Is Albuquerque’s Real Estate Market slowing down?

(Transcript Snippet): ” Tego: Tracy. I want to just go back to the thing about is the market slowing, because like I said, there has been some news stories out there implying that maybe the real estate market’s slowing down and it really isn’t even nationally, even in some of these other markets, because w th the story that’s actually out there is that inventory is starting to grow a little bit in some parts of the country. It’s not that the real estate market’s slowing down

Tracy:

Well, and I bet you have stats to prove what’s, you’re about to say, well, what I, I just, you know, it’s that time

Tego:

Of the month where it’s mid, mid month, I wanted to see where we were for July this year versus in particular July last year, because July last year, July, 2020 is when the real estate market just went nutty.

Tracy:

This was right after COVID right? So March, April, may, June, July, all those people, June, June is

Tego:

When all of a sudden everybody decided it was time to buy a house in there. We hadn’t had any listings in April, may of last year

Tracy:

Was pretty much shut down. So I didn’t say

Tego:

Any, it was half the number of new listings. Yes.

Tracy:

My point is July last year, despite COVID was a record month, it

Tego:

Was the busiest closing month on record for the Albuquerque area, July of 2020. Right? Right now, July of 2021, pendings are up 15% over last year, just in the first 15 days. And the number of closings is about equal with, with last year right now, the number of homes on the market, it’s down 23% just versus last year. So yeah, we’re less houses on the market. We’re it’s not slowing down. That’s

Tracy:

Not in our market. No, no. So,

Tego:

And there was you know, I don’t know, I know you saw Tracy, but you all might’ve caught it, that there was a story in the journal this week where Stephen Hanway does the real estate beat, I guess, if you would say, and he called me and got a couple, just, you know, put a few quotes on there. One of them was there’s, you know, like I said, the story that there’s more homes in the inventory starting to come in, and there’s more homes on the market and I cautioned him and I’m glad he printed it, that, that it’s maybe just seasonal cyclical that, you know, we’re going to have a little bit of build this time a year. And I think it’s gonna, you know, just kind of stay flat and probably declined throughout the year. So if you’re out there thinking of buying, if, if you’re thinking that you’re going to wait until more homes come on, the market later this year, probably not going to happen is, is my call on that. So I’ll just say

Eddie:

That. Yeah, because I mean, that wasn’t as clear as that I would like for it to be hearing you. So what you’re saying is cyclically every year about this more homes are basically delivered. They hit the market, but even though those homes are coming onto the market, it doesn’t mean that there’s going to be more opportunity, more houses, more inventory, necessarily that is going to get absorbed right away.

Tego:

It is. And I don’t see generally what happens. Inventory builds up until July, August, if you want to say that, right? So the number of homes available and then come July, August, it starts to drop off all the way through till February. And that’s just a normal seasonal pattern for our market.

Eddie:

Those are free. So I imagine those are kind of presale. Are they not reconstruction training? You brought on new con construction people on board. Several times, you’ve had several home builders who’ve come on. There’s like people beating down their door or something like that. I mean, this is something that you guys work on. You can take people to places where, you know, that inventory is going to be rolling out. And I got to, I got to say, that’s, that’s worth a, what do they say? A bird in the hand? You know, that really is a good opportunity there to jump in. And another reason to pick up the phone and call a Tigo and Tracy Venturi 4, 4, 8 88, 88, that’s 4, 4, 8 88, 88. And we are alive this morning. So if you want to know and get a heads up on where that might potentially could be and delivered, all depends upon the city of your city or Rio Rancho. Just go ahead and give them a call. Thank you for clarifying that. Yeah,

Tego:

No, no, thanks. And I want to just bring in one other stat. I don’t want to, I don’t want to confuse people, but, but again, this whole story of, oh, you know, home prices are going up way too fast, which I would, I would tend to agree with. And, and we’re going to have a bubble and prices are going to explode and go down. And one of the things we have to look at always is supply versus demand, right? That drives everything in, in pricing, on, on any, any product in, in homes in particular. And what I found is right now, we have about 1100 homes on the market in July of 2007. That’s when let’s say the bubble burst back in the day, when, when home prices started to decline in 2007, at that time, we, we didn’t, I’m trying to say this. So so it’s more succinct, succinct, and not, not complicated. There were S we had over 7,000 homes on the market, in the greater Albuquerque area in July of 2007, when prices started to go down

Tracy:

Another way to start to shift until we had over 7,000 houses.

