Note: The data in The Lora Company report do not include Angel Fire, Eagle Nest, Red River and other areas which are in the Taos County Association of Realtors Multiple Listing Service (MLS), but which we don’t consider part of the main Taos market.
The market is still very strong, but the increases in the number of sales this year over last year are starting to taper. 2021 sales were running well ahead of 2020 every month until recently because last year sales were stalled for several months in the spring during the worst of the pandemic; after that they exploded. July was the first month this year that unit sales of homes, condos, and land did not exceed last year’s numbers in the same month. The market remains hot, but for the rest of this year, residential sales (homes and condos) will probably run only about the same as or slightly less than last year’s pace. It’s not for lack of demand! It’s due to lack of inventory and also the extremely long time it is taking to complete transactions due to title company backlogs. With these constraints, we just can’t close more sales than we did last year in any given month. However, prices continue to rise! Call us for a free market analysis of the value of your property, and a consultation about the selling process.
Market activity–especially for homes and condos–is intense: multiple offers are common, with buyers often offering above asking price. This sort of market behavior has rarely occurred in Taos, even during the boom years of 2000 – 2007. Spurred by the work-from-home paradigm that the Covid-19 pandemic created, and fueled by interest rates that remain extremely low, robust demand for homes and condos in Taos is expected to continue into the foreseeable future. Even multi-family sales–a very small segment of the market–have picked up some. Land sales are way up vs. last year, as some frustrated home buyers are deciding to build instead of searching in vain for an existing home to buy. Commercial sales are still zero for the year through July.
Click here for a chart with data for the past 18 years.
Last year, the Covid-19 pandemic brought an incremental layer of buyers to a market that has been steadily gaining since 2015. After the stay-at-home health orders were lifted and people started to travel, the market kicked into a new high gear, and the pace has not slowed. Homes are going under contract fast–sometimes in a day or two. We are also seeing more cases of multiple offers, “bidding wars”, and homes selling well above asking price. This kind of market behavior was heretofore very rare in Taos, even during the boom years of 2000 – 2006. The overall price level is rising at an accelerated rate, due to the lack of inventory. We are also seeing an increase in sales of higher-priced homes, as well as of homes in less popular areas. So far this year, there have been 13 sales of homes over $1 million, and more homes above $700,000 than has ever been typical for Taos.
The pandemic has changed the way people work and where they want to live. It looks as if “working from home” is here to stay. The desire of many people to leave urban areas and to live in a more rural environment seems likely to remain a strong factor in national real estate trends. Taos will continue to attract some of these people. Although average prices here are up dramatically, they still seem very attractive vis-a-vis where many buyers are coming from.
July 2021 closed sales were 28 vs. 34 in July of last year. Through the first seven months, unit sales are 204 this year vs. 164 last year, a gain of 40 sales (+24%). Dollar sales are up $44.4 million (+80%), from $55.6 million to $100.0 million. July saw six sales at over $1 million, and one at #980,000.
The huge year-on-year gains are partly due to reduced sales during the spring last year caused by the onset on the Covid-19 pandemic. The stay-at-home orders that began in March affected sales contracts and closings for several months, so it was no surprise that 2021 sales were much higher. However, for the remainder of this year, unit sales will probably not exceed last year’s because 2020 sales really shot up after people were able to start traveling again. And even though buyer interest continues very strong, the number of closed sales each month is limited by the capacity of the Taos’s two title companies to process escrows. Currently, there are 64 pending sales, which is many more than the historical average of 15-30 homes under contract at any given time. It is taking three months or longer to get a title insurance commitment after a property goes under contract! The title companies simply cannot process all the orders in a timely fashion.
Median and Average Prices – Through July, the median price (midpoint in the range of prices from low to high) in 2021 is $419,500 vs. $319,100 in 2020, an increase of $100,400 (+31.5%). The average (mean) is $490,100 this year vs $339,100 last year, a gain of $151,000 (+44.5%). Some of the increases are due to the sales mix, with relatively more higher-priced homes selling; however, price per square foot of just about every type of home is up dramatically. The acute lack of inventory (supply) coupled with booming demand is causing prices to rise at a rate not seen before in Taos.
Here is a chart showing the trend in median and average prices over the past several years
Price 2016 2017 2018 2019 2020 2021 ytd
Median $283,500 300,000 311,000 322,500 344,000 419,500
Average $306,100 326,800 370,500 373,100 390,500 490,100
Price Discounting – For the year to July 31, actual sales price has averaged 2.9% below the last asking price when the home went under contract; the discount from original asking price is 4.8%. As noted above, more homes are selling at asking price or higher, due to intense buyer competition; this has caused the decrease in the average discount. Here is a chart showing the discount from original asking price over the past eight years:
2013 2014 2015 2016 2017 2018 2019 2020 2021 ytd
18.4% 16.9% 13.9% 13.3% 9.4% 10.3% 7.8% 7.2% 4.8%
Days On Market – The average days on the market so far this year is 144 vs. 157 for the same period in 2020, a decrease of 13 days (-8.3%). We have seen desirable homes in preferred locations going under contract much faster than the average, often in just a few days. Many buyers are from out of town, and they often are frustrated that a home they are interested in goes under contract before they can get here to see it. Sometimes a video showing must suffice for a buyer to make a timely offer.
