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 County Association of Realtors MLS but that are not considered part of the main Taos market.
Total market sales (all categories of property) for the first four months of 2019 were below the same period in 2018 by 3%. The cold, snowy winter probably affected sales. Heck, it snowed today (May 9)! Buyer interest in Taos real estate remains strong, so sales should pick up as we get into summer.
Single-family home unit sales are lagging last year’s pace by about 7%, but dollar sales are up about 2%. The lack of adequate inventory of good homes available for purchase has been an ongoing issue in the market. 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. This situation continues in 2019. 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 April 2019 are up by 6 units over 2018. Dollar sales are up 46%. As with single-family homes, lack of inventory is pushing prices up.
Land unit sales so far this year are exactly equal to 2018. Dollar sales are down 36%.
Multi-family unit sales for the first four months of 2019 are none vs. 2 in 2018. This market segment remains very limited.
Commercial sales through April are 3 this year, down from 5 last year. Dollar sales are down 40%.
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. 2019 looks to be on track to be about the same as 2018.
Following is a detailed discussion of each market segment:
SFH are by far the largest segment of the total Taos real estate market. Through April 2019, SFH accounted for 58% of total market transactions, and 73% of total dollar sales.
Year-to-date unit sales are 75 vs. 81 in the same period of 2018 (-7.4%). Dollar sales are up 1.5% ($25.8 million vs. $25.4 million), due to rising prices, as well as more sales of higher-priced homes. Please see the chart below for a breakdown of sales by price segment. Although year-to-date sales are behind last year’s pace, we expect sales to pick up as the summer-fall peak selling season gets underway. The number of homes under contract for sale at the time of this report was 32, up from 29 a month ago. The lack of inventory is a real constraint on sales; there would be more sales if there were more good homes available for buyers to look at. Therefore, we forecast full-year unit sales to be only about the same as 2018. However, prices per square foot are rising; additionally, we are seeing more sales in the mid- and higher strata of the market; thus dollar sales for the year will probably exceed 2018 by about 10%.
Median and Average Prices – For the first four months of 2019, the median price was $327,500 vs. $290,000 for the same period last year (+12.9%). Here is a simple chart showing the trend in median and average price over the past three years, and what they were in peak year 2007:
2007 2016 2017 2018 2019 YTD
325,000 283,500 300,000 311,000 327,500 (Median Price)
379,900 306,100 326,800 370,500 344,100 (Average Price)
Price Discounting – Through four months this year, actual sales price has averaged 5.9% below last asking price when the home went under contract; the discount from original asking price is 8.1%. 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% 8.1%
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.
Days On Market – The average days on the market so far in 2019 is 160 vs. 146 for the first four months of 2018. Well-priced homes in the more desired areas are definitely selling faster than in years past. From 2004 to 2015, the average time to sell a house in Taos was about eight months. Today if 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. This chart illustrates DOM in peak year 2006, and in the past six years:
2006 2013 2014 2015 2016 2017 2018 2019 YTD
247 244 235 235 226 192 147 160
Here is a chart indicating inventory and sales by price segment:
|Up to $200,000||48||50||190||66||44%||70||25%||20||27%|
|$200,001 – $300,000||46||44||109||37||25%||66||23%||15||20%|
|$300,001 – $400,000||47||49||69||20||13%||61||22%||22||29%|
|$400,001 – $500,000||36||37||39||12||8%||34||12%||3||4 %|
|$500,001 – $650,000||27||29||35||9||6%||31||11%||10||13%|
|$650,001 – $800,000||21||24||27||4||3%||9||3%||4||5%|
|$800,001 – $1 million
Inventory – At the time of this report, there were 257 homes listed for sale, up from 249 last month. The highest inventory in 2018 was 328; the average for the year was 264. The average inventory has decreased steadily over the past six years:
2013 2014 2015 2016 2017 2018 2019 YTD
334 333 324 316 285 264 253
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 is that there is 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). Another, probably stronger, 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. Additionally, many 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. With positive net cash flow plus price appreciation, many owners are holding their Taos homes as good investments.