Tego:

That’s a great way to put it. So, so if you were to just go with that, that one metric, and I know that’s just one thing we would need six times more inventory that was, we say, you know, homes available on the market than we currently have before we start to see a shift in pricing.

Tracy:

And we could see a shift in pricing well, before that, of course, but that’s what the history was. We were over 7,000 houses on the market before we started seeing prices come down. Yep. Back in 2007. And

Tego:

I’ve been saying this now for month and month, I keeps saying we could have four or 5,000 homes, 6,000 homes on the market tomorrow, and still not be in a, a buyer’s market.

Tracy:

And, you know, it could shift, let’s say we have 4,000 on the market, but interest rates change drastically. We could see price changes. We just know from what we hear politically through the economy that they’re not planning to do major changes in, in the interest rate. Right. So that’s part of our, where we were going. We’re going to talk a little bit about the second half of this year since we’re into it now, right?

Tego:

Yeah. And, oh my gosh, you know, how do we do this? We go so fast. We’ve just got so much to cover. So Tracy, let’s just talk about a few predictions from the experts. I’m going to say that the air quote experts. Yes. I think 2020 nevermind. I’m not going to go there. I was going to talk about experts in, in the year 2020. So what, what are the real estate, you know, prediction makers, you know, what are they saying about the market tracing? What are they saying about mortgage rates? Let’s say,

Tracy:

No, they say mortgage rates will likely increase a little bit by the end of the year, but a little bit, we’re not talking anything major. Right.

Tego:

And based on the announcement this week, it doesn’t look like there’s going to be much. I mean, I know that the fed rate is not necessarily tied to mortgage rates. It’s more about the 10 year bond yield that, that ties to mortgage rates. But, you know, as long as the 10 years, under 2%, we’re still going to see really low mortgage

Tracy:

Rates, right? Another end of year price appreciation, Tigo

Tego:

Price appreciation from a lot of the different groups out there. So Zelman and associates, which is one of the big consulting firms in the real estate space there, they’re seeing 10% year over year for 2021 nationally 10.6% mortgage bankers association saying over 10% national association of realtors, our association is saying 9% Fannie Mae and Freddie Mac. Fanny’s got it at 8% Freddie, Mac’s got it at 6.6. So, you know, everybody is predicting an increase. I saw some numbers from another consulting firm just this week. And they’re seeing 20% year over year increase in median price, which is a little bit different than total price appreciation, but you know, home prices are going up and, and, and, and back to that whole thing about the market and the market slowing, I think the one thing that will slow this market down is we just get way too far ahead of ourselves on home prices, where people can’t, you know, they just can’t make it work. You know it, and then you got this whole thing, Tracy, it’s like, well, everybody’s got lifts somewhere, either got to rent, or you’ve got to buy, or you got to live with family or whatever, right back to the whole conversation about, you know a multi-generational

Tracy:

Housing. Right. And what we know is rent, rent rates have gone up significantly too. So even though the home prices have gone up, it’s still mostly cheaper to buy than to rent for the same type of house. There,

Tego:

There is so much research and there’s so many good studies that talk about how, you know, home ownership, let me put it this way. Home ownership, owning a home is affordable housing compared to renting. Right, right. Plus building a nest egg.

Tracy:

What about inventory for the rest of the year? I think nationally, yeah. What the experts

Tego:

Are predicting is nationally that there’s going to be a slight increase in the number of homes coming in into the market. We’re, we’re seeing that in a lot of other parts of the country I’m going to make the call here locally that we’re going to go through the end of this month into August. Inventory is going to stay flat, maybe increase a little bit and then start to decline.

Tracy:

That’s my call. Okay. bottom line, bottom line

Tego:

Is that, you know, mortgage rates are going to stay flat or go up slightly, no big spikes in the future. Inventory is going to go up slightly, but, but not enough to really create a, a buyer’s market, you know, unless, you know, some, some places around the country, but we’re not seeing it here. And, and for the most part, everybody’s pretty optimistic about the real estate market.