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.
After a drop earlier in the year due to the onset of the Covid-19 pandemic, single-family home sales have surged in the past two months. The market is hot! The number of properties going under contract has jumped to levels not seen before. Covid-19 has added a new wave of buyers to a market that has been steadily gaining momentum for the past several years, as people seek a home in a less populous area for future emergencies. Unfortunately, the inventory of homes listed for sale is not keeping up with burgeoning demand, so sales are constrained. Condo demand is also picking up, and the same lack of inventory applies to this segment of the market. Land sales are still lagging last year’s pace; however, if the supply of homes available for purchase continues to dwindle, then more buyers may decide to buy land and build.
For the first seven months of the year:
Total market (all categories of property) – The number of closed transactions is 271 this year vs. 269 last year, an increase of 2 sales (+0.7%). Total dollar sales are $78.8 million vs. $71.4 million, a gain of $7.4 million (10.3%). However, this year’s total includes one unusually high dollar sale: a ranch in El Rito that was reported at $7 million; excluding that one sale, 2020 sales are only $360,100 more than 2019 (+0.5%).
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 just shy of peak levels, but land prices were still well below.
Following is a detailed discussion of each market segment:
July 2020 unit sales were up by 13 homes compared to July last year: 34 vs. 21 closed transactions (+61.9%). Dollar sales for the month were up 53.8%. July and June strong sales followed a big dip in May which was caused by the Covid-19 stay-at-home orders that went into effect in March-April. As soon as people were allowed to start traveling again, buying activity has spiked.
Year-to-date unit sales are now back ahead of last year’s pace: 162 homes sold this year vs. 144 last year (+12.5%). Dollar sales are up by 9.3% ($55.4 million vs. $50.7 million). Currently, there are 51 sales pending, up from 40 a month ago, and much more than the typical 20-30. August 2020 sales will exceed August 2019.
Median and Average Prices – Through seven months of 2020, the median price (midpoint) is $320,000 vs. $330,500 for the same period last year, a decrease of $10,500 (-3.2%). The average (arithmetic mean) price year-to-date is $342,100, down $9,900 (-2.8%) from 2019. Although these two averages are down slightly at this point in time, it is clear that prices of many homes are rising sharply due to the big imbalance between supply and demand.
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 $325,000 283,500 300,000 311,000 322,500 320,000
Average $379,900 306,100 326,800 370,500 373,100 342,100
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. Prices are now about equal to peak levels of 2007. The rate of price rise has increased steadily over the past four years, as demand has continued to grow, while supply has steadily declined. Recently, the rate of price rise seems to be accelerating as buyer competition for scarce inventory heats up.
Price Discounting – For the year through July, actual sales price has averaged 5.6% below the last asking price when the home went under contract; however, the discount from original asking price is 8.4%. 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.
2013 2014 2015 2016 2017 2018 2019 2020 YTD
18.4% 16.9% 13.9% 13.3% 9.4% 10.3% 7.8% 8.4%
Days On Market – The average days on the market so far in 2020 is 159 vs. 148 for the same time frame in 2019, an increase of 11 days (7.4%). Please note that this is just an average of the entire market. 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. We are seeing many homes go under contract soon after being listed for sale. 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
247 244 235 235 226 192 147 151 159
|| Aug 2019
|| Sep 2008
|Up to $200,000||41||49||190||66||44%||58||22%||32||20%|
|$200,001 – $300,000||44||57||109||37||25%||63||23%||38||23%|
|$300,001 – $400,000||46||67||69||20||13%||74||27%||47||29%|
|$400,001 – $500,000||33||45||39||12||8%||27||10%||19||12 %|
|$500,001 – $650,000||36||27||35||9||6%||24||9%||19||12%|
|$650,001 – $800,000||21||32||27||4||3%||16||6%||4||2%|
|$800,001 – $1million
Inventory – At the time of this report, there were 267 homes listed for sale, down 6 units (2%) from 273 last month, and down 47 homes from 314 a year ago (-15%). 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
334 333 324 316 285 264 274 267
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. If owners financed purchases at low interest rates, with good rental income they can achieve attractive return on investment. 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. In fact, with the current surge in home buying, the inventory shortage will probably worsen.
How Home Purchases Were Financed:
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 stabilized, and then decreased. Current rates are down slightly 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 August 25:
Conventional 30-year fixed: 3.03 % (Nominal) 3.31 % (APR)
Conventional 15-year fixed: 2.60 % 2.92 %
Jumbo 30-year fixed: 3.05 % 3.16 %
5/1 Adjustable 3.10 % 4.03 %
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales – Through July of this year, there have been only four 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 significant increase 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:
|2020 YTD||4||( 2%)|
Currently, there are 6 bank-owned houses listed for sale, down from 10 last month; two of these are under contract.
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.
July was the first month since January in which the month’s sales exceeded sales in the same month last year. There were 8 closed sales in July 2020 vs. 5 in July 2019 (+60%). Dollar sales were up 84.3%. Year-to-date unit sales are 30 vs. 37 last year (-18.9%). Like single-family homes, condos are experiencing something of a recent surge, due to the Covid-19 wave of buyer interest. At the time of this report, there are 15 condo sales pending, up dramatically from the usual 2-5.
