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 which we don’t consider part of the main Taos market.
After a drop in the spring due to the lockdowns at the onset of the Covid-19 health emergency, single-family home sales have surged during the past four months. The market is hot! The pandemic 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, with more open space. Unfortunately, the inventory of homes listed for sale is not keeping up with the burgeoning demand, so sales are fewer than they would be if there were more homes available to purchase. Prices are rising at an accelerated rate as demand way exceeds supply.
Condo demand has also increased, and year-to-date unit sales are almost equal to last year’s pace. The lack of inventory is even more acute than for homes. Prices are rising sharply in this market segment, too.
Land sales are still lagging last year’s number; however, if the supply of homes available for purchase continues to dwindle, then more buyers will probably decide to buy land and build. Recently there has been an increase in the number of pending land sales, so this may already be happening.
For the first nine months of the year:
Total market (all categories of property) – The number of closed transactions is up by 27 (7.4%) at 394 sales this year vs. 367 last year. Total dollar sales are up 23% at $116.8 million vs. $94.8 million, a gain of $22 million. However, this year’s total includes one unusually high dollar sale: a ranch that was reported at $7 million; excluding that one sale, 2020 sales are up $15 million (+16%).
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 almost back to peak levels, but land prices were still well below that.
If current trends continue–with home sales well above last year, condos marginally below, multi-family up by 1-2 sales, land almost equal to, and commercial well below–the total market should end the year up 7% in number of closed transactions, and up 15% in dollar sales.
Following is a detailed discussion of each market segment:
September 2020 unit sales were up again over the same month last year: 31 vs. 25 closed transactions (+24.0%). Dollar sales for the month were up 59%. June, July, August and September 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 spiked. Like so many places in the country, Taos is experiencing an influx of buyers looking for a place to escape current and future health and other emergencies. Many people can now work remotely, and so a permanent or second home in Taos is possible and attractive.
Good homes in the most popular locations are going under contract very quickly. Even less-desirable homes (due to location, style, condition, etc.) are selling.
Year-to-date unit sales are now 22% above last year’s pace: 232 homes sold this year vs. 190 last year. Dollar sales are up 25.6% ($83.7 million vs. $66.7 million). Currently, there are 40 sales pending, down from 47 a month ago, but still above average during “normal” times. The increase in pending contracts is partly due to the surge in orders with title companies and appraisers which has caused severe delays in closing sales. It is difficult to quantify what part of the increase in pending sales is due to the backlog in processing orders, and how much is increase in actual sales.
Median and Average Prices – Through nine months of 2020, the median price (midpoint) is $320,00 vs. $330,500 for the same period last year, a decrease of $10,500 (-3.2%). The average (mean) price year-to-date is $360,800, up $9,900 (2.8%) from 2019.
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 $379,900 306,100 326,800 370,500 373,100 360,800
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 gradually in most cases as buyer interest began to gain momentum. Prices have risen steadily over the past four years, as demand has continued to grow, while supply has declined. Prices are now about equal to peak levels of 2007, as measured by median and average. Recently, the rate of price rise is accelerating as buyer competition for scarce inventory heats up. Although the median price is down at this point, it is quite clear that prices of many homes are rising sharply due to the big imbalance between supply and demand.
Price Discounting – For the year through September, actual sales price has averaged 5.2% below the last asking price when the home went under contract; however, the discount from original asking price is 7.8%. The trend of demand exceeding supply has caused the discount from original price to decrease from 2013 to 2019. This discount should continue to diminish (if sellers and brokers resist the temptation to list homes at unreasonably high prices in a hot market!). Here is a chart showing the discount from original asking price over the past eight years:
2013 2014 2015 2016 2017 2018 2019 2020 YTD
18.4% 16.9% 13.9% 13.3% 9.4% 10.3% 7.8% 7.8%
Days On Market – The average days on the market so far in 2020 is 154 vs. 151 for the same time frame in 2019, an increase of 3 days (2.0%). Since 2016, there has been a huge decrease (about 33%) in the average time from when a house is listed to when it goes under contract 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
247 244 235 235 226 192 147 151 154
Here is another chart, with data on current inventory and unit sales by price segment for the year to date:
|| Oct 2019
|| Sep 2008
|Up to $200,000||37||53||190||66||44%||58||21%||45||19%|
|$200,001 – $300,000||32||60||109||37||25%||64||24%||55||24%|
|$300,001 – $400,000||53||60||69||20||13%||74||27%||59||25%|
|$400,001 – $500,000||30||38||39||12||8%||27||10%||31||13 %|
|$500,001 – $650,000||34||29||35||9||6%||24||9%||25||11%|
|$650,001 – $800,000||22||28||27||4||3%||16||6%||7||3%|
|$800,001 – $1million
Inventory – At the time this report was prepared, there were 262 homes listed for sale, down 3 units from 265 last month, and down 47 homes from 309 a year ago (-15%). The highest inventory this year was 273 (in July); last year’s high was 314 (in August). In September of 2008, there were 518 homes listed for sale. The average inventory decreased every year from 2013 to 2018; it stabilized in 2019-2020, 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
334 333 324 316 285 264 274 262
Probably the main 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 much are now holding them as rental property. The number of 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 strong net income from vacation rentals. Positive cash flow, possible tax benefits, and price appreciation add up to a compelling 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.
