COMMENTARY

MARCH 2008 COMMENTARY

The Taos real estate market is starting to show signs of increasing buyer activity. Anecdotal evidence from other brokers indicates an increasing number of people looking at property; however, the number of units going “under contract” and closing is still relatively low. While February 2008 was up slightly compared to February 2007, March 2008 is down significantly vs. March 2008. It will take a few more months to determine if a real upward trend is developing.

National news is still all doom and gloom! Foreclosures up, house prices falling, negative equity, homeowners walking away from properties, billions of write-downs of mortgage assets, a worsening credit crunch, increasing layoffs, soaring food and energy prices, and a probable recession.

Many parts of the national real estate market will have another tough year in 2008; in fact, some markets may not recover for several years. However, real estate markets are very localized, and Taos is in much better shape than many other areas. Taos has not had the speculative excesses plaguing these other markets. This market has been pausing due to buyers not coming here to buy due to problems in their “home” market: their current primary residence may not be worth as much as it was before the national slump began, and they might not be able to sell it in a timely manner if they want to move to Taos. Finally, worries about recession are further dampening demand. As a result, many buyers are postponing purchasing property in Taos.

We believe that Taos will rebound ahead of most national markets, and we are forecasting that 2008 will show some moderate gains over 2007. We do not expect a hot market such as we had in 2005 and the first half of 2006. Now is still an excellent buying opportunity!

Although price appreciation in Taos has slowed during the market lull, prices here are not falling – at least not yet. (We have seen some major reductions in asking price because some properties were originally listed at prices that were unrealistically high; and we are seeing some sales prices at 20%-25% below those original asking prices; however, we have not seen the same property sell for less than in a previous sale, i.e., true price decrease.) In fact, actual median and average sales prices continue to rise. Most Taos sellers do not urgently need to sell, and they are not accepting unreasonably low offers. Some sellers have taken their properties off the market, and are waiting for the market to strengthen before relisting them for sale.

Sellers who want to sell in the current weak market should realize that they need to price property realistically. They also need to address any defects, and do all that they can to make their property attractive to the relatively few buyers actively looking to buy. More sellers are “staging” their homes to make them more attractive. (See related article in our website.) It is still a buyer’s market, and buyers are more picky than they are when the market is hot!

For the buyers who are looking at property, there does not seem to be much of a sense of urgency to buy. They perceive that the market is still slow and that prices are not rising fast. Some are making very low offers, under the (mostly) mistaken idea that sellers are desperate to sell. Nevertheless, there is usually room to negotiate!

Although the number of residential properties (houses + condos) for sale has decreased somewhat from a peak of 711 in September 2007 to 585 currently, that is still a large inventory for the number of buyers actively buying. The average number of days on market in Taos has always been relatively high. Even when the market was hot in 2005, the average for all residential properties was 248. The average for the first tthree months of 2008 is 289.

CONCLUSION

Taos will resume an upward trend, although it may be six months to a year before buyers really return in earnest. We believe that, when the market does rebound, Taos is poised for a major market surge over the next five to ten years. Taos is definitely being considered by more and more prospective buyers who are seeing it as an attractive – and less expensive – alternative to other Rocky Mountain resort areas, e.g., Santa Fe, Telluride, Vail, Aspen, Jackson Hole, etc.

Prices will start to rise steadily again -- and price discounting will diminish -- as demand increases and once again exceeds supply (which will probably always be relatively limited in Taos). Interest rates remain very favorable, and sellers want to sell. So now is a very opportune time to invest in Taos real estate!

Please call us at 575-758-3275 with any questions, and we’ll be happy to discuss our real estate market – or anything else about Taos – with you!

Warm regards,

Amanda and Peter Lora

STATISTICAL HIGHLIGHTS

MARCH 2008 vs. MARCH 2007:

For the overall market (residential, land, commercial, and multi-family properties):

-Total units sold decreased from 51 to 18 (65%).
-Total dollar sales decreased from $18.8 million to $4.8 million (75%).

March was a very weak month, for no apparent reason. Sales were down markedly, not only compared to March of last year, but also compared to January and February of this year.

