The Lora Company’s Taos Real Estate Market Report for the Year Through November 30, 2021

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 has cooled some from the frenzied pace of the past year and a half, just like the national market.  But there is still strong buyer interest in Taos property!

The actual number of closed sales of homes and condos continues to be constrained by an acute lack of inventory, and also by the extremely long time it is taking to complete escrows—four to five months, and in some cases even longer!  Taos has only two title companies, and they are overwhelmed by the volume of title searches needed.  The good news is that another title company is looking to open an office in Taos some time in the first quarter of the new year.

Competition among buyers for homes and condos remains stiff: multiple offers are common, with buyers often offering above asking price.  This sort of market behavior has rarely ever occurred in Taos, even during the boom years of 2000 – 2007.  With many people being able to work from anywhere, and with interest rates still amazingly low, strong demand for homes and condos in Taos is expected to continue into the foreseeable future.  This will continue to push prices up, but the rate of price increases will slow down.

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 very slow, as demand for retail and office space hasn’t yet recovered from the last recession and from the pandemic.

Call us for a free market analysis of the value of your property, and a consultation about the selling process!

Click here for detailed year-to-date data

Click here for a chart with data for the past 18 years.

SINGLE-FAMILY HOMES

Starting in late spring 2020 and continuing into 2021, the Covid-19 pandemic brought an extra wave of buyers to a market that had been steadily gaining since 2015.  This exacerbated the severe imbalance between supply and demand.  Competition for scarce inventory caused prices to rise rapidly pretty much across the entire market.  We are also seeing an increase in the number of sales of higher-priced homes, as well as of homes in less popular areas.  So far this year, 25 homes have sold over $1 million!  Back in 2006-2007 at the height of the market before the recession, only 6-7 homes over $1 million would sell in a year.

The pandemic has changed the way people work and where they want to live.  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.  Some of the hottest markets have been in the Rocky Mountain states.  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 moving from.

November 2021 was another month with fewer closed sales compared to the same month last year: 26 vs. 30.  This is the fourth month this year that unit sales have lagged last year.  Year-to-date unit sales are still 7% above last year, but the positive variance is shrinking.  Back in May of this year, the market was 39% ahead of last year.  At this point in time, it looks as if December sales this year will be well below last December’s; therefore, 2021 total sales for the year will be about the same as 2020.

We noted above the fact that it is taking an unbelievably long time to close sales contracts.  Actual closed sales would be significantly higher if title work was getting done in “normal” time frames.  Currently, there are 84 pending sales, up from 72 last month, and 66 the month before that.  This is way more than the historical average of 15-30 homes under contract at any given time.  The situation is actually worse now than it was a year ago.  If/when the third title company that is supposedly coming to Taos opens for business, it will help; but it seems unlikely that we will return to what was “normal” before the pandemic, when a title commitment would be issued in 2-3 weeks.

Dollar sales continue to run well above last year due to rising prices.  Year-to-date dollar volume is $61.8 million this year vs. $112.9 million last year, a gain of 43% even though unit sales are up just 7%.

Median and Average Prices – For the year through November, the median price (midpoint in the range of prices from low to high) in 2021 is $425,000 vs. $338,000 in 2020, an increase of $87,000 (+26%).   The average (mean) is $508,900 this year vs $381,400 last year, a gain of $127,500 (+33%).  Some of the increases are due to the sales mix, with relatively more higher-priced homes selling, however, price per square foot is up significantly across all types of homes.

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  425,000

Average  $306,100   326,800   370,500    373,100   390,500    508,900

Price Discounting – Through eleven months, actual sales price has averaged 2.3% below the last asking price when the home went under contract; the discount from original asking price is 3.1%.  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 how the discount from original asking price has diminished steadily 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%     3.1%

Days On Market – This is is the number of days from when a property is listed to when it goes under contract for sale.  The average days on the market so far this year is 141 vs. 152 for the same period in 2020, a decrease of 11 days (-7%).  Good homes in preferred locations are going under contract much faster than the average, often in just a few days.    The average time to sell in Taos is still much higher than in many parts of the country, because there isn’t much of an economy that brings people here for work, and few people in Taos move from one home here to another here.