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. With sales increasing–even among homes with less popular styles and locations–and with no significant increase in the building of new homes or the listing of existing homes, the inventory will probably continue to shrink relative to demand. The acute inventory shortage is definitely affecting total sales, as well as average prices, price discounting and days on market.
How Home Purchases Were Financed:
Interest Rates – Interest rates on residential loans remain amazingly low by historical standards. After fluctuating sharply in March-April due to market uncertainties caused by Covid-19, rates stabilized, and have then decreased some. Current rates are up 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 September 18:
Conventional 30-year fixed: 3.03 % (Nominal) 3.37 % (APR)
Conventional 15-year fixed: 2.56 % 2.89 %
Jumbo 30-year fixed: 3.09 % 4.06 %
5/1 Adjustable 3.06 % 4.06 %
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales – Through September of this year, there have been seven foreclosure sales (3.0% of total sales). The number of foreclosures has diminished steadily over the past several years, both in Taos and nationally. Nationally, there could be a spike in foreclosures 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||7||( 3%)|
Currently, there are just 4 bank-owned houses listed for sale, down from 6 last month; two of these are under contract.
Note: These data do not include any of the condominiums developed by Taos Ski Valley Resort; those condos are not listed in the Taos MLS.
September unit sales were down by 2 compared to September last year (7 vs 9), after being up in July and August. There have been only three months so far this year with gains over the same month last year. Year-to-date unit sales are three fewer than last year: 50 vs. 53 (-5.7%). Condo sales would be trending higher than last year if there were more condos available for purchase.
Dollar sales in September were up 7.7%; year-to-date sales are up 4.5%.
Like single-family homes, condos are experiencing heightened interest, due to the Covid-19 buying wave. At the time of this report, there are 11 condo sales pending, up dramatically from the 3-5 typical up until recently. And as with homes, some of this increase is due to the increased time it is taking to get sales contracts closed (title work, appraisals).
Median price YTD is $303,300 this year vs. $240,000 last year, an increase of $63,300 (26.4%). Median price for the full year 2019 was $230,000. Peak median price (in 2007) was $263,000.
Average (mean) price YTD is $308,100 this year vs. $278,100 last year, a gain of $30,000 (10.8%). Average price for the full year 2018 was $265,800; in 2007, average price was $279,100.
As with single-family homes, condo prices in general have been rising, due to the same inventory situation of more demand than supply. However, some of the the large gains in median and average prices may be partly attributable to a changing sales mix, with proportionally more higher-priced units (e.g., larger units, and units at Taos Ski Valley). Further analysis is needed.
Price Discounting – So far this year, final sales price has averaged 2.2% less than last asking price when the condo went under contract; the discount from original price is 3.3%. 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% 3.3%
Inventory – The number of condos listed for sale at the time of this report was 54, the same as last month, and up 4 from 50 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 54 units currently available for purchase, 28 (52%) are at Taos Ski Valley, while only 26 are in or near the Town of Taos; those 26 include a wide variety of size, age, style and price; as with homes, it is difficult to find more than a few listings that work for any given buyer. 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||3||40||16||55%||11||14%||5||10%|
|$150,001 – $250,000||10||16||50||8||28%||37||47%||16||32%|
|$250,001 – $350,000||16||11||51||3||10 %||10||12%||10||20%|
|$350,001 – $500,000||17||17||56||1||3%||19||24%||16||32%|
Like single-family homeowners, 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
The percentage of sales financed by loans has decreased substantially. 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 nine months of 2020, the same as 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 with total dollar volume of $3,053,000.