This chart illustrates DOM in 2006 (a boom year), in the past eight years, and this year so far:
2006 2013 2014 2015 2016 2017 2018 2019 2020 2021 ytd
247 244 235 235 226 192 147 151 156 144
Here is a chart with data on current inventory and unit sales by price segment for the year:
|| Aug 2020
|| Sep 2008
||2020|| 2021 YTD
|Up to $200,000||26||41||190||66||44%||58||21%||61||18%||24||12%|
|200,001 – $300,000||29||44||109||37||25%||64||24%||70||21%||32||16%|
|$300,001 – $400,000||50||46||69||20||13%||74||27%||83||25%||38||19%|
|$400,001 – $500,000||34||33||39||12||8%||27||10%||45||13 %||35||17%|
|$500,001 – $650,000||36||36||35||9||6%||24||9%||42||13%||30||15%|
|$650,001 – $800,000||22||21||27||4||3%||16||6%||15||4%||20||10%|
|$800,001 – $1million
Inventory – At the time this report was prepared, inventory had increased again, but only by 9 homes. There are now 251 homes listed for sale, up from 242 last month and from 230 two months ago, but down 16 units from 267 a year ago (-6%). The highest inventory is 2020 was 273 (in July). 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, but decreased again in 2020. This year, inventory will probably average about the same as last year, which is about half the number of homes available for purchase in 2008. Taos inventory consists of a wide variety of size, price, style, location, and condition. With such limited inventory, it is difficult to find more than a few homes to show a buyer that might meet most of his/her criteria. There are no indications that inventory will increase much in the near term, either from an increase in building or from more owners listing existing homes for sale (many owners are holding their homes as investments).
Here is chart showing average inventory for the past eight years:
2013 2014 2015 2016 2017 2018 2019 2020
334 333 324 316 285 264 274 257
With demand 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 remain inadequate relative to demand.
How Home Purchases Were Financed:
|2011||2016||2020|| 2021 YTD
Interest Rates – Over the past few months, rates on home loans have moved up and down. Recently, long-term bond rates have been decreasing again, despite rising inflation! The 30-year fixed-rate loan is now averaging 3.01%, down from 3.13% a month ago. Rates are expected to remain very low for at least the rest of the year. However, if the Federal Reserve begins to change its view that the current spike in inflation is “transitory”, then rates may start to rise. Here are current rates as posted by Bankrate.com on July 23, 2021:
Conventional 30-year fixed: 3.08 % (Nominal) 3.30 % (APR)
Conventional 15-year fixed: 2.38 % 2.68 %
Jumbo 30-year fixed: 3.11 % 3.22 %
5/1 Adjustable 2.80 % 3.91 %
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales – For the year through July of this year, there have been just three foreclosure sales. They ranged in price from $135,000 – $315,500. For the full year of 2020, there were nine foreclosure sales (2.7% of total sales). The number of foreclosures has diminished steadily over the past several years. Currently, there are just two bank-owned house listed for sale; both have sales pending.
This table shows the number of foreclosure sales, and their percentage of total sales of single-family homes, for the last ten years:
|2021 ytd||3||( 1%|
Note: These data do not include any of the condominiums developed and offered for sale by Taos Ski Valley Resort; those condos are not listed in the Taos MLS.
July 2021 sales were down by 5 units over July 2020 (3 vs. 8). Year-to-date unit sales are 46 this year vs. 30 last year, a gain of 18 units (+53%). Dollar sales are up 68% at $14.6 million vs. $8.7 million. The condo inventory shortage is even worse than for single-family homes, and the lack of supply will be a constraint on sales going forward. As with single-family homes, there are no signs that inventory will increase significantly this year–or in the near future years.
At the time of this report, there are 19 condo sales pending, up from 17 last month, and significantly more than the 3-7 that was typical up until last year. As with homes, much of this increase is due to the increased time it is taking to get sales contracts closed (backlog of title work, appraisals).
Median price through seven months is $316,100 vs. $237,500 last year, an increase of $78,600 (+33%). Average price year-to-date is $316,600 vs. $289,100, a gain of $27,500 (+9.5%). Please note that 46 sales is a small data set; averages can be skewed by a change in the proportion of unit sizes (larger vs. smaller units), unit locations (some areas are higher-priced), unit age/style. But it is safe to say that condo prices are definitely rising–-often very substantially–due to the supply/demand situation.
Price Discounting – Year-to-date final sales price has averaged 2.8% less than last asking price when the condo went under contract; the discount from original price is 4.7%. There have been a number of cases of condos selling at or above asking price.
