Coldwell Banker Legacy Real Estate - Blog

2016 Market Letter

BlueCrew@cblegacy.com — Wed, 23 Mar 2016 00:00:00 GMT

The average home sale price in the major Albuquerque metropolitan area has increased four years in a row! While they are not huge increases, they still demonstrate sustained signs of a slow recovery. The major metropolitan Albuquerque area netted a 1.89% increase in new jobs, and new jobs are what help fuel the real estate market.

According to the Greater Albuquerque Association of Realtors, the average sale price was $215,331 in 2015, up 1.1% from $212,990 the prior year. The number of sales was also up by 16% to 10,730 single family and condo/town home closed sales in 2015. In addition, Albuquerque MSA residential building permits for new dwelling units, including multifamily, totaled 2,239-down just 4% from 2014.

Despite economists’ forecasts of higher mortgage rates in 2015, the 30-year home loan remained about what it was in 2014-actually falling by one tenth of one percent. They are now hovering around 3.65%. Lower home loan rates, combined with lower gas have continued to add more buying power and discretionary income for homebuyers.

Active inventory of homes on the market decreased by 20%-down from 4,300 to 3,407 which has resulted in a reduction from a six-month supply to a four-month supply. Historically when we see less than a six-month supply we see prices increase accordingly. This is the first time in over a decade we have had such a low supply of homes relative to demand!

Renters in the Albuquerque MSA continue to pay more. Fortune Magazine states nationally rents have increased by 8% but according to Davina Lawson, Director of Property Management for Coldwell Banker Legacy, rents in the Albuquerque area have increased more than that in many cases. Additionally, there are well over 75,000 single-family and multi-family rentals in the Albuquerque MSA.

The average rental rate for a single-family home in the market is approximately $1,200 per month. The principal and interest payment on a $200,000, 30-year, fixed rate loan at 3.65%, is $914.92. Taxes, mortgage insurance, and hazard insurance are in addition, but it may literally be more cost effective to buy and own compared to renting in the Albuquerque area. Furthermore, rent is not tax deductible, while interest on home loans and real estate taxes are. This only adds to the argument of owning, as opposed to renting.

Finally, one more piece of information about the rental market. Buying residential real estate as a long-term investment in the Albuquerque area right now may be one of the best things you can do with your money, even if it is leveraged with a mortgage. As noted, rates are at an all-time low. Values are stable. Rents are on the increase. Demand is high, as noted by a nearly 95% occupancy rate, and unlike many other markets Albuquerque is not over-built, so rents should remain secure.

A look ahead at what the “experts” are saying about interest rates

Ted Jones, PhD and Chief Economist for Stewart Title and Guarantee Company is forecasting 5.2 to 5.6 percent 30-year, fixed-rate home loans by the end of 2016. Another forecaster suggests a much more conservative future for rates. Bankrate’s Marcie Geffner reports that although the Fed raised its benchmark federal funds rate in December from near zero to a range of 0.25% to .05%, borrowers shouldn’t expect rates to shoot skyward. Finally FNMA has published its 30-year mortgage rate forecast for 2016 as ranging from 4.0% to 4.1%.

New Mexico:

Job growth is the main driver of overall economic growth. As much as it pains me to say this, our state will likely see little gain this year. According to Forbes, New Mexico netted 1.2% increase in job growth in 2015. The same source is forecasting a 1.7% increase for 2016. The state is still recovering from the Great Recession, taking ten years to approach employment levels last seen in 2006. Healthcare has driven the majority of New Mexico’s job growth, accounting for 56% of new jobs over the last year. According to the Tax Foundation (est. 1937), New Mexico ranks 35^th; up from 38^th in 2014, in the nation as states that have the most competitive business tax systems. The four states we share a border with still rank much higher.

More on the housing market

Expect metro area home sales to remain steady as long as rates and supply stay low with much more activity in the price range below $300,000. New CFPB rules went into effect last fall which had an impact on the industry as lenders and title agencies had to comply with mandated federal changes to the closing process. With most of the learning curve behind them, the closing process has begun to plane out and delays in closing have been reduced. In spite of new regulations, we should still see more than 10,500 sales in the metro area with continued appreciation this year. We are returning to the levels of sales volume we experienced prior to 2008.

