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.
What a year 2020 was! The Covid-19 pandemic was a huge game-changer for just about everybody and everything–all over the world. Unlike many industries and people, the real estate business had a good year, for which we are grateful. As 2021 gets underway, we hope and believe that there will be positive change for everyone.
The Taos real estate market faltered in the spring when the pandemic took hold and stay-at-home orders were initiated. When restrictions were eased, and people started traveling, the market regained momentum. Summer and fall saw a surge in buying as people from cities sought a home in less populous areas to escape to. There was an air of almost panic buying. This will probably ease up as the pandemic is gradually brought under control in 2021; but the market should remain strong as more people decide that they can live anywhere and work from home.
For the full year 2020, the total market (all categories of property) was up by 49 closed transactions (9%), at 569 sales this year vs. 520 last year. Total dollar sales were up 24% at $177.0 million vs. $142.8 million, a gain of $34.2 million.
Sales of single-family homes—by far the biggest segment of the market—were up in every month this year except January and May compared to the same month in 2019. Demand continues to far exceed supply. Prices are rising, and time to sell is falling.
Condo demand has also increased, but the lack of inventory is even more acute than for homes, and this has been a constraint on sales. Full-year 2020 unit sales were 6% below last year. Prices are rising sharply in this market segment, too.
Land unit sales were 6% fewer in 2020 than in 2019. Recently there has been an increase in the number of pending land sales, so this segment of the market appears to be starting to get some momentum. With buyer demand for single-family homes expected to remain strong, and with no foreseeable increase in supply of homes available for purchase, the land market should see an increase in sales in 2021.
Following is a detailed discussion of each market segment:
The Covid-19 pandemic added an incremental layer of buyers to a market that has been steadily gaining for the past five years. Unfortunately, the inventory of homes listed for sale has not kept up with soaring demand. Homes are going under contract much faster than usual in Taos, and prices are rising at an accelerated rate. We are also seeing an increase in sales of higher-priced homes.
Full-year unit sales were 24.4% above last year’s pace: 337 homes this year vs. 271 last year. At 337, the number of sales is just 14 fewer than in peak year 2005 when 351 homes sold (-4.0%). The gain would have been even greater but for the time it is taking to close real estate sales contracts. There are only two title insurance companies in Taos, and they are overwhelmed by the number of orders, from both purchase contracts and from refinancings. Additionally, Taos County offices have been open just two hours per day for Covid-19 safety reasons, thus hampering the title companies’ ability to do title searches. As a result, it has been taking ten weeks or longer to get title insurance commitments to be able to close sales.
Currently, there are 62 sales pending, up from 60 last month, and well above the historical average of 15-30 homes under contract at any given time. The high number of pending sales is in large part due to the delays in closing sales caused by the backlog at title companies.
Dollar sales for the full year were up 30.2% over 2019 at $131.6 million vs. $101.1 million. 2020 dollar sales were $14.9 million (12.8%) above peak year 2005 sales of $116.7 million.
Median and Average Prices – For the year 2020, the median price (midpoint) was $344,000 vs. $322,500 in 2019, an increase of $21,500 (+6.7%). The average (mean) was $390,500 vs $373,100 last year, an increase of $17,400 (+4.7%).
Here is a chart showing the trend in median and average prices over the past several years, and what they were in peak year 2007:
Price 2007 2016 2017 2018 2019 2020
Median $325,000 283,500 300,000 311,000 322,500 344,000
Average $379,900 306,100 326,800 370,500 373,100 390,500
Price Level Trend – Prices of single-family homes fell 30%–35% from their peak in 2007 to a bottom in 2011. Prices were basically flat for a few years, then they started to increase slowly, mainly in the most preferred areas. By 2015 prices were starting to rise gradually in most cases as buyer interest began to gain momentum. Prices have risen steadily over the past four years, as demand has continued to grow, while supply has declined. Prices are now above peak levels of 2007, as measured by median and average. Recently, the rate of price rise is accelerating as buyer competition for scarce inventory heats up.