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    141

Here is a chart with data on current inventory and unit sales by price segment for the year:

INVENTORY								UNIT	SALES
	Dec 2021	Dec 2020	Sep 2008		2011			2019			2020		2021     YTD
					#	%		#	%		#	%	#	%
Up to $200,000	19	31	190		66	44%		58	21%		61	18%	38	12%
200,001 – $300,000	37	32	109		37	25%		64	24%		70	21%	47	15%
$300,001 – $400,000	46	44	69		20	13%		74	27%		83	25%	57	18%
$400,001 – $500,000	34	27	39		12	8%		27	10%		45	13 %	53	17%
$500,001 – $650,000	29	29	35		9	6%		24	9%		42	13%	47	15%
$650,001 – $800,000	29	18	27		4	3%		16	6%		15	4%	32	10%
$800,001 – $1million	15	17	36		1	1%		4	1%		15	4%	19	6%
Over $1,000,000	34	29	13		1	1%		4	1%		6	2%	25	8%
TOTAL	243	227	518		150	100%		271	100%		337	100%	318	100%

Inventory –   At the time this report was prepared, inventory had decreased slightly.  There are now 243 homes listed for sale, down 3 from 246 last month, but up 16 from 227 a year ago.  The highest inventory this year was 259 (in September); in 2020 it 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 is averaging about 12% less than last year, and less than 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   2021

334     333      324     316    285     264    274     257     225

With buyer demand remaining strong, and with no significant increase in the building of new homes or the listing of existing homes, the imbalance between supply and demand looks set to continue into the foreseeable future. 

How Home Purchases Were Financed:

	2011		2016			2020		2021 YTD
Cash	65	43%	91	36%		103	31%	124	39%
Conventional loan	66	44%	129	52%		200	59%	167	53%
FHA loan	8	5%	11	4%		11	3%	12	4%
VA loan	1	1%	10	4%		13	4%	10	3%
Seller financing	8	5%	7	3%		4	1%	2	1%
Other	2	1%	1	1%		6	2%	3	1%
Total	150	100%	249	100%		337	100%	318	100%

Interest Rates – Over the past year, rates on home loans have moved within a fairly narrow range.  Recently, expectations of persistent consumer price inflation seem to be growing, but mortgage rates haven’t moved up much yet.  Mortgage rates area function of the long-term Treasury bond market (10-year T-notes).  As long as the demand for US government bonds remains strong, long rates–and therefore mortgage rates–will stay low.  The 30-year fixed-rate loan is now averaging 3.074%, down from 3.234% a month ago.  A year ago, the 30-year was at 2.92%.  Here are average current rates as posted by Bankrate.com on December 27:

Conventional 30-year fixed:           3.074 %  (Nominal)      3.145%  (APR)

Conventional 15-year fixed:            2.238 %                         2.355 %

Jumbo  30-year fixed:                    3.25 %                           3.265 %

5/1 Adjustable                                 2.482 %                          2.848 %

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

Foreclosure Sales –  For this year through November, there have been just four foreclosure sales.  They ranged in price from $135,000 – $352,500.  For the full year of 2020, there were nine foreclosure sales.  Since peaking in 2012, the number of foreclosures has diminished steadily over the past nine years.  Currently, there are no bank-owned house listed for sale.

This table shows the number of foreclosure sales, and their percentage of total sales of single-family homes, for the last ten 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	9	(  3%)
2021 ytd	4	(  1%)

 

CONDOMINIUMS

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.

