The Lora Company’s Taos Real Estate Market Report for November 2018
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 that are in the Taos MLS but are not part of the main Taos market. For the most part, buyers looking for property in Taos are not looking in those areas, and vice versa. Those areas do not have their own MLS system, and many brokerages in those areas have joined the Taos MLS; but we feel that they are separate and distinct markets, so they are not included in our report.
Single-family home unit sales were UP in November by 6 over last November, bringing the year-to-date total equal to last year’s.
Condo unit sales for the month were UP by 4 units. Year-to-date sales are ahead of last year by 5 units (9%).
Land sales for the past month were DOWN by 6 tracts sold. Year-to-date sales are equal to last year’s pace.
Multi-family had no sales in November, the same as last November. Year-to-date sales are down by 1 from last year (3 vs. 4).
Commercial segment had two sales for the month vs. none last November. Year-to-date sales are up by 6 over last year (11 vs. 5).
As the second of these two charts shows, since bottoming out in 2011-2012, the total market through 2017 gained 105% in unit sales, and 130% in dollar sales. At this point, it looks as if 2018 will finish even with or slightly below 2017’s number of transactions; however, dollar sales will be above last year.
The lack of inventory of good homes available for purchase has been a major constraint on sales. Buyer interest continues to increase but the supply has not kept up with the demand. Homes are selling faster than they have historically in Taos, and prices are rising.
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 READY TO SELL!
SFH are by far the largest segment of the total Taos real estate market. Through November of 2018, SFH account for 58% of transactions, and 76% of dollar sales.
November 2018 had 28 closed sales vs. 22 in November 2017 (+27%). However, dollar sales were up 82%. The highest sale was just $717,000, but there were 10 more sales above $400,000 this November.
Year-to-date unit sales are exactly equal to last year at 257 homes sold. Dollar sales are up 14.5% ($95.9 million vs. $83.7 million). There have been six sales over $1 million this year vs. only one last year.
At this point in time, it’s looking like December 2018 unit sales will be the same as last December; therefore it appears that 2018 will end with the almost the same volume as last year. That would mean the market is still about 20% below the peak (2005) level of unit sales. However, dollar sales will be up about 15%.
Median and Average Prices – Year-to-date the median price is $310,000 this year vs. $303,000 last year (+2.3%). Full-year 2017 median price was $300,000; in 2016 it was $283,500. Year-to-date 2018 average (mean) price is $373,100 vs. $325,800 last year (+14.5%). The full-year 2017 average was $326,800; in 2016 it was $306,100. In peak year 2005, the median was $290,500; the average was $333,500.
So far this year, the highest sale price was a $5.4 million sale (the Lineberry property noted in our September report). It was followed by a $2.5 million sale, and the four others over $1 million.
Price Discounting – Year-to-date, the actual selling price has averaged 5.9% less than the last asking price when the property went into contract; however, the average discount from original asking price is 10.6%. For the full year 2017, the discount from original price was 9.4%; in 2016, it was 10.5%; in 2015 it was 13.9%; in 2014 it was 16.9%; in 2013, it was 18.4%.
Price Level – Prices of single-family homes fell 30%–35% from a 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, due to increasing demand and limited supply. Of course, prices in the most preferred areas have risen more than others. This year, we have seen prices rising at a faster rate, as demand has picked up even more while supply has remained about the same. The year-to-date median price is now about 5% below the peak median reached in 2007; the mean (average) price is about 2% below its peak which was also reached in 2007.
Days On Market – The average days on the market for all the homes that have sold year-to-date in 2018 is 144 vs. 200 for the same time frame last year (-28%). Well-priced homes in the more desired areas are definitely selling faster than in years past: In 2017, average DOM was 192; in 2016 it was 228; in 2015 was 234 days; in 2014, it was 235 days. Even during the boom years 2004-2006, the average time to sell a house in Taos was about eight months. However, if today’s buyers find a home that works for them, they are taking action rather than assuming that the home they like or an acceptable substitute will be available later.