Price Discounting – For the year just ended, actual sales price averaged 4.6% below the last asking price when the home went under contract; however, the discount from original asking price was 7.2%. The trend of demand exceeding supply has caused the discount from original price to decrease from 2013 to 2019. This discount should continue to diminish (if sellers and brokers resist the temptation to list homes at unreasonably high prices in a hot market!). Here is a chart showing the discount from original asking price over the past eight years:
2013 2014 2015 2016 2017 2018 2019 2020
18.4% 16.9% 13.9% 13.3% 9.4% 10.3% 7.8% 7.2%
Days On Market – The average days on the market in 2020 was 156 vs. 151 in 2019, an increase of 5 days (3.3%). Even during the boom years before the financial crisis of 2008, the average time to sell in Taos was about eight months! Since 2016, there has been a huge decrease (about 33%) in the average time from when a house is listed to when it goes under contract. This chart illustrates DOM in peak year 2006, in the past eight years:
2006 2013 2014 2015 2016 2017 2018 2019 2020
247 244 235 235 226 192 147 151 156
Here is a chart with data on current inventory and unit sales by price segment for the year:
|| Jan 2020
|| Sep 2008
|Up to $200,000||30||52||190||66||44%||58||21%||61||18%|
|$200,001 – $300,000||27||44||109||37||25%||64||24%||70||21%|
|$300,001 – $400,000||39||52||69||20||13%||74||27%||83||25%|
|$400,001 – $500,000||25||26||39||12||8%||27||10%||45||13 %|
|$500,001 – $650,000||22||35||35||9||6%||24||9%||42||13%|
|$650,001 – $800,000||18||22||27||4||3%||16||6%||15||4%|
|$800,001 – $1million
Note the jump in sales in the $800,000 – $1 million segment. And six homes sold for over $1 million.
Inventory – At the time this report was prepared, inventory had decreased again: only 199 homes were listed for sale, down 28 homes (-12%) from 227 last month, and down 70 homes from 269 a year ago (-26%). The highest inventory this year was 273 (in July); last year’s high was 314 (in August). 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 this year it has decreased again.
Here is chart showing average inventory for the past eight years:
2013 2014 2015 2016 2017 2018 2019 2020
334 333 324 316 285 264 274 257
One reason for the diminished inventory is that property owners who in earlier times would have sold their Taos homes when they no longer used them are now holding them as rental property. The number of homes for rent on sites such as Airbnb.com and vrbo.com has increased exponentially over the past several years. Evidently, property owners are achieving excellent net income from vacation rentals. Positive cash flow, possible tax benefits, and price appreciation add up to a compelling reason to hold the asset as part of an investment portfolio.
Another factor affecting supply is that since the real estate crash of 2008, there has been very little “spec” building by contractors. However, even if there were the same number of spec houses being built today that occurred in the 1990’s and early 2000’s, it would not amount to more than maybe an additional 20 homes in inventory at any given time.
Taos inventory consists of a wide variety of size, price, style, location, and condition. It is often difficult to find more than 3-4 homes to show a buyer that might meet most of his/her criteria. With sales increasing–even among homes with less popular styles and locations–and with no significant increase in the building of new homes or the listing of existing homes, the inventory will probably continue to shrink relative to demand. The acute inventory shortage is definitely affecting total sales, as well as average prices, price discounting and days on market.
How Home Purchases Were Financed:
During the recession that followed the Great Financial Crisis of 2008, when obtaining loans was more difficult, cash purchases accounted for nearly the same percentage as conventional loans. Loans have again become the primary means of financing purchases.
Interest Rates – Interest rates on residential loans remain extremely low. After fluctuating sharply in March-April due to market uncertainties caused by Covid-19, rates stabilized, and they have then decreased during the year. Current rates are down very slightly from a month ago. Rates are expected to remain very attractive at least through 2021. Here are current rates as posted by Bankrate.com on January 21, 2021:
Conventional 30-year fixed: 2.88 % (Nominal) 3.18 % (APR)
Conventional 15-year fixed: 2.36 % 2.70 %
Jumbo 30-year fixed: 2.92 % 3.03 %
5/1 Adjustable 2.98 % 3.99 %
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales – For the full year of 2020, there were nine foreclosure sales (2.7% of total sales). Prices ranged from $20,000 to $329,000. The number of foreclosures has diminished steadily over the past several years, both in Taos and nationally. Currently, there is just one 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:
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.
December unit sales were up three compared to December 2019 (8 vs. 5). There were only four months in 2020 with gains over the same month last year. Full-year 2020 unit sales were 5 fewer than last year: 74 vs. 79 (-6.3%). Condo sales would be trending higher than last year if there were more condos available for purchase, especially in and near the Town of Taos. The inventory shortage is even worse than for single-family homes.
Dollar sales for the year were up 3.3% due to rising prices, and to the sales mix (more higher-priced units sold).
Like single-family homes, condos are experiencing heightened buyer interest, due to the Covid-19 buying wave. At the time of this report, there are 12 condo sales pending, up significantly from the 3-5 that has been typical up until recently. As with homes, some of this increase is due to the increased time it is taking to get sales contracts closed (backlog of title work, appraisals).