Year-to-date dollar sales are down 21.5% at $8,672,600 this year vs. $11,051,000 last year. Sales prices have ranged from $117,000 – $620,000.
Median price YTD is $237,500 this year vs. $255,000 last year, a decrease of $17,500 (-6.9%). Median price for the full year 2019 was $230,000. Peak median price (in 2007) was $263,000.
Average (mean) price YTD is $289,100 this year vs. $298,700 last year, a decline of $9,600 (-3.2%). 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, the low number of sales has an outsize effect on averages. 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 4.6%. 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%.
Here are the discounts from original asking price for the past six years, and this year to date:
2014 2015 2016 2017 2018 2019 2020 YTD
12.7% 8.6% 11.8% 6.7% 6.5% 5.5% 4.6%
Inventory – The number of condos listed for sale at the time of this report was 58, up 11 units from 47 last month, but still 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 58 units currently available for purchase, 38 (65%) are at Taos Ski Valley, while only 20 are in or near the Town of Taos; those 20 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.
Here is a chart indicating inventory and sales by price segment:
||Sept.||# of||# of||# of|
|Up to $150,000||8||5||40||16||55%||11||14%||2||7%|
|$150,001 – $250,000||11||21||50||8||28%||37||47%||14||47%|
|$250,001 – $350,000||14||16||51||3||10 %||10||12%||5||17%|
|$350,001 – $500,000||23||20||56||1||3%||19||24%||7||23%|
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
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.
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 is one pending sale, a 10-unit property in Ranchos de Taos adjacent to the Ranchos Plaza.
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. Additionally, the Town of Taos has imposed a moratorium on permits for short-term rentals, which should cause some property owners to revert to long-term rentals; however, this probably will not alleviate the shortage of available rentals.
July 2020 units sales were 16, the same as in July last year. Dollar sales were down $402,700 (-23.7%) at $1,294,800 vs. $1,697,500.
For the year to date, 73 pieces of land have sold, down 8 tracts (-9.9%) from the same time period last year. Dollar sales are up 96%, from $6,662,600 to $13,056,200. 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 $606,400 (-9.1%). Excluding the ranch sale, prices have ranged from $11,000 – $390,000 (a 0.9-acre lot at Taos Ski Valley).
Median price year-to-date is up $6,500 (10.8%) from $60,000 last year to $66,500 this year. The $7 million sale doesn’t affect median price (the midpoint of prices). Average (mean) price is up $96,600 (117%) with the ranch sale included; with the ranch sale excluded, average price is $84,100 for this year to date compared to $82,300 last year, an increase of $1,800 (2.2%).
Price 2007 2016 2017 2018 2019 2020 YTD*
Median 89,000 52,300 64,500 62,700 65,000 66,500
Average 128,000 73,100 89,800 92,300 85,400 84,100
*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. 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. Currently, there are 33 pending sales, up sharply from what has been the norm.
Price Discounting – Year-to-date, the discount from last asking price when the property went under contract is 8.2%; the discount from original asking price is 11.0%. The discounts have diminished over the past six years. For the full year 2019, the discount from last asking price was 9.5%; the discount from original asking price was 15.9%. Discounts for land are greater than for residential sales because land is still pretty much a buyer’s market, whereas is residential is a seller’s market.
Here are the discounts from original asking price for the past six years:
2014 2015 2016 2017 2018 2019 2020 YTD
17.0% 18.4% 22.4% 20.0% 18.3% 15.9% 11.0%
Average Days on Market – Through the first seven months this year, days on market has averaged 406, an increase of 29 days (+7.7%) over the same period in 2019. The averages for the past seven years were:
2013 2014 2015 2016 2017 2018 2019 2020 YTD
465 390 605 464 469 388 338 406
Here is a chart indicating inventory and sales by price segment:
| Same Month
|Up to $50,000||137||159||46||39%||63||41%||28||38%|
|$50,000 – $100,000||152||172||34||29%||45||30%||26||36%|
|$250,001 – $300,000||18||12||2||2%||3||2%||0||0%|
At current sales pace, the inventory of 503 tracts for sale equals about a 3-year supply.
How Land Purchases Were Financed:
|2011||2016||2019|| 2020 YTD
For the year to July 31, there have been four commercial sales, down from six in the same period in 2019. Two were commercial condos, one was a 4,000-square foot space in a light manufacturing zone, and one was a 3-unit retail complex on Bent Street in the central business district. Total dollar sales are $1,162,000 vs. $2,769,500 last year (-58.0%).
For the full year 2019, there were 12 sales, a decrease of 2 transactions (-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 33 commercial properties listed for sale. 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 former cabinet-making shop with two residential rentals on Hwy 64 going out toward the airport; and the RV Park and Motel property that has been on-and-off pending status for years.
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 having a severe negative effect on local businesses, with stores, galleries and restaurants forced to close for many weeks; tourism will be down this year, which will further hurt business; some businesses may not survive. However, when the pandemic ends, and if the surge in buying of residential property continues, the commercial market may revive.