Note:   The data in The Lora Company report do not include Angel Fire, Eagle Nest, Red River and other areas that are in the Taos County Association of Realtors MLS, but that we don’t consider part of the main Taos market.

June single-family home sales bounced back strongly after May’s weak sales due to the Covid-19 health emergency.  People are traveling again, and market activity is brisk!

For the first six months of the year:

Total market (all categories of property) – The number of closed transactions is 210 this year vs. 227 last year, a decline of 17 sales (-7.5%).  Total dollar sales are $62.5 million vs. $60.6 million, an increase of $1.8 million (3%).  The increase in dollar sales despite the decrease in unit sales is due to one unusually high dollar sale: a ranch in El Rito that added $7 million to the total; excluding that one sale, 2020 sales are $55.5 million, a decrease of $5.1 million (-8.4%).

Single-family homes – Unit sales now ahead of last year’s pace by 4 houses (+3%).  Dollar sales up 0.8%.  SFH are 60% of total market transactions, 69% of dollar sales.

Condos – Unit sales down 10 condos (-31).  Dollar sales down 33%.  Condos are 10% of total transactions, and 11% of dollar sales.

Land – Unit sales down 8 tracts (-12%).  Dollar sales up 137% (due to the one large sale noted above).  Land is 27% of total transactions, and 19% of dollar sales.

Commercial – Unit sales down 4 (67%).  Dollar sales down 81%.  Commercial sales are 1% of total transactions, and 1% of dollar sales.

At this juncture, it appears that the Covid-19 pandemic will have had a relatively minor impact on Taos real estate sales this year.  People had to stay home during March and April, which resulted in May sales falling way behind May 2019.  Since the stay-at-home orders and travel restrictions started to be gradually relaxed, activity has picked up.  It now looks as if 2020 will continue the same trend that occurred in 2018-2019, with strong interest in single-family homes and condos but with sales constrained by lack of inventory.   As this report is published, it appears that July home sales will exceed sales in July 2019.  And over time, the pandemic will probably boost Taos real estate sales, as people seek a home in a less populous area for future emergencies.  There have been numerous articles in the mainstream press about this.  As more companies find that employees can work from home, there will be an somewhat of an exodus from cities.  Condo, land and commercial sales are tracking below last year, and this trend is expected to continue.

Click here for detailed year-to-date data.

Click here for a chart with data for the past 15 years.

The second chart shows that, since bottoming out in 2011, the total market (all categories of property) through 2019 had recovered 130% in unit sales, but was still about 38% below peak year 2005 unit sales.  Dollar sales had recouped 170% from the bottom, but were still about 30% below peak year 2006 volume. Average prices for homes and condos were about back to peak levels, but land prices were still well below.

Following is a detailed discussion of each market segment:

SINGLE-FAMILY HOMES

June 2020 unit sales were up by 11 homes compared to June last year: 26 vs. 15 closed transactions (+73.3%).  That is a big turnaround from May, when sales were 19 fewer homes.  Dollar sales for the month were up 36.2%.

Year-to-date unit sales are now back ahead of last year’s pace, after falling behind in May: there have been 127 homes sold this year vs. 123 last year (+3.3%%).  Dollar sales are up by 0.8% ($43.1 million vs. $42.7 million).  Currently, there are 40 sales pending, up from the typical 20-30.

Median and Average Prices – For the first  half of 2020, the median price is $315,000 vs. $330,000 for the same period last year, a decrease of $15,000 (-4.5%).   The average price year-to-date is down $8,200 (-2.4%) at $339,100 vs. $347,300 last year.  Here is a chart showing the trend in median and average prices over the past several years, and what they were in peak year 2007:

Price          2007        2016       2017         2018          2019        2020 YTD

Median   $325,000  283,500   300,000    311,000     322,500      315,000

Average $379,900   306,100   326,800    370,500    373,100       339,100

Price Level – Prices of single-family homes fell 30%–35% from the market peak in 2007 to a bottom in 2011.  Prices were basically flat for a few years, then they started to increase slowly, and mainly in the most preferred areas.  By 2015 prices were starting to rise in most cases as buyer interest began to gain momentum.  The rate of price rise has increased steadily over the past four years, as demand has continued to grow, while supply has steadily declined. Prices are now about equal to peak levels of 2007.  The trend should continue, as demand is expected to increase while supply is not.

Price Discounting – For the year through June, actual sales price has averaged  6.0% below the last asking price when the home went under contract; however, the discount from original asking price is 8.9%.  Some homes were overpriced when first listed, and they had one or more price reductions before selling.  However, the trend of more demand than supply has caused the discount from original price to decrease from 2013 to 2019.  It’s too early to estimate how 2020 will play out, but with the inventory shortage, we expect the discount to diminish as buyers compete for scarce homes.

