we got better, it was seven. So, you know, sometimes we’d be in that seven, seven and a half range through 2006 as my recollection.

Tego Venturi:

So the takeaway is don’t make a decision based on a headline that says home prices are going up and, you know, they’re up this much from last year or whatever, right. Or you see a headline that said, there’s no of affordable housing on the market. Again, affordable housing is an issue. You know, we look at the Albuquerque market right now. I mean, how many homes in Albuquerque right now, Tracy you’re in the MLS are on the market under 200,000. It’s gotta be less than, it’s gotta be a few hundred, right? And so, you know, that is a challenge. There are less lower price homes on the market without a doubt.