Finally, while we live in an area of the country that hasn’t seen the economic recovery enjoyed by most of the nation, we are in a stable market. With four solid years of appreciation coupled with low interest rates, it is a safe place to buy and own a home. New Mexico is a beautiful state and the true value of being able to live here is far greater than just it’s economy.

Why you need a real estate consultant with experience in Albuquerque and Rio Rancho.

Andrew@TheDynamicBroker.com — Sun, 31 May 2015 00:00:00 GMT

I've talked to several sellers this week, and all of them were overwhelmed with the advice from friends and family on how to get their homes ready to sell. Some of them thought they needed to make expensive repairs based on opinions of people who have never seen the house, some thought they couldjust placea sign out and expect a full price offer, and others have been delayed months in putting the house on the market because the thought the house wasn't clean enough. All of these sellerswere acting out on their fears because none of them had taken the time to have a Realtor talk with them to help them understand their options. Before you make repairs that you think need to be done, ask yourself, "Who said you need to make the repairs" If you have already have a buyer, then yes, you could make repairs. If you don't have a buyer, who is the expert that said you need to fix something Your neighbor Your brother-in-law Your parents If you think you need a new roof, perhaps you should have a home inspector give you his or her thoughts in writing. Most roofers need work, so if you ask a roofer if you need a new roof, you might get a "yes" more often than not.

Why not just put a sign out and wait for an expensive offer Well, you could do that, but by the time you realize your house is not as nice as your neighbor's house that has been painted, cleaned, and has new carpet, your house will have been on the market a while with no offers. Once you do all the work of making your house presentable, most buyers will wonder why it has been on the market a while, and you'll get a lower priced offer. Instead, you need to make your house presentable. Ask your Realtor to show you the houses for sale in the neighborhood that are your competition, and then pretend you're a buyer. Would you buy your house that needs paint, carpet, cleaning, and has stinky pet odor No, you'd run away screaming to your neighbor's house and offer full price because you can move in quickly. Take the time please to make your house as beautiful and you think it is.

The sellers that have been taking months to get the house ready to sell are missing the point: sell the house now. If the house needs more work than you are willing to do or can afford, lower the price. Your list price can cure any problem in the house. Waiting to have absolutely everything done on the house can take a very long time. Set a deadline to get it done. Ask your broker to help. Most competent Realtors have a vast resource of professionals to help you get things done. From chimney sweeps to people who will haul away stuffto be recycled or donated, good Realtors can get things done. How easy would it be to live your life and not worry about real estate Very easy. I am a broker who specializes in letting you live your life. I can coordinate everything in getting professionals to do needed repairs, cleaning, and donating so you can walk away and concentrate on your life.

So what do you do when you get too much information from watching home and garden television, advice from family who think they know everything, and coworkers who have been there and done that Ask an expert. Ask a Realtor who knows the area. Don't ask your friend from high school who lives in another state what you should do to sell your home in Rio Rancho or Albuquerque. All real estate is local, so ask a local Realtor.

All of those sellers are going to continue to frustrate themselves because they all want the same thing: sell their house. Yet all of them are missing the opportunity because people who are not involved and don't understand the situation are giving them bad advice. Bottom line Call a local Realtor and put the house on the market based on what your local expert Realtor says. And of course call me, The Dynamic Broker, because I'm an expert here!

2015 Real Estate Market and Economic Summary

bluecrew@cblegacy.com — Thu, 19 Mar 2015 00:00:00 GMT

For the first time since 2006, the average home sale price in the major Albuquerque metropolitan area has increased for three years in a row. While these are not huge increases, they still demonstrate signs of recovery-albeit sluggish. Nonetheless, we netted 3,500 new jobs in the Albuquerque area during 2014.

According to the Greater Albuquerque Association of Realtors, the average sale price was $212,990 in 2014, up 1.19% from $210,488 the prior year. The number of sales however was down slightly by 294 to 9,450 single family and condo/townhome sales for 2014. In addition, Albuquerque MSA residential building permits for new dwelling units, including multifamily, totaled 2,341-with the vast majority being for single-family homes. New home permits rose to about the same level as they were in 2008.