2013        2014     2015    2016    2017     2018     2019    2020 YTD

18.4%      16.9%   13.9%  13.3%  9.4%   10.3%     7.8%      8.9%

Days On Market – The average days on the market so far in 2020 is 164 vs. 165 for the same time frame in 2019, a decrease of 1 day (-0.6%).  Good homes in preferred locations, especially those in the low- and mid-price range, are selling much faster than in years past, again due to the inventory shortage and increased buyer competition.  This chart illustrates DOM in peak year 2006, in the past seven years, and this year to date:

2006  2013  2014  2015   2016   2017  2018 2019  2020

247     244    235    235     226     192   147    151    164

Here is a chart indicating inventory and sales by price segment:

INVENTORY					UNIT	SALES
	Jul 2020	Jul 2019	Sep 2008	…….	2011		……	2019		…..	2020	YTD	……
					#	%		#	%		#	%			.
Up to $200,000	46	49	190		66	44%		58	22%		25	20%
$200,001 – $300,000	41	52	109		37	25%		63	23%		32	25%
$300,001 – $400,000	53	65	69		20	13%		74	27%		37	29%
$400,001 – $500,000	28	43	39		12	8%		27	10%		15	12 %
$500,001 – $650,000	35	29	35		9	6%		24	9%		12	9%
$650,001 – $800,000	24	29	27		4	3%		16	6%		3	2%
$800,001 – $1million	16	13	36		1	1%		4	1%		2	2%
Over $1,000,000	30	23	13		1	1%		4	1%		1	1%
TOTAL	273	303	518		150	100%		282	100%		127	100%

Inventory –   At the time of this report, there were 273 homes listed for sale, up 8 units (2%) from 267 last month, but down 30 houses from 303 a year ago (-10%).  The highest inventory last year was 314 in August.  In September of 2008, there were 518 homes listed for sale.  The average inventory decreased steadily from 2013 to 2018; it stabilized in 2019, but it is still way below pre-2008 levels.

Here is  chart showing average inventory for the past seven years and the current number of homes listed for sale:

2013       2014       2015       2016       2017       2018       2019       2020

334          333         324         316         285        264          274         273

Taos inventory consists of a wide variety of size, price, style, location, and condition, so the current inventory is not a lot of properties to work with.  It is often difficult to find more than 3-4 homes to show a buyer that might meet most of his/her criteria.   The acute inventory shortage is definitely affecting total sales, as well as average prices, price per square foot, price discounting and days on market.

One reason for the reduced inventory is that property owners who in earlier times would have sold their Taos homes when they no longer used them are now holding them as rental property. The number of home rentals on sites such as Airbnb.com and vrbo.com has exploded over the past several years. The anecdotal evidence is that property owners are achieving good net income with vacation rentals—at least they were before Covid-19 started crushing the travel industry!  If owners financed purchases at low interest rates, with strong rental income they can achieve positive net cash flow after carrying costs.  Price appreciation adds another reason to hold the asset as part of an investment portfolio.

Another factor affecting supply is that, since the real estate crash of 2008, there has been very little “spec” building by contractors.  However, even if there were the same number of spec houses being built today that occurred in the 1990’s and early 2000’s, it would not amount to more than maybe an additional 20 homes in inventory at any given time.

Inventory in 2020 is tracking about the same as in the past two years.  It seems unlikely that there will be any major increase in inventory in the near future.

How Home Purchases Were Financed:

	2011		2016			2019		2020 YTD
Cash	65	43%	91	36%		99	37%	41	32%
Conventional loan	66	44%	129	52%		143	53%	69	54%
FHA loan	8	5%	11	4%		11	4%	7	6%
VA loan	1	1%	10	4%		9	3%	7	6%
Seller financing	8	5%	7	3%		6	2%	0	0%
Other	2	1%	1	1%		3	1%	3	2%
Total	150	100%	249	100%		271	100%	127	100%

Interest Rates – Interest rates on residential loans remain very low by historical standards.  After fluctuating sharply in March-April due to market uncertainties caused by Covid-19, rates have stabilized.  Current rates are down from a month ago; they are expected to remain very low in 2020, and probably into 2021 as well.

Here are current rates as posted by bankrate.com on July 17:

Conventional 30-year fixed:           3.14 %  (Nominal)    3.41 % (APR)

Conventional 15-year fixed:           2.72 %                      3.02 %

Jumbo  30-year fixed:                    3.19 %                      3.27 %

Jumbo 15-year fixed                      2.79 %                      2.85 %

Note: Interest rates are impacted by occupancy, credit score, and down payment.

Foreclosure Sales –  Through June of this year, there have been only three foreclosure sales (2% of total sales).  The number of foreclosures has diminished steadily over the past several years, both in Taos and nationally.  There could be a spike in foreclosures nationally due to high unemployment and business closures caused by Covid-19; however, we do not think there will be a surge in Taos.

