Santa Fe Homeowners Cheer U.S. Return to Housing Value Highs

For us small town Santa Fe homeowners, the news was a long time coming. The bounce back from last decade’s dizzying plummet in the nation’s residential housing values has been underway for quite a while now—but those values hadn’t quite returned to their former heights.

Until last moth!

The Wall Street Journal was early to break the long-awaited headline, “Existing-Home Prices Hit Record: $236,400.” Using just-released June sales numbers, the Journal reported that the nation’s average housing prices now topped the previous high water mark set in 2006. It meant that a lot of paper losses have been obliterated—and the return of full nights’ sleep for many U.S. homeowners who have long been underwater.

Ok, so Santa Fe  still hasn't hit its former housing numbers. Santa Fe’s housing market typically runs a year or so behind national averages Santa Fe’s June 2015 sales had an average sale price of $462,878 over the 158 single family home sales that month. The figures for June of 2006: An average sales price of 567,651 with 174 single family houses sold that month. How does this benefit Santa Fe if we are still behind? Well, Historically speaking and looking at the numbers, our average sales price should reach our historic 2006 numbers in a year or two. That means there is a whole lot of equity still to be gained for today’s Santa Fe homeowners and buyers. This is an opportunity.  

Another aspect of June’s housing report card could also ease nerves on a wider scale. USA Today led with it: “Existing homes were sold at the fastest pace in eight years…” It quoted the NAR’s Lawrence Yun as pronouncing this year’s spring buying season “the strongest since the economic turndown.”

That’s where the current housing market profile seems to differ in kind from the previous peak of $230,400, registered in July 2006. That mark was reached after sales volume had started to fall. Prices then followed, starting with a slow decline that continued until the spring of 2008, when the slump became a nosedive—unleashing the subprime mortgage crisis. The “bubble” of unsupported high prices had burst.

There was more glad tidings in last week’s news, as well. U.S. home builder confidence levels hit its highest mark in “nearly a decade” (WSJ). A rise in demand for apartment housing caused a jump of 9.8% in housing starts.

But the biggest news was the existing-home price rise, reported as having “rocketed” 35% since 2011, “benefiting current homeowners by giving them an opportunity to trade up to better homes or sell and cash out.” That’s the kind of spur that can stimulate the entire housing market.

With one economist (Andrew Hunter of Capital Economics) quoted as saying “the housing recovery has shifted into a higher gear,” it wasn’t surprising that other analysts were in agreement. “Don’t Laugh” read one headline from international observer Quartz.com; “the U.S. housing market is the best story in the global economy right now.” Reuters agreed about the implications. Their headline: “Strong U.S. housing data boosts dollar.”

Santa Fe residents don’t have to be global investors to take advantage of this summer’s values. A simple call to my office is all it takes to get things started!

Leland Titus
Qualifying Broker
Santa Fe Realty Unltd
Office 505-467-8829
Cell     505-603-2435
NmRealtorLeland@gmail.com

Santa Fe Renters Face Trend toward  Continuing Rent Hikes

The Rent Also Rises (with sincere apologies to E. Hemingway)

Santa Fe Renters Contemplate National Trend to Rising Rates

“WHY YOUR RENT CHECK JUST KEEPS GOING UP” was the headline in CNN Money’s real estate special report in June, which could have explained to Santa Fe renters why it is that U.S. rents keep rising faster than home values. After all, that doesn’t seem to make sense!

The list of reasons was long, and taken all together, fairly convincing:

·         Millennials are renting longer

·         Housing inventory is tight and getting tighter

·         The housing crash scared those who would otherwise have become homeowners

·         Baby Boomers are downsizing

·         Rental construction slowed when confidence sank after the housing crisis

It all comes down to demand and supply—less of the latter, more of the former. Although the author may have exaggerated a detail or two (“…there just aren’t enough ‘For Rent’ signs to keep up with the demand”), more than one Santa Fe renter will probably agree with the gist of the piece: rents have been on the rise long enough that it makes you want to think about the alternative: buying.

Some of the more extreme cases are urban: in San Francisco and Denver, for instance, renters have seen yearly increases of 15% and 11.6%, respectively, according to Zillow. Santa Fe renters can find themselves in something of a bind, though—since those higher rent bills make saving for a down payment more difficult. It’s just one reason. Per CNN, “There are a bunch of things keeping renters on the sidelines, meaning “the folks that would be normally making the switch to become homeowners are still taking up the rental units.”

The result: more units remain occupied, vacancies go down; rentable units remain scarce…so prices renters pay continue to go up.

Will this Catch-22 situation persist forever? Most likely not: the broad economic news is that this year’s steady job growth coupled with the pronounced turnaround in builder confidence is likely to loosen the supply stranglehold. Last Tuesday, there was also the kind of news that can prompt builders to really get going: government data showed purchases of new U.S. homes surged (particularly in the Northeast and West), with sales of new homes soaring 24% so far in 2015. That’s the best showing since 2007.

Of course, before supply outstrips demand, the situation puts landlords in an advantageous position. Santa Fe investors who bought rentable properties during the downturn can now enjoy steady returns from their properties, or decide to sell in a robust market. If you are leaning in that direction, it’s the perfect time to give me a call!

Leland Titus

Qualifying Broker

Santa Fe Realty Ultd

505-467-8829

505-603-2435

NMRealtorLeland@gmail.com