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.

The market continued strong in October.  Sales of single-family homes—by far the biggest segment of the market—have been up in every month this year except January and May compared to the same month in 2019.  Demand continues to far exceed supply.

Condo demand has also increased, but the lack of inventory is even more acute than for homes, and this has been a constraint on sales.  Year-to-date uit sales are 6% below last year.  Prices are rising sharply in this market segment, too.

Land unit sales are lagging last year by 13%; however, recently there has been a sizable increase in the number of pending land sales, so this segment of the market may be starting to get some momentum.

Cumulative totals for the first ten months of the year:

Total market (all categories of property) – The number of closed transactions is up by 22 (5%) at 448 sales this year vs. 426 last year.  Total dollar sales are up 23% at $135.4 million vs. $109.8 million, a gain of $25.5 million.  However, this year’s total includes one unusually high dollar sale: a ranch sold at $7 million; excluding that one sale, 2020 sales are up $18.0 million (+16%).

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 almost back to peak levels, but land prices were still well below that.

At this point in time, the forecast of 2020 year-end totals and percent change from 2019 is:

Market Segment                      Unit Sales                     Dollar Sales

Single-family Homes           + 325  (+20%)            + $20 million  (+20%)

Condos                                     -3  (-10%)             +    $2 million  (+10%)

Multi-family                               +1  (+33%)            –   $150,000   (-19%)

Land                                          -5  ( -3%)              +   $6 million  (+46%)  (including the $7million sale)

Commercial                               -4  (-33%)              –   $4.1 million (-35%)

Note:  The commercial dollar projection may increase substantially if two big pending sales close this year.

Following is a detailed discussion of each market segment:

SINGLE-FAMILY HOMES

October 2020 unit sales were up over October 2019 by 2 sales:  29 vs. 27 closed transactions (+7%).  Dollar sales for the month were up 34%, due to two sales over $1 million.  June, July, August, September and October gains followed a big drop in May caused by 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 rose sharply.  The pandemic has added a new layer of buyers to a market that has been steadily gaining for the past five years, as people from cities seek a home in less populous areas to escape to during health or other emergencies.  This incremental demand has created a surge of buying this summer and autumn.  Unfortunately, the inventory of homes listed for sale has not kept up with demand.  Homes are going under contract much faster than usual in Taos, and prices are rising at an accelerated rate.

Year-to-date unit sales are  21% above last year’s pace: 263 homes sold this year vs. 217 last year.  Dollar sales are up 27% ($98.1 million vs. $76.9 million).  Currently, there are 43 sales pending, well above historical average of 15-30.  The increase in pending sales is partly due to the sheer volume of orders at Taos’s only two title companies, and also with appraisers, which has overwhelmed the system and slowed the time it takes to close sales.  Loan re-financings because of today’s extremely low interest rates, have also contributed to the backlog.  It is difficult to quantify what part of the increase in pending sales is due to the delays in escrow, and how much is increase in actual sales.

Median and Average Prices – Through ten months of 2020, the median price (midpoint) is $327,00 vs. $330,000 for the same period last year, a decrease of $3,000 (0.9%).   The average (mean) price year-to-date is $372,900 vs $354,600 last year, an increase of $18,300 (5.2%).

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      327,000

Average $379,900   306,100   326,800    370,500    373,100       372,900

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.

Price Discounting – For the year through October, actual sales price has averaged 4.9% below the last asking price when the home went under contract; however, the discount from original asking price is 7.7%.  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%      7.7%

Days On Market – The average days on the market so far in 2020 is 154 vs. 150 for the same time frame in 2019, an increase of 4 days (2.7%).  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:

INVENTORY					UNIT	SALES
	Nov 2020	Nov 2019	Sep 2008	…….	2011		……	2019		…..	2020	YTD	……
					#	%		#	%		#	%			.
Up to $200,000	34	51	190		66	44%		58	21%		50	19%
$200,001 – $300,000	33	56	109		37	25%		64	24%		60	23%
$300,001 – $400,000	48	51	69		20	13%		74	27%		67	25%
$400,001 – $500,000	30	30	39		12	8%		27	10%		33	13 %
$500,001 – $650,000	29	32	35		9	6%		24	9%		32	12%
$650,001 – $800,000	19	24	27		4	3%		16	6%		9	3%
$800,001 – $1million	16	12	36		1	1%		4	1%		8	3%
Over $1,000,000	32	26	13		1	1%		4	1%		4	2%
TOTAL	241	282	518		150	100%		271	100%		263	100%

Inventory –   At the time this report was prepared, inventory had decreased again: 241 homes were listed for sale, down 262 last month, and down 41 homes from 282 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         241

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 homes for rent on sites such as Airbnb.com and vrbo.com has increased exponentially over the past several years.  Evidently, property owners are achieving excellent 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.  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:

	2011		2016			2019		2020 YTD
Cash	65	43%	91	36%		99	37%	82	31%
Conventional loan	66	44%	129	52%		143	53%	156	59%
FHA loan	8	5%	11	4%		11	4%	8	3%
VA loan	1	1%	10	4%		9	3%	10	4%
Seller financing	8	5%	7	3%		6	2%	.5	2%
Other	2	1%	1	1%		3	1%	2	1%
Total	150	100%	249	100%		271	100%	263	100%

Interest Rates – Interest rates on residential loans remain extremely low.  After fluctuating sharply in March-April due to market uncertainties caused by Covid-19, rates stabilized, and have then decreased some.  Current rates are down slightly from a month ago, but they are expected to remain very attractive at least through 2021.  Here are current rates as posted by Bankrate.com on November 21:

Conventional 30-year fixed:           2.95 %  (Nominal)    3.26 %  (APR)

Conventional 15-year fixed:           2.46 %                      2.78 %

Jumbo  30-year fixed:                    2.93 %                      3.04 %

5/1 Adjustable                                3.03 %                      4.06 %

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

Foreclosure Sales –  Through October of this year, there have been eight foreclosure sales (3.0% of total sales).  The number of foreclosures has diminished steadily over the past several years, both in Taos and nationally.

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	8	(  3%

Currently, there are just 4 bank-owned houses listed for sale, the same as last month; all four of these are under contract.

CONDOMINIUMS

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.

October unit sales were down by one compared to October last year (11vs. 12).  There have been only three months so far this year with gains over the same month last year.  Year-to-date unit sales are four fewer than last year: 61 vs. 65 (-6.2%).  Condo sales would be trending higher than last year if there were more condos available for purchase.

Dollar sales in October were up 0.6%; year-to-date dollar sales are up 3.8%.  Sales prices have ranged from $62,500 – $$620,000.

Like single-family homes, condos are experiencing heightened buyer interest, due to the Covid-19 buying wave.  At the time of this report, there are 14 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 (backlog of title work, appraisals).

Median price YTD is $299,000 this year vs. $241,300 last year, an increase of $57,700 (24%).  Median price for the full year 2019  was $230,000.  Peak median price (in 2007) was $263,000. 

Average (mean) price YTD is $304,600 this year vs. $275,300 last year, a gain of $29,300 (10.6%).  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).

Price Discounting – So far this year, final sales price has averaged 2.4% less than last asking price when the condo went under contract; the discount from original price is 3.4%.  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 55, up one from last month, and up 13 from 42 at the time a year ago.  This year’s highest inventory was 55 in August.  The highest inventory in 2019 was 65 available for sale (in July and August).  2018’s peak inventory was 74 units.  Of the 55 units currently available for purchase, 27 (49%) are at Taos Ski Valley, while only 28 are in or near the Town of Taos; those 28 include a wide variety of size, age, style and price, so just like with homes, it is difficult to find more than a very 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:

			—–	—–	UNIT	SALES	——-	—–
	—–INVENTORY—–				2011			2019		2020
					full	year		full	year	YTD
	Nov	Nov	Sept.		# of			# of		# of
	2020	2019	2008		Sales	%		Sales	%	Sales	%
Up to $150,000	7	1	40		16	55%		11	14%	6	10%
$150,001 – $250,000	11	14	50		8	28%		37	47%	19	31%
$250,001 – $350,000	17	11	51		3	10 %		10	12%	13	21%
$350,001 – $500,000	17	13	56		1	3%		19	24%	20	33%
Over $500,000	3	3	29		1	3%		2	3%	3	5%
TOTAL	55	42	226		29	100%		79	100%	61	100%

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
Cash	14	48%	34	51%		37	47%	36	59%
Conventional loan	15	52%	32	48%		38	48%	24	39%
Seller financing	0	0%	0	0%		0	0%	1	2%
Other	0	0%	1	1%		4	5%	0	0%
Total	29	100%	67	100%		79	100%	61	100%

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

Multi-family has always been a very small portion of the Taos market. There have been just two multi-family sales during the first ten months of 2020, down one from the same period last year.  The two sales have totaled just $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.  Of these, five are under contract, much more than typical.  It is possible that the Covid-19-induced buying  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.

LAND

October closed sales numbered 11, down 42% from 19 in October 2019.  Dollar sales were down only 20%.  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, 117 pieces of land have sold, down 17 tracts (-12.7%) from the same time period last year.  Dollar sales are up 61%; 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 $534,700 (-5%).  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 $70,500 is up $7,700 (12.3%) from $62,800 last year.  The $7 million sale doesn’t affect median price (the midpoint of prices), but it does affect average (mean) price.  Average price year-to-date with the ranch sale included is up $66,700 (84.4%) over last year; with the ranch sale excluded, average price is $86,700 this year, an increase of $7,700 (9.7%) from last year to date.  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      86,700

*excluding the $7 million sale

Land sales have been slowly recovering from the recession, but they haven’t come back nearly as much as residential sales have.  From a low point of 41 closed 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 Covid-19 impact on supply chains for materials (factory and lumber mill production slowdowns, imports), 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 as buyers who cannot find a suitable existing home may decide to buy land and build.  Currently, there are 48 pending sales, up significantly from what has been typical in Taos at any given time.  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 8.4%; the discount from original asking price is 11.6%.  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 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	133		46	39%		63	41%	40		34%
$50,000 – $100,000	161	151		34	29%		45	30%	46		39%
$100,001 -$150,000	72	64		16	14%		21	14%	12		10%
$150,001-$200,000	42	41		15	13%		9	6%	12		10%
$200,001– $250,000	31	37		3	2%		9	6%	4		3%
$250,001 – $300,000	20	17		2	2%		3	2%	0		0%
Over $300,000	58	53		2	2%		2	1%	3		3%
TOTAL	514	496		118	100%		152	100%	117		100%

At current sales pace, the inventory of 514 tracts for sale equals about a 3.5-year supply.

How Land Purchases Were Financed:

	2011		2016			2019		2020 YTD
Cash	28	69%	63	70%		111	73%	88	75%
Conventional loan	5	12%	6	7%		19	13%	21	18%
Seller financing	7	17%	20	22%		20	13%	7	6%
Other	1	2%	1	1%		2	1%	1	1%
Total	41	100%	90	100%		152	100%	117	100%

 

COMMERCIAL

There were no commercial sales closed in October this year or last year.  For the first ten 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 32 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; the 29-space RV Park and 26-room motel property south of Town with a list price of $825,000; and a commercial condo on Cruz Alta Rd.  The 4,500-square foot building near Holy Cross Hospital that was listedas pending in last month’s report closed in November, and will appear in the November report.

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 sales continue to increase. With more people living in Taos full-time or for extended stays, the demand for commercial products and services should grow.