The Lora Company Taos Real Estate Market Report for the Year to May 31, 2019

Note:   The data in The Lora Company report do not include Angel Fire, Black Lake, Cimarron, Eagle Nest, Red River, Raton, Chama, Miami, Mora, San Miguel, Vallecitos, and “Other” areas.  These are in the Taos County Association of Realtors MLS but we don’t consider them part of the main Taos market.

Total market sales (all categories of property) for the first five months of 2019 are 1% above the same period in 2018.  May was a relatively strong month for single-family home sales, which are by far the largest market segment.  After being behind last year’s pace through April, year-to-date unit sales of homes are now 6% ahead of last year’s total; dollar sales are up 17%.

The lack of adequate inventory of good homes available for purchase remains a constraint on home sales.  Buyer interest has been increasing over the past several years, but supply has not kept up with demand.  As a result, prices have been increasing, while the average time it takes to sell a home has been decreasing.  IF YOU HAVE BEEN THINKING ABOUT SELLING YOUR HOME, CALL US AT THE LORA COMPANY FOR A FREE MARKET ANALYSIS AND CONSULTATION ABOUT YOUR HOME’S VALUE, THE SELLING PROCESS AND WHAT YOU NEED TO DO TO GET YOUR PROPERTY READY TO SELL!

Condo sales through May 2019 are up by 6 units (30%) over 2018.  Dollar sales are up 28%.  As with single-family homes, lack of inventory is pushing prices up.

Land unit sales year-to-date are lagging last year’s pace by 6 lots sold (12%).  Dollar sales are down 32%.  Land sales have lost some momentum; however, the cold and snowy winter affected first quarter sales; we expect the pace to pick up. 

Multi-family  – There has been just one sale so far through May.  This market segment remains very small.

Commercial – There have been 5 sales through May this year, down from 8 last year for the first five months.  Dollar sales are down 15%.

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 2018 gained 117% in unit sales, and 164% in dollar sales.  At this point in time, 2019 sales look to be tracking slightly higher than 2018’s.

Following is a detailed discussion of each market segment:

SINGLE-FAMILY HOMES

Through May 2019, SFH accounted for 57% of total market transactions, and 72% of total dollar sales.

Year-to-date unit sales are 105 vs. 99 in the same period in 2018 (+6.1%).  Dollar sales are up 17% ($35.6 million vs. $30.3 million), due to rising prices.  Despite the ongoing issue of inadequate inventory, we expect unit sales to remain at or above last year’s pace for the rest of the year.  Dollar sales for the year will probably exceed 2018 by about 10% – 15%. 

Median and Average Prices – For the first five months of 2019, the median price is $322,500 vs. $273,000 for the same period last year (+18.1%).   Year-to-date average price is $338,800 vs. $306,400 last year (+10.6%).  Here is a chart showing the trend in median and average prices over the past four years, and what they were in peak year 2007:

Price           2007          2016            2017         2018      2019

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

Average     379,900      306,100      326,800    370,500  338,800

Price Level – Prices of single-family homes fell 30%–35% from the peak in 2007 to a bottom in 2011.  Prices were basically flat for a couple of years, then they started to increase slowly.  By 2015 prices were rising in most cases, with prices in the most preferred areas rising more than in others.  2018 saw prices rise at a faster rate, as demand has picked up even more while supply has steadily declined over the years.  2018 median and average prices were both about 4% below peak levels.  Prices are continuing to trend higher in 2019, and are now about equal to pre-crash levels.

Price Discounting – Through five months this year, actual sales price has averaged  5.3% below last asking price when the home went under contract; the discount from original asking price is 7.8%.  The chart below shows how the discount from original price has decreased over the past seven years.

2013          2014       2015       2016       2017       2018       2019 YTD

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

Days On Market – The average days on the market so far in 2019 is 166 vs. 167 for the first five months of 2018.  Well-priced homes in the more-desired areas are definitely selling faster than in years past.    In the years 2004 through 2016, the average time to sell a house in Taos was 249 days.  Today if buyers find a home that works for them, many are taking immediate action rather than assuming that the home they like, or an acceptable substitute, will be available later.  This chart illustrates DOM in peak year 2006, and in the past six years:

2006       2013       2014       2015       2016       2017       2018       2019 YTD

247         244          235         235         226         192         147         166