Here are the discounts from original asking price for the past seven years, and this year to date:
2014 2015 2016 2017 2018 2019 2020 2021 ytd
12.7% 8.6% 11.8% 6.7% 6.5% 5.5% 3.2% 4.7%
Inventory – The number of condos listed for sale at the time of this report was 62, up 17 from 58 last month, and from 58 at this time a year ago. Of the 62 units currently available for purchase, 22 (35%) are at Taos Ski Valley, while 40 are in or near the Town of Taos. Of those 40, only 18 do not have a pending sales contract; and they vary a lot in terms of size and price. There is not a lot to choose from! 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.
Note how the average inventory has decreased steadily over the past eight years:
2013 2014 2015 2016 2017 2018 2019 2020
107 81 78 65 58 59 56 49
Here is a chart indicating current inventory and sales by price segment:
||Sept.||# of||# of||# of|
|Up to $150,000||1||8||40||16||55%||10||13%||6||13%|
|$150,001 – $250,000||13||11||50||8||28%||21||28%||6||13%|
|$250,001 – $350,000||20||14||51||3||10 %||18||24%||20||43%|
|$350,001 – $500,000||17||23||56||1||3%||22||30%||12||26%|
How Condo Purchases Were Financed:
July 2021 had two closed sales, following three in June, for a year-to-date total of five, which is an increase of three over the same period in 2020. The sales consisted of one duplex, one triplex, one four-plex, and a 10-unit property. Multi-family is and has always been a very small segment of the Taos real estate market. However, going forward we may see more gains as home and condo buyers facing scarce inventory broaden their searches to include multi-family. For example, some duplexes might be convertible to single-family residences with some building modifications. Currently, there are 13 multi-family properties listed for sale; 3 of these under contract.
Rents have been trending higher for years, so multi-family income properties should yield fairly attractive returns on investment. especially with today’s low interest rates (cost of capital). However, obtaining conventional financing for multi-family properties larger than a duplex can be difficult, due to the lack of comparable sales needed for appraisals.
July had 16 closed sales, down from 18 in July 2020. Year-to-date unit sales are 152 vs. 75 in the same period in 2020, a gain of 77 tracts sold (+103%). Dollar sales are up only 21% ($16.0 million vs. $13.2 million), but that is because last year had one unusually high-priced sale of $7 million (a ranch property north of Taos). Excluding that one sale, dollar sales are up $9.8 million (157%).
After years in the doldrums after the real estate recession that started in 2008, land sales are starting to pick up. Some home buyers who have been frustrated in their search for an existing home to buy are deciding to buy land and build, despite the fact that building costs have skyrocketed. A good-quality home — not the most luxurious, but not “builder basic” — would cost $350 – $400 per square foot to build today in Taos. And this doesn’t include the cost of the land. Such high building costs no doubt are deterring some people from building.
Currently, there are 77 pending sales, which is huge! Of course, as with both single-family homes and condos, a substantial portion of the increase in pending sales is due to the protracted time it is taking to close sales, i.e., three months or longer to get a title insurance commitment.
Median price year-to-date is $65,100 this year vs. $67,500 last year, a decrease of $2,400 (-3.6%). The median price differential is negligibly affected by that one large sale last year; however, average (mean) price is. Excluding the $7 million sale last year, average price for the first seven months is $105,500 this year vs. $84,100 last year, an increase of $21,400 (+257%).
Current inventory of 537 tracts listed for sale is down 1 from 538 one month ago, and up 34 from 503 a year ago. Whereas in the market for homes and condos there is much more demand than supply, in the land market the reverse is true; therefore, prices won’t rise as they have for homes and condos until some of the excess inventory is absorbed.
Here is a chart indicating inventory and sales by price segment:
| Same Month
|Up to $50,000||113||137||46||39%||52||36%||53||35%|
|$50,000 – $100,000||186||152||34||29%||53||36%||53||35%|
|$250,001 – $300,000||23||18||2||2%||0||0%||2||1%|
Days On Market – For the first seven months of the year, the average time to sell a piece of land has been 344 days. This is down 45 days (-12%) from the same time period in 2020. The average over the past 18 years is 410 days from the time a piece of land is listed until it goes under contract.
How Land Purchases Were Financed:
The availability of financing for land purchases is more limited than it was during the years before the “Great Financial Crisis” of 2008, when all kinds of loans were easy to obtain.
There still have been no commercial sales so far in 2021, compared to four in the same period in 2020. For the entire year 2020, there were only 8 sales, with a total dollar volume of $2.9 million.
Here is a quick look at the number of sales over the past ten years:
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2 7 9 3 17 7 5 14 12 8
Currently, there are 41 commercial properties listed for sale, down one from 42 last month. At this time, three are under contract.
It is somewhat puzzling that there have been sales so far this year. Perhaps Covd-19 still has people worried about the viability of commercial enterprises. However, with the growing number of people moving to Taos (for either full-time or extended-stay living), the demand for commercial services should increase; this should in turn boost the commercial real estate sector at some point once the virus fears have subsided.