This table shows the number of foreclosure sales, and their percentage of total sales of single-family homes, for the previous nine years:

2011	44	(29%)
2012	55	(28%)
2013	37	(16%)
2014	50	(22%)
2015	34	(13%)
2016	34	(14%)
2017	29	(10%)
2018	24	(  9%)
2019	17	(  6%)
2020 YTD	3	(  2%)

Currently, there are 10 bank-owned houses listed for sale, up from 9 last month; three of these are under contract.

 

CONDOMINIUMS

Note:  These data do not include any of the condominiums developed at and adjacent to The Blake Hotel by the Taos Ski Valley resort owner; those condos are not listed in the Taos MLS.

June was another down month, with only 3 closed sales vs. 6 in June 2019 (-50.0%).  Dollar sales were down 46.4%.  Year-to-date unit sales are 22 vs. 32 last year (-31.3%).  Year-to-date dollar sales are down 33.1% at $6,666,100 this year vs. $9,962,500 last year.  Sales prices have ranged from $131,000 – $620,000.  Lack of inventory is definitely a factor in the number of sales.

Median price YTD is $269,500 this year vs. $305,000 last year, a decrease of $35,500 (-11.6%).  Median price for the full year 2019  was $230,000.  Peak median price (in 2007) was $263,000. 

Average (mean) price YTD is $303,000 this year vs. $311,300 last year, a decline of $8,300 (-2.7%).  Average price for the full year 2018 was $265,800; in 2007, average price was $279,100.

Although the median and average prices are down so far this year, 22 sales are not enough to discern a trend.  As with single-family homes, condo prices in general have been rising, due to the same inventory situation of more demand than supply. 

Price Discounting – So far this year, final sales price has averaged 3.6% less than last asking price when the condo went under contract; the discount from original price is 4.4%.  For the full year 2019, final sales price averaged 5.5% less than last asking price; the average discount from original asking price was 6.5%.

Inventory – The number of condos listed for sale at the time of this report was 47, down from 51 last month, and also down from 65 in the same month a year ago.   The highest inventory in 2019 was 65 available for sale (in July and August).  2018’s peak inventory was 74 units.  Of the 47 units currently available for purchase, 28 (60%) are at Taos Ski Valley, while 19 are in or near the Town of Taos; those 19 include a wide variety of size, age, style and price.  In 2006, there were often over 200 condos on the market at any given time, with the majority in or near central Taos; there were 149 condo sales that year.

Conventional loans for condos are more difficult to obtain than they were before the financial crisis of 2008: the criteria for a Fannie Mae (FNMA) conforming loan are more stringently applied these days, and some condo projects do not qualify; therefore, even if the buyer is qualified, lenders who need the Fannie guarantee to be able to sell their loans in the secondary market won’t make a loan on these “non-warrantable” condos.

Foreclosure Sales –  There have been no foreclosure sales so far this year.  In 2019 there was only one foreclosure sale out of 79 condos sold.  Currently, there are no foreclosed condos listed for sale.

Here is a chart indicating inventory and sales by price segment:

			—–	—–	UNIT	SALES	——-	—–
	—–INVENTORY—–				2011			2019		2020
					full	year		full	year	YTD
	July	July	Sept.		# of			# of		# of
	2020	2019	2008		Sales	%		Sales	%	Sales	%
Up to $150,000	7	3	40		16	55%		11	14%	1	5%
$150,001 – $250,000	9	22	50		8	28%		37	47%	10	45%
$250,001 – $350,000	9	16	51		3	10 %		10	12%	3	14%
$350,001 – $500,000	20	21	56		1	3%		19	24%	6	27%
Over $500,000	2	3	29		1	3%		2	3%	2	9%
TOTAL	47	65	226		29	100%		79	100%	22	100%

Like single-family homes, many condo owners are holding their property as investments yielding attractive returns from rentals, thus reducing supply of condos available for purchase.

How Condo Purchases Were Financed:

	2011		2016			2019		2020 YTD
Cash	14	48%	34	51%		37	47%	14	64%
Conventional loan	15	52%	32	48%		38	48%	7	32%
Seller financing	0	0%	0	0%		0	0%	1	4%
Other	0	0%	1	1%		4	5%	0	0%
Total	29	100%	67	100%		79	100%	22	100%

 

MULTI-FAMILY

Multi-family has always been a very small portion of the Taos market. There have been just two multi-family sales during the first six months in 2020, up from one during the same time period last year.  These two sales totaled $442,000.  For the full year 2019 there were three sales, with total dollar volume of $810,000.  In 2018, there were four sales, with a total price of $1,847,000.  2017 had four sales, totaling $1,790,000.  Since 2004, the highest number of sales was 8 in 2005. 

There are currently 9 multi-family properties listed for sale.  There are two pending sales, a duplex and a 10-unit property, both in Ranchos de Taos.