There are currently 9 multi-family properties listed for sale. But the number of pending sales has jumped from one last month (a 10-unit property adjacent to the Ranchos de Taos Plaza) to five. The additional four include two duplexes, a triplex, and a 4-unit property. It is possible that the Covid-19 buying frenzy is affecting even this market segment!
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.
September 2020 had 15 closed sales, the same as in Septembert 2019. Dollar sales were up $349,800 (23.5%). I keep hearing that land sales are really picking up, but so far it hasn’t shown in the numbers.
For the year to date, 105 pieces of land have sold, down 10 tracts (-8.7%) from the same time period last year. Dollar sales are up 71%, from $9.4 million to $16.1 million. However, the large increase is due to one sale in April which was reported at $7 million (a 5,433-acre ranch in the El Rito area north of Taos)–an unusually high price for the Taos market. Excluding that one sale, YTD dollar volume is down $316,300 (-3.4%). 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 of $70,000 is up $2,800 (4.2%) from $67,200 last year. The $7 million sale doesn’t affect median price (the midpoint of prices), but it does affect average (mean) price. Average price with the ranch sale included is up $71,500 (87.5%) over last year; with the ranch sale excluded, average price is $87,400 this year, an increase of $5,700 (7.0%). Here is a chart indicating price trends since 2016, and in peak year 2007:
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 87,400
*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 year 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. Building costs have risen sharply this year due to the impact on supply chains for materials due to Covid -19 (factory and lumber mill production slowdowns), and extra demand for materials in hurricane-damaged zones. Notwithstanding much-higher building costs–the cost to build a good-quality house is now $275-$300 per square foot), the critically low inventory of homes available for purchase may start to drive more land sales: buyers who cannot find a suitable existing home may decide to buy land and build. Currently, there are 51 pending sales, up significantly from what has been typical in any given month. Once again, some of this is due to the extended time it is taking to close purchases; but interest in vacant land does seem to be growing.
Price Discounting – Year-to-date, the discount from last asking price when the property went under contract is 8.3%; the discount from original asking price is 11.5%. 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 residential is a seller’s market.
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
17.0% 18.4% 22.4% 20.0% 18.3% 15.9% 11.5%
Average Days on Market – Through the first nine months this year, days on market has averaged 437, an increase of 74 days (20.4%) over the same period in 2019. The averages for the past seven years were:
2013 2014 2015 2016 2017 2018 2019 2020 YTD
465 390 605 464 469 388 338 437
Here is a chart indicating inventory and sales by price segment:
| Same Month
|Up to $50,000||140||138||46||39%||63||41%||36||34%|
|$50,000 – $100,000||165||161||34||29%||45||30%||42||40%|
|$250,001 – $300,000||22||15||2||2%||3||2%||0||0%|
At current sales pace, the inventory of 528 tracts for sale equals about a 3.6-year supply.
How Land Purchases Were Financed:
|2011||2016||2019|| 2020 YTD
There were no commercial sales closed in September this year or last year. For the first nine months of 2020, there have been five commercial sales, down from seven in the same period in 2019. Two were commercial condos; one was a 4,000-square foot space in a light manufacturing zone; one was a 3-unit retail complex on Bent Street in the central business district, and one was a 1,600-square foot space that had been an upholstery shop. Total dollar sales are $1,218,000 vs. $3,579,500 last year, a decrease of $2,361,500 (-66.0%).
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 30 commercial properties listed for sale. Of these, three 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; and the 29-space RV Park and 26-room motel property south of Town with a list price of $825,000.
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 slowly improve; however, the Covid-19 crisis dealt a severe blow to many local businesses during spring and summer. Although tourism has picked up, there are still restrictions on restaurants, hotels and other businesses. Taos Ski Valley this winter will be limited to 50% capacity, and this will have a knock-on effect on businesses all over town. When the health crisis eventually subsides, the commercial market should start to revive, especially if residential and land sale continue to increase. With more people living in Taos full-time or for extended stays, the demand for commercial products and services should grow.