Pending Sales – The number of homes under contract for sale at the time of this report was 22, down from 26 at last report a month ago.
|Up to $200,000||51||60||190||66||44%||77||27%||64||25%|
|$200,001 – $300,000||41||45||109||37||25%||66||23%||62||24%|
|$300,001 – $400,000||51||53||69||20||13%||65||23%||55||21%|
|$400,001 – $500,000||31||40||39||12||8%||33||12%||30||12 %|
|$500,001 – $650,000||25||26||35||9||6%||25||9%||28||11%|
|$650,001 – $800,000||25||28||27||4||3%||15||5%||8||3%|
|$800,001 – $1 million
Inventory – The inventory of available homes listed for sale decreased again, from 287 last month to 259 at the time of this report. In 2017, the number of homes available for purchase during the year ranged from a low of 228 to a high of 329, averaging 285. The highest inventory in 2018 was 328 (September). Current inventory is substantially less than during the early 2000’s; for example, in 2008 there was a high of 518 homes for sale. The inventory consists of a wide variety of price, style, location, and condition, so today’s 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 or 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 is that there is very little “spec” building happening, in which a contractor builds a home to list for sale (rather than “custom” building, where the contractor builds for an owner of a lot). Another reason 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. And some homeowners 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. This is probably another reason owners are holding homes: with positive net cash flow plus price appreciation, why sell?
How Home Sales Were Financed:
Interest Rates – Interest rates on residential loans were trending up, but recently they have come down some. Here are current rates provided by local mortgage broker C & M Financial, Adam Consiglio, NMLS ID 1748512, email email@example.com, telephone 575-425-1010:
Conventional 30 year fixed: 4.750% (note rate) 4.795% (APR)
Conventional 15 year fixed: 4.125% 4.200%
Jumbo 30 year fixed: 4.500% 4.514%
Jumbo 15 year fixed: 4.125% 4.129%
* Conventional rates assume a sales price of $325,000.00 with a 20% down payment. Higher or lower down payments may have a corresponding effect on the rate.
** Jumbo rates assume a sales price of $1,000,000.00 with a 25% down payment. Higher or lower down payment and or loan amounts may have a corresponding effect on the rate.
***Above rates based on credit scores above 740
Foreclosure Sales – Through 11 months of 2018, there have been 22 foreclosure sales (8.6% of total units sold). The number of foreclosure sales, and their percentage of total sales of single-family homes, for the previous seven years were:
Currently, there are only 9 bank-owned houses listed for sale; of those, five are under contract (sale pending). The number of foreclosures has diminished steadily over the past several years, both locally here in Taos and nationally.
November 2018 unit sales were up by 4 over November 2017 (13 vs. 9). But dollar sales were down 3%, from $2,515,500 to $2,438,000.
Year-to-date, 61 condos have sold, a gain of 5 units (8.9%) over 2017’s pace for the first eleven months. Dollar sales are up 8.2%, from $13,789,800 to $14,918,500. At this point in time, it looks as if 2018 will end with 67 units sold, a gain of 6 over last year, and equal to the number sold ion 2016. In peak year 2006, there were 149 condos sold, with a median price of $251,000, and an average price of $259,300. l
Year-to-date 2018 median price is $193,000 vs. $211,500 for the same period in 2017, a decrease of 8.7%. The median price for full-year 2017 was $215,000; in 2016 it was $188,000.
Year-to-date 2018 average (mean) price is $244,600 vs. $246,200 in 2017 (-0.6%). For full-year 2017 it was $243,800; in 2016 it was $212,900.
Price Discounting – Through 11 months this year, final sales price has averaged 4.9% less than last asking price; the discount from original price is 6.6%. For the full year 2017, final sales price averaged 4.6% less than last asking price; the average discount from original asking price was 6.6%. For the full year 2016, the discount from original price averaged 11.8%.