Median price for the year was $288,500 vs. $230,000 in 2019, an increase of $58,500 (+25.4%). Peak year (2007) median price was $263,000.
Average (mean) price in 2020 was $293,200 vs. $265,800 in 2019, a gain of $27,400 (+10.3%). Average price in 2018 was $265,800; in peak year 2007, average price was $279,100.
As with single-family homes, condo prices in general have been rising, due to the same inventory situation of more demand than supply. However, some of the the large gains in median and average prices may be partly attributable to a changing sales mix, with proportionally more higher-priced units (e.g., larger units, and units at Taos Ski Valley, where prices are higher per square foot). This year, 28 of the 74 units sold (38%) were at TSV; in 2019, only 20% of the total of 79 condos sold were at TSV.
Price Discounting – For the full year 2020, final sales price averaged 2.4% less than last asking price when the condo went under contract; the discount from original price was 3.2%. In 2019, final sales price averaged 5.5% less than last asking price; the average discount from original asking price was 6.5%.
Here are the discounts from original asking price for the past six years, and this year to date:
2014 2015 2016 2017 2018 2019 2020
12.7% 8.6% 11.8% 6.7% 6.5% 5.5% 3.2%
Inventory – The number of condos listed for sale at the time of this report was 49, down eight from last month, but up 14 from 35 units at this time a year ago. Of the 49 units currently available for purchase, 24 (49%) are at Taos Ski Valley, while only 25 are in or near the Town of Taos; those 25 include a wide variety of size, age, style and price, so just as with with houses, it is difficult to find more than a very few listings that work for any given buyer. In 2006, there were often over 200 condos on the market at any given time, with the majority in or near central Taos; there were 149 condo sales that year.
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:
||Sept.||# of||# of||# of|
|Up to $150,000||3||0||40||16||55%||11||14%||10||13%|
|$150,001 – $250,000||10||9||50||8||28%||37||47%||21||28%|
|$250,001 – $350,000||18||11||51||3||10 %||10||12%||18||24%|
|$350,001 – $500,000||14||13||56||1||3%||19||24%||22||30%|
Like single-family home owners, many condo owners are holding their property as investments yielding attractive returns from rentals, rather than selling; this has greatly reduced the supply of condos available for purchase.
How Condo Purchases Were Financed:
Conventional loans for condos are more difficult to obtain than they were before the financial crisis of 2008: the criteria for a loan to be eligible for purchase by the US government agencies Fannie Mae (FNMA) or Freddie Mac (FHLMC) are more stringently applied these days; some condo projects do not qualify; therefore, even if the buyer is qualified, lenders who need to be able to sell their loans in the secondary market won’t make a loan on condo projects that do not meet the government agency guidelines. The percentage of condo sales financed by conventional loans (40%) is much lower than for single-family homes (59%).
Foreclosure Sales – There were no foreclosure sales in 2020. In 2019 there was only one foreclosure sale out of 79 condos sold. Currently, there are no foreclosed condos listed for sale.
Multi-family has always been a very small portion of the Taos market. In all of 2020, there were just four multi-family sales, an increase of one over 2019. The four sales totaled $1.2 million. In 2018, there were four sales, with a total price of $1,847,000. 2017 also had four sales, totaling $1,790,000. Since 2004, the highest number of sales was 8 in 2005 with total dollar volume of $3,053,000.
There are currently 11 multi-family properties listed for sale. There are four pending sales, an increase over what has been typical. It is possible that the Covid-19-induced buying surge is affecting even this market segment, although as with everything else, the increase may be due to the backlog at the title companies.
The supply of long-term rentals in Taos is very low relative to demand. Many owners of single-family homes and condos have switched from doing long-term rentals to short-term (vacation) rentals. Long-term renters are having difficulty finding places to live. Rents are rising, which should make the investment returns on multi-family properties attractive. However, obtaining conventional financing of properties larger than a duplex is challenging due to the lack of comparable sales. Additonally, rental management expenses reduce cash flow and return on investment.
December closed sales jumped to 18 from 7 in November. The year 2020 ended with 146 closed sales vs. 155 in 2019, a decrease of 9 units (5.8%). Dollar sales were $19.7 million, a gain of $6.1 million (45%) over 2019; however, the large increase is due to one sale in April of $7 million (a 5,433-acre ranch in the El Rito area north of Taos)–an unusually high price for the Taos market. Excluding that one sale, 2020 dollar volume was down $899,000 (-6.6%). Excluding the ranch sale, prices have ranged from $11,000 – $390,000 (a 0.9-acre lot at Taos Ski Valley).
