Dear Friends,
We are off to a new year and a new decade with cautious optimism about Santa Fe’s real estate market. Somewhat like the January thaw the past few weeks, our market is showing signs of stability which leads us to believe 2010 will stronger than 2009.
Yes, 2009 proved challenging for Santa Fe sellers as sales volume plunged and sales prices dropped in the neighborhood of 20% +/- depending on location and property type. Discouraging as these trends have been we are happy to report that there are now signs of the market stabilizing:
• Just in the first two weeks in January there have been 42 residential closings compared to last year’s 26 for the same time period.
• The median price of single family homes sold in the city rose back above $300,000 in the 4th quarter from a low of $287,000 in the 3rd qtr 2009.
• The homes sold in the city 4th qtr 2009 rose to 143 from 131 in the 4th qtr of 2008.
• The number of single family homes sold increased every quarter within the city limits since the 1st qtr 2009.
• Single family residential inventory has continued to decline although condominium sales are still very slow.
• Absorption rates (# of months to sell inventory) has declined from its peak in August 2009 and inventory has declined as well. While still far from a balanced market which is thought to be a 6-7 month supply, the average absorption rate for all residential real estate stood at 18.31 months as of 12/31/09. It is important to note, however, that months to absorb inventory varies by price range with the higher prices ranges taking more time to sell.
The following tables show us that large inventories are still favoring buyers:
Below are snapshots of two popular areas that compare 2008 with 2009. In general, properties further out in the county have dropped in price more than those in the heart of downtown.
Unlike the residential market, land sales still remain dismal relative to supply. Builders are no longer purchasing land for spec homes and potential land buyers are finding that they can buy high quality existing homes for less than they could buy land and build. With such inventory overload, it will most likely take years for this market segment to come into balance.
So, with cautious optimism we see 2010 bringing in a more balanced residential market. Buyers still have a great opportunity to purchase homes at tremendous values in a low interest rate environment. Sellers should be seeing an end to their price deterioration and, if relocating, sellers can reinvest at the same attractive levels. The Fed’s extension of its $8,000 first time home buyer credit will continue to nudge the market along as will the creation for the new $6,500 credit for buyers of second and/or vacation homes.
Do we expect gangbuster activity? No, we don’t, yet, after the challenges of 2009, we expect Santa Fe’s charms and attraction will continue steer our market towards a balanced state.
We wish you the best as this new decade gets underway. As always, please consider us a go to resource for questions or concerns you may have!