Inventory – The number of condos listed for sale decreased again, from 58 last month to 51 at the time of this report. However, 30 of those are at Taos Ski Valley (59% of available units); there are only 21 condos available for purchase for buyers who don’t want the Ski Valley location; for a buyer looking up to $250,000, there are only 9 listings, and of those only 3 are not at TSV. Peak inventory this year was 74 units available for sale (September).
As with single-family homes, the lack of inventory is constraining sales! In 2006, there were often over 200 condos on the market at any given time. However, inventory is not the only reason for lackluster sales: there just doesn’t seem to be as much buyer interest in condos as there was before the real estate recession. Additionally, condo financing is much more challenging than it was before the recession.
|Current||Last||Sept.||# of||# of||# of|
|Up to $150,000||0||1||40||16||55%||11||18%||17||28%|
|$150,001 – $250,000||9||11||50||8||28%||29||48%||22||36%|
|$250,001 – $350,000||13||17||51||3||10%||10||16%||9||15%|
|$350,001 – $500,000||23||24||56||1||3%||9||15%||10||16%|
Pending Sales – There was only 1 sale pending at the time of this report, down from 6 last month.
Days On Market – Through November 2018, the average days on market is 120 compared to 203 for the same period in 2017 (-41%). For the full year 2017, the average days on the market was 195 compared to 259 for 2016; in 2015 it was 328 days; in 2014, it was 237 days.
Cash Sales vs. Loans – For the 61 units sold so far in 2018, cash sales were 56% of the total, conventional loans were 41%, and two were seller-financed (3%). In 2017, 61% were cash sales, and 39% were financed with a conventional loan. 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, so 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 those “non-warrantable” condos.
Foreclosure Sales – So far in 2018 there has been only one foreclosure sale (1.6% of total units sold). Of the 61 condos that sold in 2017, 5 were foreclosures (8%).
There were no sales in either November of 2018 or 2017. Year-to-date in 2018 there have been three sales (a 7-unit property, one duplex, and one triplex) with total sales prices of $1,198,000. Through eleven months in 2017, there were four sales, with a total price of $1,790,000.
For the full year 2017, there were four sales; in 2016 there were two. Total dollar volume for 2017 was $1,790,000; in 2016 it was $787,500. Of the four sales in 2017, two were duplexes, one was a triplex, and one was a 28-slot mobile home park (which is not truly a multi-family residential property – it probably should have been classified as improved land).
There are currently 12 multi-family properties listed for sale. There are no pending sales. The triplex sale on Liebert Street near the center of Taos that was pending when last month’s report was written closed in December, and will appear in next month’s report. .
Investor interest in multi-family property should start to increase. 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 capitalization rates (net operating income as a percentage of sales price, i.e., rate of return on investment) should become more attractive to investors. On the other hand, with interest rates starting to rise, investors will demand higher cap rates, which will reduce values. However, the rate of increase in rents will more than make up for the rate of increase in interest rates, so investor interest should increase.
The asking prices for many of the listed properties do not yield an adequate rate of return for most investors; this is probably the main reason for the lack of sales. Additionally, obtaining financing for multi-family properties of more than two units is difficult because the lack of sales means that there are not enough comparable sales for appraisals: lenders generally require two comps in the past 12 months; however, with the recent sales, this may be less of a problem.
November 2018 unit sales were 5 vs. 11 in November 2017 last year (-55%); however, dollar volume was up, from $805,900 to $1,441,100 (79%). There was a 114-acre property in San Cristobal that sold for $1,075,000.
Year-to-date unit sales are exactly equal to last year, at 112 tracts sold. Dollar sales are up 7.7% ($10,723,200 vs. $9,955,800).
2017 full-year unit sales were up 31% over 2016 (118 vs. 90 tracts sold). Dollar sales were up 61% ($10.6 million vs. $6.6 million).
At this point in time, it appears that 2018 will finish with the same number of land sales as 2017, maybe slightly more (117-120).
Due to the limited inventory of single-family homes available for purchase, land sales are starting to increase as some people who want a home in Taos but who cannot find an existing home that suits them are opting to buy land and build. Additionally, a few “spec” builders are buying land. But land sales are still about 60% below peak (2005) level.