How Home Purchases Were Financed:
Interest Rates – Interest rates on residential loans are still extremely low by historical standards. Here are current rates as provided by local mortgage broker Donna Nelson (NMLS 190187) at Dimond Mortgage (tel 575-758-5566, firstname.lastname@example.org)
Conventional 30 year fixed: 4.375% (Nominal rate) 4.469% (APR)
Conventional 15 year fixed: 3.875% 4.038%
Jumbo 30 year fixed: 5.25% 5.308%
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales – Through the first four months this year, there have been 7 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:
|2019 YTD||7||( 9%)|
Currently, there are 12 bank-owned houses listed for sale; of those, four have pending sales. The number of foreclosures has diminished steadily over the past several years, both locally in Taos and nationally.
In the first four months of this year, there have been 20 closed sales, a gain of 6 (43%) 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.
The sales mix so far this year has included more 2- and 3-bedroom units than in the same period last year. Price per square foot is also rising. As a result, 2019 year-to-date dollar sales are up 46.1% over 2018, from $4,261,500 to $6,225,000. We forecast full-year 2019 unit sales to be about the same as last year; dollar sales should be up 10%.
Median price YTD is $335,000 vs. $257,500 in 2018 (+30.1%). Median price for the full year 2018 was $212,500. Peak median price was $263,000 (in 2007).
Average (mean) price YTD is $311,300 this year vs. $304,400 last year (+2.3%). Average price for the full year 2018 was $248,900. In 2007, average price was $279,100.
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 4.5%. 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 59, the same as the average for the 12 months of 2018. Peak inventory in 2018 was 74 units available for sale. Of the 59 units currently available for purchase, only 30 are not at Taos Ski Valley; and of those 30, only 12 are priced not more than $250,000.
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.
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, 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 in the first four months of this year. In 2018 there was only one foreclosure sale (1.5% of total units sold). In 2017 there were 5 foreclosure sales (8%).
There have been no multi-family sales during the first four months of this year, 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 is one pending sale (an old schoolhouse in town that could be converted to multiple units).
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.
Year-to-date unit sales are exactly equal to 2018’s for the first four months: 32 tracts sold. However, dollar sales are down from $4,101,000 to $2,628,900 (-35.9%). The cold and snowy winter was probably a factor, since most buyers do not like to walk land in the cold and snow.
Median price year-to-date is down compared to 2018, from $66,000 to $55,700 (-15.6%). 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 four months this year is $82,200, down from $102,500 last year for the same time frame (-19.8%). 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 a 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.
One factor helping to boost land sales is the inadequate inventory of single-family homes available for purchase. Some people who want a home in Taos but who cannot find a suitable existing home are opting to buy land and build. Additionally, a few “spec” builders are buying land, mostly lower-priced lots for homes to be built in the $250,000-$275,000 price range.
Price Discounting – Year-to-date, the discount from the asking price when the property went under contract is 8.3%; the discount from original asking price is 19.8%. Here are the discounts from original asking price for the past five years:
2014 2015 2016 2017 2018 2019 YTD
17.0% 18.4% 22.4% 20.0% 18.3% 19.8%
Average Days on Market – Year-to-date 2019 the average is 411 vs. 410 for the same period in 2018. The averages for the past six full years were:
2013 2014 2015 2016 2017 2018
465 390 605 464 469 391
Here is a chart indicating inventory and sales by price segment:
|Up to $50,000||141||154||46||39%||51||42%||15||47%|
|$50,000 – $100,000||154||193||34||29%||42||35%||7||22%|
|$250,001 – $300,000||18||16||2||2%||3||2%||1||3%|
The commercial market has been up and down over the past several years. 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 four months of 2019, there have been 3 commercial sales, a decrease from 5 for the same period in 2018. Total dollar sales year-to-date are $587,000 vs. $1,340,000 last year.
Currently, there are 22 commercial properties listed for sale. Of these, two are under contract: an 8-unit lodging operation on Brooks Street in central Taos; and 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.