The supply of long-term rentals in Taos is very low because many rental property owners have switched to short-term (vacation) rentals.  Long-term renters are having difficulty finding places to live.  Rents are rising, which should make the investment returns on multi-family properties attractive.  However, conventional financing of properties larger than a duplex is challenging due to the lack of comparable sales.

 

LAND

June 2020 units sales were 13, up from 7 in May but down from 17 in June last year (-23.5%).  Dollar sales were $1,202,900 vs. $1,079,700 (+11.4%).

For the year to date, 57 pieces of land have sold, down 8 tracts (-12.3%) from the same time period of last year.  Dollar sales are up 137%, from $4,965,100 to $11,761,400.  The large increase is due to one sale reported at $7 million (a 5,433-acre ranch in the El Rito area north of Taos).  Excluding that one sale, YTD dollar volume is down $203,700 (-4.1%).  Excluding the ranch sale, prices have ranged from $12,000 – $390,000 (a 0.9-acre lot at Taos Ski Valley).

Median price year-to-date is up $15,000 (29.1%) from $51,500 last year to $66,500 this year.  The $7 million sale doesn’t affect median price.  Average (mean) price is up $129,900 (170%) with the ranch sale included; however, with the ranch sale excluded, average price is $85,000  for this year to date compared to $76,400 last year, an increase of $8,600 (+11.3%).

Price          2007    2016       2017      2018    2019      2020 YTD*

Median     89,000  52,300   64,500   62,700   65,000     70,000

Average  128,000  73,100  89,800   92,300   85,400    82,800

*excluding the $7 million sale

Land sales are slowly recovering from the recession, but they haven’t come back nearly as much as residential sales have.  From a low point of 41 transactions in 2011, 2019’s total of 152 sales was a gain of 270%, but that was still 56% below peak (2005) sales of 339 tracts.  Sales this year will probably not equal last year’s total.

One reason for sluggish land sales is that the cost to buy land and build a home is still significantly greater than the price of an existing home, even though prices of existing homes are rising.  However, the inadequate inventory of homes available for purchase may start to drive more land sales: buyers who cannot find a suitable existing home may opt to buy land and build.

Here is a chart indicating inventory and sales by price segment:

		UNITS				SOLD
——INVENTORY—–				2017			2019		2020 YTD
	Current  Month	Same Month Last Year		#	%		#	%	#		%
Up to $50,000	130	157		46	39%		63	41%	23		40%
$50,000 – $100,000	156	173		34	29%		45	30%	18		32%
$100,001 -$150,000	61	78		16	14%		21	14%	6		11%
$150,001-$200,000	46	45		15	13%		9	6%	6		11%
$200,001– $250,000	24	33		3	2%		9	6%	2		3%
$250,001 – $300,000	16	14		2	2%		3	2%	0		0%
Over $300,000	53	46		2	2%		2	1%	2		3%
TOTAL	486	546		118	100%		152	100%	57		100%

At current sales pace, the inventory of 486 tracts for sale equals about a 3-year supply.

How Land Purchases Were Financed:

	2011		2016			2019		2020 YTD
Cash	28	69%	63	70%		111	73%	46	81%
Conventional loan	5	12%	6	7%		19	13%	7	12%
Seller financing	7	17%	20	22%		20	13%	3	5%
Other	1	2%	1	1%		2	1%	1	2%
Total	41	100%	90	100%		152	100%	44	100%

 

COMMERCIAL

For the year to June 30, there have been just two commercial sales, down from six in the same period in 2019.   Both sales this year were commercial condos on the south side of Taos.  Total dollar sales are $535,000 vs. $2,769,500 last year (-80.7%).

For the full year 2019, there were 12 sales, a decrease of 2 (-14.3%) compared to 2018.  Total dollar sales for the year were $6,324,500 vs. $4,656,000 in 2018, an increase of $1,668,500 (+35.8%).

Currently, there are 34 commercial properties listed for sale (same as last month). Of these, four are under contract: the Taos Tennis Ranch facility adjacent to the Quail Ridge Inn, with a listed price of $1.4 million; a 4,500-square foot building near Holy Cross Hospital listed at $450,000; a three-building retail property on Bent Street downtown, listed at $495,000; and a 1,600-square foot building just south of Town center that was formerly an upholstery shop.

The commercial market has been up and down over the past several years, with no clear trend. Commercial sales are still well below peak year 2005, when 19 properties sold, with a total dollar volume of $8,735,600. At the start of this year, our expectation was that the commercial market would continue to increase, but slowly. However, the Covid-19 crisis is no doubt having a severe negative effect on local businesses, forcing stores and restaurants to close for many weeks; tourism will be down this year, which will further hurt business; some may not survive. At this point in time, it appears that 2020 sales will be well below 2019’s.