Interest rates fell by one half of one percent in 2014. They are now even lower, hovering around 3.75%, reducing the mortgage payment of that $212,990 home by nearly $120 per month. This has created a mini boom in refinances of existing mortgages. Lower home loan rates, combined with gas prices dropping by nearly $1.40, have added more buying power and discretionary income for homebuyers.

Active inventory of homes on the market is virtually unchanged since last year, with approximately 4,300 homes and condos for sale in the market. This gives us about a 6-month supply of inventory, which has typically been referred to as a “balanced” market.

Renters in the Albuquerque MSA are paying more. According to Seth Kelly, Director of Property Management for Coldwell Banker Legacy, there are over 75,000 single-family and multi-family rentals in the Albuquerque MSA. Overall, rents have increased 2.67% from 2013. The average turnover rate (move outs) over 12 months is 41%, compared to 59% nationally, making Albuquerque a more stable market for investors of rental property. The rental occupancy rate for both single-family and multi-family in the area is currently 94.7%.

This is where things get interesting. The average rental rate for a single-family home in the market is now $1,176.00 per month. The principal and interest payment on $185,000, 30-year, fixed rate loan at 3.75%, is $856.76. Taxes, mortgage insurance, and hazard insurance are in addition, but it may literally be more cost effective to buy and own compared to renting in the Albuquerque area. Furthermore, rent is not tax deductible, while interest on home loans and real estate taxes are. This only adds to the argument of owning, as opposed to renting, if you plan on staying in one place for a period of time.?
Finally, one more piece of information about the rental market. Buying residential real estate as a long-term investment in the Albuquerque area right now may be one of the best things you can do with your money, even if it is leveraged with a mortgage. As noted, rates are at an all-time low. Values are stable. Rents are on the increase. Demand is high as noted by a nearly 95% occupancy rate, and unlike many other markets Albuquerque is not over built, so rents should remain secure.

A look ahead.

Expect to see mortgage rates rising. Ted Jones, PhD Chief Economist for Stewart Title and Guarantee Company is forecasting 5.6 to 6 percent 30-year, fixed-rate home loans in the next twelve months. Greg McBride, Bankrate.com’s Chief Financial Analyst is more optimistic but says rates could rise to 4.8 to 4.9 percent by the end of 2015. Even Fannie Mae’s Chief Economist Doug Duncan cautions the Federal Reserve may begin measures to normalize the monetary supply in the third quarter, likely keeping rates “relatively” low. My question for Mr. Duncan is this: Relative to what?

Don’t expect to see much improvement in the New Mexico economy this year. If job growth is the main driver of overall economic growth, our state will likely see little this year. According to the bureau of Labor Statistics, New Mexico netted 1.64% new jobs in 2014 by adding 13,300 total jobs. The biggest increase as a percentage of job-growth was in the Four Corners area. Business and the capital that belongs to it are attracted to where it is welcome. According to the Tax Foundation (est. 1937), New Mexico ranks 38th in the nation as states that have the most competitive business tax systems. The four states we share a border with are ranked higher.

Expect area home sales to remain steady and history will repeat itself with more improvement in the entry-level market. As the credit box opens we see a significantly higher increase of sales activity in areas of the market where the average home price is less than $220,000. For example, since 2011 sales in Sandia Heights, where the average sales price is $420,000, has increased 7%. Compare this to sales in Paradise East, where the average sales price is $211,000, and the number of sales for the same period has increased 27%. The first-time buyer is a catalyst to fueling a real estate market, and the good news is they are coming back.

As a means to an end, I leave you with one last thought. There are 76 million baby boomers alive today (born between 1946 and 1964). One third of them have saved more than $30,000 for retirement. This isn’t said to be critical but out of genuine concern for all Americans. Given the current state of the local market, there is $56,000,000 in potential annual rents available and for sale today. Getting your share of it by buying rental property could go a long way in your future years. Like the actor on the H&R Block commercials who quotes the line, “Get your billions back America”, I’m saying, “Come get your millions New Mexicans!”

Number of Properties Pended each Month in Relation to the Number of Active Listings

cbl.previews@cblegacy.com — Tue, 17 Feb 2015 00:00:00 GMT