In 2014 the New Mexico housing market saw a 3.6% increase in the number of homes sold compared to the year before. The 2015 housing market appears to be continuing the trend and the state could be looking at a record year. The Realtors Association of New Mexico (RANM) reports that there have been 8,806 home sales through June of this year. What are some of the reasons for buyer optimism? “Higher rents, a stronger job market, and gradually rising interest rates are coaxing many first-time home buyers into becoming homeowners,” says RANM President Baro Shalizi.
Median home prices are beginning to return to where they were back in 2008 before the market crash. Lets take a glance at the Albuquerque housing market as an example housing trends throughout the state. Back in 2008 the median home price for a single-family home was $199,000 in Albuquerque. In 2011 it had decreased dramatically to $165,000. But since then the numbers have been rising to respectable levels. In 2014 it was $177,000 and this year it is $184,000. This is representative of the New Mexico real estate market as a whole.
While statewide numbers are good there is reason for concern. Some counties in the state are hampered by economic conditions. While sales are up, home affordability numbers have decreased slightly. A limited number of homes for sale, coupled with a higher demand and increasing home prices lower the housing affordability index. And even though housing market predictions are all pointing towards continued progress in the state, it all hinges on a diverse economy. In this regard New Mexico needs to continue to grow. “Good job growth, everything else will fall into place,” says RANM Chief Executive Officer Steve Anaya. And that might be the crux that holds back even more growth in the state.
This year’s annual Forbes economy report is due out next month, but last year’s report didn’t show much to get excited about. New Mexico ranked #47 on the list for Best States for Business, and the state has a staggering 21.9% poverty rate. Job growth is not seeing much to brag about (a projected .8% annual increase), but it has been increasing the past three years. In 2013 the state had a .8% job growth, followed by .9% the year after, and this year that number so far has reached 1.2%. The economy is technically growing but will it be fast enough to help the housing market maintain and exceed its current growth is the biggest unknown factor.
But even the most stringent pessimists can see a silver lining in the New Mexico real estate market. Home prices are up 5.2% this year and foreclosures are at a remarkable .8%. So as homeowners and investors keep an eye on the states economy the short-term outlook for New Mexico housing market appears to be favorable. “This is probably the strongest summer we’ve seen since 2008,” says Anaya. “If you’re looking for a home today, now may be the time to do it because I think the stars are lining up for folks.”
Influencing Factors for the 2015 New Mexico Housing Market
- Home appreciation rates for New Mexico real estate have increased 5.2% this year and foreclosures are at a favorably low rate of .8%.
- Six counties reported more than a 40% increase in sales between June of 2014 and June of 2015: Torrance, Los Alamos, Lea, Lincoln, Taos, and San Miguel.
- Job growth is increasing, but at a snails pace. Projected annual growth is less than 1%.
- Median prices increased from $179,092 to $189,000 in the last year.
- Rental units are in high demand in New Mexico. On rental websites like Trulia, Rent.com, and Craigslist New Mexico is seeing a shortage of availability and an increase in rental prices. The average rental price in the state is $1,100.
Best Places to Live in New Mexico
If there is a place that is seeing the brunt of the states housing growth it is the Albuquerque NM real estate market. Signs of progress can be seen all around the city. Downtown Albuquerque is seeing an increase in renovations, co-working spaces, and even a new gym due to the much talked about Simms Building on Gold Avenue. The two entrepreneurs behind the project are in the brewery and fitness business and see the downtown area as an up-and-coming rejuvenation of youth and culture. Signs of the influx of young people can be seen in East Nob Hill, a hip, fashionable, and fun area of the city. The neighborhood is becoming littered with new apartments seemingly popping up overnight.
Different real estate websites show varying results for the Albuquerque market but all show the same trend: upward. On Trulia Albuquerque has an average list price of $234,000 as of October 7th of this year. The website also shows the number of listing have been steadily decreasing in the past few months signaling that available housing is beginning to get snatched up. On Zillow Albuquerque NM real estate looks to continue to increase in home values as well. They predict that the home values in the city will rise 2.7% in the next year. And backing up the data on Trulia, Zillow shows a large dip in the average number of days that homes stay on the market. In July of this year homes averaged a listing time of 135 days. Since then that number has dropped to 92 days.
Recently the Minneapolis-based development and management company Dominium, one of the top affordable housing development and management companies in the country, entered the Santa Fe NM real estate market by acquiring a large apartment complex. This is due to the strong rental market in Santa Fe. For a company of this size to invest this kind of money into purchasing and renovating residential properties is a sign of a market that is desirable and in high demand.
Next to Albuquerque Roswell NM real estate is another market on the rise. Perhaps best known for being attached to the Roswell UFO incident in 1947 the city continues to be a tourist destination for individuals interested in UFO’s, sci-fi, and aliens. But in the last year home appreciation rates in Roswell have increased nearly 8%. This is one of the highest real estate market increases in the country. As the state’s fifth largest city the increase in home appreciation must be examined in relation to the city’s population. Roswell is inhabited by less than 50,000 and the median home value is only $96,217. So what few homes are there have either been remodeled, renovated, or are simply beginning to accrue value in land capital. Although a small town, Roswell has some of the benefits of some its larger city counterparts including a professional sports team, University campus, and airport hub.
Supply for homes in the Rio Rancho NM real estate are limited. The median rental price is nearly $1,200, some of the highest rental prices in the state. Average listing prices are well above $200,000. So why the high costs in housing? Rio Rancho is one of the fastest expanding cities in New Mexico. The city saw a population increase of 69% between 2000 and 2010. Rio Rancho has a very respectable public education system, which can be attributed to the fact that the city has a household and family income that exceeds state averages.
The economy in Rio Rancho continues to drive the market forward. The Intel Corporation is the city’s largest employer, and several new commercial retailers have located to the city in the past few years. Because of the population increase the city is constantly undergoing major new construction on facilities to accommodate its citizens.
The Farmington NM real estate market is not as costly as Rio Rancho but the city has just as much to offer in terms of potentiality. The median home cost in the city is $186,100 making it on the high end but not extremely expensive. The city also boasts a good public school system and job sector. But where Rio Rancho leans on technology and retail companies, Farmington’s primary industry is fuel. The mining of petroleum, coal, and natural gas keep the home values respectable and sought after commodities.
One area that is not seeing recent growth is the Las Cruces NM real estate market. Listings, sales, and rental prices in the city have seen a slow but steady drop off in the past year. One silver lining is that the market here is affordable. Rental prices are around $950 and home values are hovering right around $136,100. Zillow sees the home values in the city increasing 3.9% in the next year. For first time buyers or investors with limited capital Las Cruces offers them a reasonable entry point into home ownership.