November 2021 closed unit sales were up by 3 units from November 2020 (8 vs. 5).  This reversed a trend of the previous four months in which 2021 sales were fewer than 2020.  Year-to-date unit sales in 2021 are 9% ahead of last year, at 72 vs. 66, an increase of 6 units.  There are still plenty of condo buyers in the market, but there is a dearth of condos available for purchase. 

Year-to-date dollar sales are up 17% at $23.4 million vs. $19.9 million.  The lack of inventory will continue to keep sales below potential going forward.  As with single-family homes, there are no signs that inventory will increase significantly this year—or in the near future.

At the time of this report, there are 23 condo sales pending, down from 24 last month, and significantly more than the 3-7 that was typical up until last year.  Most of this increase is due to the increased time it is taking to get sales contracts closed (backlog of title work).

Median price through the first eleven months is $316,100 vs. $297,500 last year, an increase of $18,600 (+6%).  Average price year-to-date is $324,700 vs. $302,200, a gain of $22,500 (+7%).  Like single-family homes, condo prices are rising due to the supply-demand situation.  The median and average prices are averages that, in such a relatively small statistical sample (72 sales) which includes a great diversity of price, do not really indicate how steeply some condo prices have risen.

Price Discounting – Year-to-date final sales price has averaged 2.3% less than last asking price when the condo went under contract; the discount from original price is 3.1%.  There have been a number of cases of condos selling at or above asking price.

Inventory – The number of condos listed for sale at the time of this report was 64, down 4 from 68 last month, but up 7 from 57 at this time a year ago.  Of the 64 units currently available for purchase, 20 (31%) are at Taos Ski Valley, while 44 are in or near the Town of Taos).  Of those 44, only 8 do not have a pending sale.  The available units vary a lot in terms of size and price, so there is not a lot for an individual buyer 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; that year, there were 149 condo sales.

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:

		—–	—–	UNIT	SALES	—	—–
	—–INVENTORY—–				2011			2020		2021
					full	year		full	year	YTD
	Dec	Dec	Sep.		# of			# of		# of
	2021	2020	2008		Sales	%		Sales	%	Sales	%
Up to $150,000	3	6	40		16	55%		10	13%	8	11%
$150,001 – $250,000	10	13	50		8	28%		21	28%	12	17%
$250,001 – $350,000	19	18	51		3	10 %		18	24%	28	39%
$350,001 – $500,000	16	17	56		1	3%		22	30%	20	28%
Over $500,000	16	3	29		1	3%		3	4%	4	5%
TOTAL	64	57	226		29	100%		74	100%	72	100%

How Condo Purchases Were Financed:

	2011		2016			2020		2021 YTD
Cash	14	48%	34	51%		43	58%	32	44%
Conventional loan	15	52%	32	48%		30	41%	39	54%
Seller financing	0	0%	0	0%		1	1%	0	0%
Other	0	0%	1	1%		0	0%	1	1%
Total	29	100%	67	100%		74	100%	72	100%

 

MULTI-FAMILY

Once again, there were no closed sales in the past month.  The year-to-date total is 7 sales, which is an increase of 4 over the same period in 2020.  This year’s sales have consisted of 2 duplexes, 2 triplexes, one four-plex, a 5-plex, and a 10-unit property.  Multi-family is and has always been a very small segment of the Taos real estate market.  In peak year 2005, there were but 8 sales, with a total dollar volume of $3,053,000.  However, going forward we may see sales increase as more investors start to consider this class of real estate.  Rents have been rising for years.  There is way more demand than supply for long-term rentals, and this trend is expected to continue.  Multi-family income properties yield fairly attractive returns on investment.  With today’s low interest rates (cost of capital), and with prices of single-family homes and condos having risen rapidly, multi-family should start to attract investors.  Additionally, if inflation does persist, then real estate investments traditionally have provided a good inflation hedge.

Currently, there are 11 multi-family properties listed for sale; 4 of these have sales pending.