YEAR-TO-DATE THROUGH MARCH

The overall Taos market (all categories of property) for the first quarter of 2008 compared to the same period in 2007 is down 33% in terms of number of units sold, but it is down 34% in terms of dollar sales.

The number of single-family homes sold (excluding condos and townhouses) is down 30%. Dollar sales are down 18% from 2007. The median price (equal number of units sold above and below this price) of homes has increased slightly, and is at $337,500 vs. $336,300 last year (+0.4%). The average price has also increased, from $392,200 to $447,900 (+17%).

The number of Condominiums and Townhouses sold decreased 36%, while dollar sales decreased 44%. The median price has decreased again, from $285,800 to $275,000 (4%). The average price also decreased, from $303,000 to $287,600 (5%). Given that only 14 condo units have sold year-to-date, the average price declines probably reflect the mix of units sold, rather than actual declining prices.

Total Residential Market (homes + condos) number of units sold year-to-date this year vs. last year has declined from 76 to 52 (32%), and dollar sales have decreased from $27.8 million to $21.1 million (24%).

Land units sold through March dropped from 37 to 27 (27%), and dollar sales volume is down from $5.1 million to $3.3 million (36%). The median price has increased from $89,000 to $109,000. (The median is not a very meaningful number, since land transactions vary so much in terms of size, location, etc; however, it is somewhat indicative of a trend.) The average price year-to-date has dropped from $137,300 to $120,800. Again, this is not a very meaningful number. Land sales are suffering from the same decrease in demand as in Residential sales, as buyers postpone purchases. Even land in typically “hot” areas (e.g., Des Montes, Arroyo Seco, El Salto) is not selling very much.


SUMMARY DATA FOR THE ENTIRE YEAR 2007:

The overall Taos market (all categories of property) for the twelve months of 2007 vs. 2006 was down 33.1% in terms of number of units sold, and it was down 20.1% in terms of dollar sales.

The number of single-family homes sold (excluding condos and townhouses) was down 27.1%. Dollar sales were down 19.8% from 2006. The median price (equal number of units sold above and below this price) of homes continues to increase, and was at $325,000 at the end of 2007 vs. $286,000 last year (+13.6%). The average price has also increased, from $346,900 to $381,800 (+10.1%).

The number of Condominiums and Townhouses sold decreased 31.5%, while dollar sales decreased 26.3%. As with single-family homes, the median price has steadily increased, and ended 2007 at $263,000 vs. $251,000 a year ago.

Total Residential market (homes + condos) number of units sold for the year declined 28.5%, and dollar sales declined 21.5%.

Land units sold were 44.6% behind 2006 pace, and dollar sales volume was down 50.8%. The median price has increased slightly from $84,500 to $89,500. (The median is not a very meaningful number, since land transactions vary so much in terms of size, location, etc; however, it is somewhat indicative of a trend.) The average price dropped from $144,400 to $128,300. Again, this is not a very meaningful number. Land sales are suffering from the same decrease in buyer demand as in Residential sales.

CONCLUSION

Taos will resume an upward trend, although it may be six months to a year before buyers really return in earnest. We believe that, when the market does rebound, Taos is poised for a major market surge over the next five to ten years. Taos is definitely being considered by more and more prospective buyers who are seeing it as an attractive – and less expensive – alternative to other Rocky Mountain resort areas, e.g., Santa Fe, Telluride, Vail, Aspen, Jackson Hole, etc.

Please call us at 505-758-3275 with any questions, and we’ll be happy to discuss our real estate market – or anything else about Taos – with you!


(Note: Data exlcude Angel Fire, Black Lake, Eagle Nest, Red River, Chama, "Other" Area)
Source: Taos Board of Realtors. The data is believed to be accurate, but is not guaranteed.


TAOS REAL ESTATE MARKET STATISTICS  YEAR-TO-YEAR COMPARISONS
The following chart illustrates year-to-year comparisons
for the Taos Multiple Listing Service sales

(Note: Data exlcude Angel Fire, Black Lake, Eagle Nest, Red River, Chama, "Other" Area)
Source: Taos Board of Realtors.  The data is believed to be accurate, but is not guaranteed.