Seeking the bottom of the real estate market

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By Harold Morgan

Seeking the bottom of the real estate market in New Mexico isn’t quite the fantasy of our quest for an interim committee meeting in Santa Rosa last summer. Unlike at the Blue Hole Dive Training and Santa Rosa Conference Center, signs exist in the real estate world. The signs have numbers—monthly, quarterly and annual sales figures. Some hope may exist.
For existing home sales, a rough rule of thumb used to exist. Something like, more population means more jobs, which means more home sales.
At best the rule is hampered by today’s reality of foreclosures, financing difficulties and  homes worth less than the amount of the mortgage, even if the owners are making the monthly mortgage payments.
That said, let’s look around.
While the state’s population growth is mostly new babies, it is growing a bit. A few—very few—new jobs are appearing outside of Albuquerque.
A review of eight larger counties shows just one—Doña Ana—with sales down for all four quarters of 2011 on a year-over-year basis from 2010. The figures are from the Realtors Association of New Mexico.
For the fourth quarter of 2011, six counties increased sales over the 2010 period. They were Chaves, Eddy, Lincoln, Otero, San Juan and Santa Fe. Curry and Doña Ana were the counties with fourth quarter sales declines.
An interesting item from the quarterly sales review is that the next best comparative performance was the first quarter of 2011, when just three counties showed increases. Of the eight counties, two registered sales increases during the second and third quarters.
Even with its high prices, Santa Fe was the best metro county performer for 2011 with 1,185 sales, a 5.5 percent improvement over 2010.
Santa Fe’s $320,000 median price for 2011 beats Los Alamos’s $290,000 for the state’s highest. At $201,800, the median home price in Lincoln County crossed $200,000 for the first time.
The median price was $216,000 in Colfax County during 2011, which I suspect has something to do with Angel Fire, a resort community. Median price means half the home sold for more and half for less.
In Albuquerque, 2011 saw 7,152 homes sold, 53 percent of peak sales of 13,448 during 2005. This was the sixth consecutive year of declining sales.
The good news—sort of—is that things are getting worse less quickly. Albuquerque sales were 7,181 during 2010, making 2011 sales only 0.4 percent below 2010.
The better news is that, starting with July, sales increased every month of 2011 over the same month of 2010.
Albuquerque’s year over year increase continued in January. The surprise was the amount of the increase, up 13 percent from January 2011 to 411 sales in January 2012.
The bigger January surprise was the 836 pending sales of single-family detached homes. That was the highest pending sales since August 2010 and up 21 percent from January 2011 and 39 percent from December.
Pending sales tend to turn into closed sales during the following month. I have watched the relationship of pending to closed sales for a number of months.
The figure for closed sales during one month tends to be about 70 percent of sales pending the pervious month.
Albuquerque prices are another story. The slide continues. For more about Albuquerque’s residential real estate market during January, see www.capitolreportnm.blogspot.com.
Lea County is a bright spot for the state, something that should be expected given the area’s energy boom. During 2011, there were 300 homes sold in the county, up 18 percent from 255 in 2010.
Being ever cautious, I’m not suggesting any trends, either around the state or in Albuquerque. But people do need to live somewhere.
Harold Morgan
New Mexico News Service