LAND

November 2021 had 22 closed sales vs. only 9 in the corresponding month in 2020.   Year-to-date unit sales are up 81%:  232 vs. 128, a gain of 104 tracts sold.  Dollar sales are up only 38% ($25.2 million vs. $18.2 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 $13.95 million (124%). 

After languishing for years after the real estate recession that started in 2008, land sales are really picking up.  The market still has a way to go before equaling the level of unit sales achieved in the years leading up to 2008:  2021 should end with approximately 250-260 closed sales; in 2005, there were 339 closed sales.  But the trend is definitely up, as some home buyers who have been frustrated in their search for an existing home 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” — costs $350 – $400 per square foot to build today in Taos.)

Currently, there are 80 pending sales!  That is a huge number which reflects the title company delays noted above.  Clearly, if escrows weren’t taking as long as they are (4-5 months), we would be reporting substantially more closed sales.

Median price year-to-date is $70,800 vs. $70,300 last year, a slight increase of $500 (+1%).  The median price comparison is negligibly affected by that one large sale last year, because the median is just the midpoint in the range of prices; however, average (mean) price is affected by that big sale.  Excluding the $7 million sale last year, average price of $108,600 this year is up $20,100 (+23%) over last year.

Current inventory of 542 tracts listed for sale is up 15 from 527 one month ago, and up 50 from 492 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 rapidly as they have for homes and condos until some of the excess inventory is absorbed. The land market is not yet a seller’s market.

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

		UNITS				SOLD
——INVENTORY—–				2017			2020		2021 YTD
	Current  Month	Same Month Last Year		#	%		#	%	#		%
Up to $50,000	118	124		46	39%		52	36%	79		34%
$50,000 – $100,000	195	150		34	29%		53	36%	79		34%
$100,001 -$150,000	71	67		16	14%		17	11%	24		10%
$150,001-$200,000	42	42		15	13%		16	11%	19		8%
$200,001– $250,000	30	31		3	2%		4	3%	14		6%
$250,001 – $300,000	16	19		2	2%		0	0%	6		3%
Over $300,000	70	59		2	2%		4	3%	11		5%
TOTAL	542	492		118	100%		146	100%	232		100%

Days On Market – For the first eleven months of the year, the average time to sell a piece of land is 364 days.  This is down 87 days (-19%) from the same time period in 2020.  The average over the past 18 years is 410 days.  This is another indicator that buyer demand for land is picking up.

How Land Purchases Were Financed:

	2011		2016			2020		2021
Cash	28	69%	63	70%		110	75%	185	80%
Conventional loan	5	12%	6	7%		26	18%	29	13%
Seller financing	7	17%	20	22%		9	6%	17	7%
Other	1	2%	1	1%		1	1%	1	0%
Total	41	100%	90	100%		146	100%	232	100%

Cash is still by far the most common way land purchases are financed.  The availability of loans for land purchases is more limited than it was during the years before the “Great Financial Crisis” of 2008, when loans were easy to obtain.

COMMERCIAL

There was one closed commercial sales in November this year compared to two in the same month last year.  Through eleven months this year, only 4 sales have closed, compared to 7 in the same period in 2020.  This year’s dollar volume  is $1,670,000, a decrease of $432,000 over 2020 sales of $2,102,000.  For the full year 2020, there was a total of only 8 sales, with a total dollar volume of $2.9 million.  The two best years during the previous 18 years were 2005 (19 closed sales totaling $8.7 million) and 2015 (17 closed sales totaling $8.1 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 33 commercial properties listed for sale, down from 38 last month. At this time, five are under contract. Like everything else, commercial sales are taking a long time to close.

Obviously, the commercial market will take longer to bounce back from the effects of the Covid-19 pandemic on the economy and local businesses. Ongoing concerns about the virus—as well as widespread difficulties in hiring employees to staff business operations—are no doubt dampening people’s willingness to venture into commercial enterprise. However, with the growing number of people moving to Taos for either full-time or extended-stay living, and with tourism on the rebound, the demand for commercial property should increase in the not-too-distant future.