"The Santa Fe real estate market continues to show consistent signs of life and progress"
The first quarter of 2012 has been full of pleasant surprises as the Santa Fe real estate market continues to show consistent signs of life and progress. Inventory continues to decrease while purchase activity continues to increase, helping stabilize our market.
The real estate market in the City Different requires a very discerning eye. “You have to look at the micro markets to see and understand what’s really occurring," says David A. Barker, president of Barker Realty. "Often times you can only look in the rear view mirror to see what’s been happening in the market. We strongly believe that the first quarter of 2009 was the bottom for unit number of sales. That being said, home values are still declining but at a much slower pace and in some neighborhoods price points have stabilized.”
If the consistent, positive signs and trends continue, 2012 could very well be the year we look back and “say this is when things turned.” “Are we in a shift?”
What does this mean for Santa Fe Real Estate and me?
The Good: One vital sign and trend is a decrease in inventory. January, February and March all had decreases in inventory. In March 2011, 1,652 properties were for sale, while March 2012 had 1,315, a 17% decrease. If you look back at inventory in 2006, 2,623 properties were for sale. That’s a 46% decrease compared to now.
The number of properties under contract was up 20% in the first quarter of 2012, compared to the first quarter of 2011. The first quarter of 2009 only had 229 sales, since then we’ve seen average of 336 sales per quarter, an increase of over 100 per quarter since then. The first quarters in 2010, 2011 and 2012 have all seen an increase in sales. An increase in sales is often one of the first signs of recovery. The number of sales in the first quarter of 2011 was 281, while in 2012 it was 232, a 13% increase. The combination of these factors and trends gives us optimism that we’re turning the corner and moving toward a healthier market. Only time will tell.
The Bad: As our market continues to shift, so does the perception and expectations of buyers and sellers. When the perception and or expectations of buyers and sellers is too far apart, it can create a tougher negotiation and transaction. A new level of education is necessary to navigate the “shift.” Also some buyers may look back at 2009, 2010 and 2011 as the years they should have acted. We see the buyer’s ability to sit back and wait diminishing as inventory, and specifically good inventory, is becoming more sparse. Another clear sign we’re in a shifting market.
The Ugly: Distressed sales continue to hit and plague certain parts of the market and we see this trend continuing with no foreseeable end in sight. In the first quarter, the average shortsale sold for $140 per square foot, while the average foreclosure sold for $118. The average equity seller sold for $206 per square foot. This means the difference between equity and shortsale are $66 per square foot and the difference between equity and foreclosure are $88 per square foot. Until we grind through these distressed sales, we’ll continue to have downward pressure on pricing where these properties are prevalent.
April has traditionally been the month when many sellers start to put their properties on the market for the “spring rush.” If this occurs and the market is flooded with inventory, the progress we’ve made could be negated. On the first and 15th of each month, we track the number of new properties that come on the market for that two-week period as well as properties that went under contract during that period. Since September of 2011, the numbers have been almost identical, leading us to believe we won’t have the “spring rush” but the next 60 days will be telling.
The question is, will these trends continue into the second quarter, the rest of 2012, and beyond?