Through November 2018, the median price is $63,500 compared to $63,400 in 2017 (+0.2%). For full-year 2017 it was $64,500, up 23% from $52,300 in 2016.
Year-to-date 2018 average (mean) price is $95,700 vs. $88,900 in 2017 (+7.6%). Full-year 2017 average was $89,800.
The highest sale price so far this year is the $1,075,000 parcel noted above. It was by a 0.33-acre home site at Taos Ski Valley that sold for $537,000; then by a 20.66-acre rural tract in the valley near Taos center that sold for $360,000; then a 0.4-acre residential lot at TSV that sold for $350,000, and by a 1-acre residential lot near Taos Plaza that is zoned 14 units per acre but could also be a couple of high-end single-family home sites, which sold for $340,200.
Price Discounting – Through the first 11 months of 2018, final sales price has averaged 12.4% less than the last asking price when the land sold; the discount from original price is 18.2%. For full-year 2017, final sales price averaged 12.1% less than last asking price; the discount from original asking price was 20.0%. For the full year 2016, the discount from last asking price was 13.4%; the discount from original asking price was 22.4%. In each of the past few years, there have been several high-dollar sales at huge discounts that have skewed the averages somewhat.
The average days on market through November this year is 402 vs. 480 for the same period last year (-16%). For the full year 2017, average DOM was 472; in 2016 it was 464; in 2015 it was 605 days; in 2014 it was 390; in 2013 it was 465.
|Up to $50,000||158||165||42||47%||46||39%||47||42%|
|$50,000 – $100,000||171||185||31||34%||34||29%||36||32%|
|$250,001 – $300,000||29||14||2||2%||2||2%||3||3%|
The number of pending sales decreased from 12 last month to 10 at the time of this report.
The inventory decreased from 552 to 530 tracts listed for sale. This equates to a 3.7-year supply at this year’s projected absorption rate; however, as with single-family homes, the inventory tends to be lower in winter; the highest inventory was 592 (August), and that would equate to a 5-year supply at 2018’s absorption rate.
Although land sales are picking up, the number of land sales is still very low compared to the early 2000’s. In the full year 2005, there were 339 closed land sales for a total value of $46 million. In 2006, 296 tracts sold for a total of $42.7 million. The year 2018 looks as if it will end with about the same as last year, or 117 unit sales, with a total sales price of $10.4 million.
There were two commercial sales in November 2018 vs. none in November last year: the 3,000-suare foot space on Paseo del Pueblo Sur that previously housed the Century 21 real estate brokerage sold for $182,000 (asking price was $315,000); and an office duplex with a total of 1,840 square feet, also on Paseo del Pueblo Sur), sold for $305,000 9asking price was $330,000)
The year-to-date total is 11 sales vs. 5 for the same period last year. Year-to-date dollar sales are $3,606,000 vs. $2,851,000 last year through 11 months (+26.5%). 2017 finished at 5 sales for $2,851,000 In 2016 there were seven sales totaling $2.9 million. In 2015, there were 17 sales, totaling $8.1 million. In 2014, there were just three sales, totaling $2.3 million.
Currently, there are 29 commercial properties listed for sale. Of these, two are under contract: a restaurant on Paseo del Pueblo Sur (business only); and the RV park south of Town with an asking price of $350,000. This property has been under contract for years; a “dollar store” company is the buyer, but there is a lengthy due diligence/approval process. The workshop plus two residential rentals on Hwy 64 West (asking price $495,000) that was under contract in last month’s report is back on the market. The commercial condo on Gusdorf Road that was under contract in last month’s report closed in December, and will appear in next month’s report as a sale.
The peak year for commercial sales was 2005, when 19 properties sold, with a total dollar volume of $8,735,600. The Taos commercial market is still pretty weak. The local general economy has not recovered as much as the national economy; however, if the residential market continues to strengthen, the commercial market should gradually improve.