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

					UNIT	SALES
INVENTORY					2011			2018			2019
					full	year		full	year		YTD	5/31
	June	June	Sept.
	2019	2018	2008		#	%		#	%		#	%
Up to $200,000	48	45	190		66	44%		70	25%		25	24%
$200,001 – $300,000	48	44	109		37	25%		66	23%		24	23%
$300,001 – $400,000	56	50	69		20	13%		61	22%		30	29%
$400,001 – $500,000	38	43	39		12	8%		34	12%		8	8 %
$500,001 – $650,000	32	30	35		9	6%		31	11%		12	11%
$650,001 – $800,000	24	23	27		4	3%		9	3%		4	4%
$800,001 – $1 million	14	14	36		1	1%		4	1%		1	1%
Over $1,000,000	22	21	13		1	1%		6	2%		1	1%
TOTAL	282	270	518		150	100%		281	100%		105	100%

Inventory –   At the time of this report, there were 282 homes listed for sale, up from 257 last month, and up from 270 in the same month last year.  The highest inventory in 2018 was 328.  The average inventory (for 12 months) has decreased steadily over the past six years:

2013       2014       2015       2016       2017       2018       2019 YTD

334          333         324         316         285        264            259

The inventory consists of a wide variety of price, style, location, and condition, so current inventory is not a lot to work with.  It is often difficult to find more than 5-6 homes to show a buyer that might meet most of his/her criteria.   The inventory shortage is affecting total sales, average prices, sales prices per square foot, price discounting and days on market.

One reason for the reduced inventory may be that property owners who financed purchases at extremely low interest rates are holding the property in the expectation that price appreciation is greater than financing and other holding costs. Many  property owners are making good income from vacation rentals. The number of home rentals on sites such as Airbnb.com and vrbo.com has exploded over the past several years. With positive net cash flow plus price appreciation, many owners are holding their Taos homes as good investments.

Additionally, there has been very little “spec” building (in which a contractor builds a home to list for sale rather than custom building, where the contractor builds a customized home for an owner of a lot) over the past several years; there are, however, several spec homes in the works.

How Home Purchases Were Financed:

	2011		2016			2018		2019 YTD
Cash	65	43%	91	36%		105	37%	44	42%
Conventional loan	66	44%	129	52%		146	52%	51	49%
FHA loan	8	5%	11	4%		11	4%	2	2%
VA loan	1	1%	10	4%		8	3%	4	4%
Seller financing	8	5%	7	3%		6	2%	3	3%
Other	2	1%	1	1%		5	2%	1	1%
Total	150	100%	249	100%		281	100%	105	100%

Interest Rates – Interest rates on residential loans remain very low by historical standards, and recently they fell even more, as capital has flooded into the long-term US Treasury bond market.  Here are current rates provided by local mortgage broker Adam Consiglio (NMLS 1748512) at C & M Financial (tel 505-263-6477), a.consiglio@candmfinancial.com:

Conventional 30-year fixed:          4.00% (Nominal)   4.046 % (APR)

Conventional 15-year fixed:           3.50%                   4.830 %

Jumbo  30-year fixed:                    4.00%                   4.015 %

Jumbo 15-year fixed                      3.75%                   3.776 %

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

Foreclosure Sales –  Through the first five months this year, there have been 9 foreclosure sales (9% of total sales).  These ranged in price from $31,500 – $200,000.  The number of foreclosure sales, and their percentage of total sales of single-family homes, for the previous eight years were:

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 YTD	9	(  9%)

Currently, there are only 8 bank-owned houses listed for sale; of those, one has a pending contract. The number of foreclosures has diminished steadily over the past several years, both locally in Taos and nationally.

CONDOMINIUMS

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

Year-to-date through May 2019, there have been 26 closed sales, a gain of 6 units (30%) over the same period last year.  For the full year 2018, 66 condos sold; in 2017 there were 61 units sold.  In peak year 2006, there were 149 condos sold.

2019 year-to-date dollar sales are up 28% over 2018, from $6,514,200 to  $8.323,500.   We forecast full-year 2019 unit sales to be about the same as last year; dollar sales should be up 10% – 15%.

Median price YTD is $323,300 vs. $303,000 in 2018 (+6.7%).  Median price for the full year 2018  was $212,500.  Peak median price (in 2007) was $263,000.

Average (mean) price YTD is $320,100 this year vs. $325,700 last year (-1.7%).  Average price for the full year 2018 was $248,900.  In 2007, average price was $279,100.

As with single-family homes, condo prices are rising, primarily due to the supply-demand dynamic.  The condo sales mix hasn’t changed much from last year: the percentage of units sold at Taos Ski Valley (where prices are higher) is actually lower this year compared to 2018; and the proportion of larger (more expensive) units is about the same.