Median price year-to-date of $70,300 is up $3,100 (4.6%) from $67,200 last year. The $7 million sale doesn’t affect median price (the midpoint of prices), but it does affect average (mean) price. Average price year-to-date with the ranch sale included is $134,700 vs. $87,500 last year; however, with the ranch sale excluded, average price is $87,400 this year, a decrease of $100 from last year. Here is a chart indicating price trends since 2016, and in peak year 2007:
Price 2007 2016 2017 2018 2019 2020
Median 89,000 52,300 64,500 62,700 65,000 70,300
Average 128,000 73,100 89,800 92,300 85,400 87,400*
*excluding the $7 million sale
Land sales have been slowly recovering from the recession, but they haven’t come back nearly as much as residential sales have. From a low point of 41 closed transactions in 2011, 2019’s total of 155 sales was a gain of 270%, but that was still 56% below peak year (2005) sales of 339 tracts. One reason for sluggish land sales is that the cost to buy land and build a home is still significantly greater than the price of an existing home, even though prices of existing homes have been rising. Building costs have risen sharply this year due to the Covid-19 impact on supply chains for materials (factory and lumber mill production slowdowns, imports), and extra demand for materials in hurricane-damaged zones. Notwithstanding much-higher building costs–the cost to build a good-quality house is now $275-$300 per square foot–the critically low inventory of homes available for purchase may start to drive more land sales, as buyers who cannot find a suitable existing home to purchase may decide to buy land and build. Currently, there are 47 pending sales. Many more than what has been typical in Taos. Once again, some of this is due to the extended time it is taking to close purchases; but interest in vacant land does seem to be growing.
Price Discounting – For the full year 2020, the discount from last asking price when the property went under contract was 8.7%; the discount from original asking price was 12.2%. The discounts have diminished over the past six years. For the full year 2019, the discount from last asking price was 9.5%; the discount from original asking price was 15.9%. Discounts for land are greater than for residential sales because land is still pretty much a buyer’s market, whereas residential is a seller’s market.
Here are the discounts from original asking price for the past six years and this year to date:
2014 2015 2016 2017 2018 2019 2020
17.0% 18.4% 22.4% 20.0% 18.3% 15.9% 12.2%
Average Days on Market – In 2020, it took an average of 469 days to sell a piece of land. The averages for the past eight years were:
2013 2014 2015 2016 2017 2018 2019 2020
465 390 605 464 469 388 338 469
These statistics reflect the tepid demand for vacant land, and the fact that there is much more land on the market. Whereas the the residential market has become a hot seller’s market, the land market is still a buyer’s market.
Here is a chart indicating inventory and sales by price segment:
| Same Month
|Up to $50,000||117||133||46||39%||63||41%||52||36%|
|$50,000 – $100,000||149||161||34||29%||45||30%||53||36%|
|$250,001 – $300,000||17||15||2||2%||3||2%||0||0%|
Current inventory of 470 tracts listed for sale is down from 490 one month ago, and down from 483 a year ago. At 2020’s sales pace, the inventory of 470 listings equals about a 3.2-year supply.
How Land Purchases Were Financed:
The availability of bank financing for land purchases is much more limited than it was during the pre-recession years of 2000 – 2007.
One commercial sale closed in December, bringing the total for the full year 2020 to eight, with a total dollar volume of $2,852,000. In 2019 there were 12 commercial sales totaling $6,324,500.
This year’s sales included two commercial condos; a 4,000-square foot space in the light manufacturing zone; a 3-unit retail complex on Bent Street in the central business district; a 1,600-square foot space that had been an upholstery shop; and a workshop with two separate residential rental units on Hwy 64 West about a mile west of the Ski Valley Road intersection.
Currently, there are 29 commercial properties listed for sale. At this time, none are under contract.
Here is a quick look at the number of sales over the past eight years:
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2 7 9 3 17 7 5 14 12 8
The commercial market has been up and down over the past several years, with no clear trend. Commercial sales are still well below peak year 2005, when 19 properties sold, with a total dollar volume of $8,735,600. At the start of this year, our expectation was that the commercial market would continue to slowly improve; however, the Covid-19 crisis dealt a severe blow to many local businesses, with the attendant capacity limitations. When the health crisis eventually subsides, the commercial market should start to revive, especially if residential and land sales continue to increase. With more people living in Taos full-time or for extended stays, the demand for commercial products and services should grow.