"Since my last post, more fear has entered the market place on a local, national and international level..."
Since my last post, more fear has entered the market place on a local, national and international level. We had the horrific fires in the Jemez, the debt crisis on Capitol Hill and the shooting travesty in Norway. These types of events have the ability to paralyze people looking to make changes and decisions in their lives, and rightfully so. Sensationalized media continues to impact the Santa Fe real estate market as the “world is truly flat."
What does this mean for Santa Fe real estate and people in my profession?
The Good:Through the first six months of the year, Santa Fe county has averaged 113 residential sales a month. Based on the average, I am projecting a slight increase of 2.5% in sales for 2011. This would be the second consecutive year of an uptick in sales. One of the first steps to recovery is an increase in sales, but we have a way to go. I’m also projecting that sales volume will increase 7% to approximately $618,923.00 this year. The increase matches a 7% increase in the average sales price from $431,000.00 in 2010 to $462,500.00 in 2011. Although these are positive signs, don’t get confused as home prices continue to decline -- a subject I’ll discuss further in a future column. Interest rates hit a new low this year. If you’re considering buying or refinancing you should take a look at this article and consider speaking to a lender. The long term savings these low rates create are considerable.
The Bad: One way for us to gauge the market is to look at the number of showings on our properties, followed by how many of our homes go under contract, and finally those that close. In July, showings were off 20%, so what does this mean for contracts and closings? We won’t know until the end of August, when we catch up, but my guess is a similar decrease. Having a decrease like this, during a peak selling month, has the potential to alter to the modest gains we’ve seen this year.
The Ugly: For the first six months of the year, residential sales in Santa Fe County were taking an average of 319 days to sell. Yes, 319 days. Foreclosures and short sales continue to drag down the market. For the first six months of the year, residential foreclosures in Santa Fe County were selling for $127.00 a square foot. Short sales were selling for $144.00 a square foot, while equity sellers were selling for $226.00 a square foot. It continues to be tale of two cities between areas with limited distressed sales (where you don’t have to use them as comparable sales) and those areas where they are prevalent (and you have to use them as comparable sales). Until we move through this inventory, it will continue to put significant downward pressure on pricing and will impact our market and your property value.
Nationally, there are a few interesting things to keep in mind. B of A, Wells, & Chase are bulldozing houses in some markets to decrease inventory. Large intuitional investors and hedge funds are buying up hundreds of foreclosed homes and adapting a “rent and hold” strategy for the next seven to 10 years. The Obama administration is looking for more of these investors to turn thousands of foreclosed properties owned by government-backed entities and turn them into rentals.
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