Price Discounting – So far this year, 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%.  For the full year 2018, final sales price averaged 4.9% 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 62, up from 59 last month, but down from 65 in the same month last year.   The average for the whole year 2018 was 59.  Last year’s peak inventory was 74 units available for sale.  Of the 62 units currently available for purchase, 27 are at Taos Ski Valley; 35 are closer to Taos center; and of those 35, only 14 are priced at not more than $250,000.  As with single-family homes, the lack of inventory is affecting sales.  In 2006, there were often over 200 condos on the market at any given time.

However, scarce inventory is not the only reason for lower sales:  Conventional loans for condos are more difficult to obtain than they were before the real estate bubble burst in 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 on the secondary market won’t make a loan on these “non-warrantable” condos.

Foreclosure Sales –  There have been no foreclosure sales of condos so far this year.  In 2018 there was only one foreclosure sale (1.5% of total units sold).  In 2017 there were 5 foreclosure sales (8%).

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

			—–	—–	UNIT	SALES	——-	—–
	—–INVENTORY—–				2011			2018		2019	YTD
					full	year		full	year
	June	June	Sept.		# of			# of		# of
	2019	2018	2008		Sales	%		Sales	%	Sales	%
Up to $150,000	3	5	40		16	55%		17	26%	2	8%
$150,001 – $250,000	20	20	50		8	28%		23	35%	10	38%
$250,001 – $350,000	16	15	51		3	10%		12	18%	2	8%
$350,001 – $500,000	19	20	56		1	3%		11	17%	10	38%
Over $500,000	4	5	29		1	3%		3	4%	2	8%
TOTAL	62	65	226		29	100%		66	100%	26	100%

 

MULTI-FAMILY

There has been only one multi-family sale during the first five months of this year (a duplex on SR 240), compared to two in 2018 for the same period.  For the full year 2018 there were four sales (a 7-unit property, one duplex, and two triplexes) with total sales prices of $1,657,000.  In 2017, there were four sales, with a total price of $1,790,000.  2016 had just two sales, totaling $787,500.

There are currently 11 multi-family properties listed for sale.  There are no pending sales.  The old schoolhouse in town that was listed as a multi-family property sold, but it was classified as a commercial sale.

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; therefore, the return on investment should be attractive to investors; however, the asking price for many of the listed properties does not yield an adequate rate of return for most investors; this is probably the main reason for slow sales of existing multi-family properties.  We may/should see some new construction by developers because of attractive return on investment  — assuming that the land can be acquired at the right price.

LAND

Year-to-date unit sales are 11.5% behind last year’s pace:  46 tracts sold this year vs. 52 last year. Dollar sales are down from $5,316,000 to $3,622,900 (-31.8%).  The cold and snowy winter probably deterred sales in the first quarter, since most buyers do not like to walk land in the cold and snow.  We expect land sales to increase as the year progresses.

Median price year-to-date is down 5.5% compared to 2018, from $68,800 to $65,000.  2018’s full-year median price was $62,700; in 2017 it was $64,000; in 2016, it was $52,300.

Average (mean) price through five months this year is $78,800, down from $102,200 last year for the same time frame (-22.9%).  2018’s full-year average was $92,300;  in 2017 it was $89,400; in 2016 it was $73,100.

Land sales have been recovering very slowly from the real estate market recession.  From a low point of 41 transactions in 2011, 2018’s total of 122 sales was a gain of almost 200%. but that was still 64% below peak (2005) level.  We expect full-year 2019 land sales to show only a modest gain over last year. The land market has a long way to go to get back to where it was in 2005.  The cost to buy land and build a home is still significantly greater than the cost 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.

 

COMMERCIAL

The commercial market has been up and down over the past several years, with no clear trend.  2018 had 14 sales, an increase of 9 (180%) over 2017. In 2018, dollar sales were $4,656,000 compared to $2,851,000 in 2017 (+63.3%).  In 2016 there were 7 sales totaling $2,890.800.  In 2015, there were 17 sales, totaling $8.1 million.  In 2014, there were just three sales, totaling $2.3 million.  The peak year for commercial sales was 2005, when 19 properties sold, with a total dollar volume of $8,735,600.

In the first five months of 2019, there have been 5 commercial sales, a decrease from 3 for the same period in 2018.  Total dollar sales year-to-date are  $1,877,000 vs. $2,219,000 last year (-15.4%).

Currently, there are 24 commercial properties listed for sale.  Of these, one is under contract: the RV park south of Town, which has been pending for years; a “dollar store” company is the buyer, but there is a lengthy due diligence/approval process.

Like the land market, the commercial market has been slow to recover from the recession.  There still does not seem to be any significant momentum in this segment.  At this point. it appears that sales for the full year 2019 will be approximately the same as 2018.