‘Less house for more money’: ABQ’s housing market feeling squeeze | Ezine Daddy

Prospective home buyers Amanda Gonzales and Adrian Espinoza walk through an open house in Albuquerque with their real estate agent Adam Trujillo on April 15. The median home price in March 2022 was $325,000. (Mike Sandoval/For the diary)

The median price for a detached single family home in March 2015 was $175,000.

Seven years later, that price has almost doubled.

According to a report by the Greater Albuquerque Association of Realtors last month, the median home price in the Albuquerque area was $325,000. The median home price was $372,002, according to the report. On both sides this has resulted in an increase of almost 20%.

And in line with the trend of increasingly scarce supply, around 523 single-family homes were available on the market in March. Around 540 apartments were available on the market in February, according to GAAR – a record low at the time.

“It’s a matter of supply and demand,” said Sarah Griffin, an Albuquerque-based real estate agent at Keller Williams Realty. “There are fewer houses than buyers.”

The hot market in Albuquerque and the surrounding area follows a nationwide trend of rising home prices and low inventories. In the US, the home inventory was about 950,000 — down 9.5% year over year — and the median selling price was about $375,300, up 15% from March 2021.

Inflation, which is increasingly affecting Americans, combined with low inventories and historically low mortgage interest rates, has contributed to rising home prices. But mortgage interest rates have risen, leading some to believe the market will level out in the coming months.

Less inventory, more bidding wars

Some new homes are being built in the metro area, but supply chain issues have hampered schedules for construction.

Kimberly Kiegel, an Albuquerque-based real estate agent at eXp Realty, said new homes aren’t always affordable for homebuyers, as developers are pricing new homes higher to accommodate rising delivery costs to make it “worth it.”

Additionally, Kiegel said the stock of homes for sale needs to be in the thousands to make the market healthier for buyers. But that wasn’t the case in the Albuquerque real estate market.

Low inventory has sparked bidding wars among potential buyers, with some paying up to $100,000 over list price, experts say.

“You get less house for more money,” Griffin said. “And you see multiple listings out there and buyers are paying, you know, $20,000, $30,000 up to $100,000 (above asking price).”

Local experts say this trend is in part due to workers moving to New Mexico with large amounts of cash. Griffin has seen buyers from California who she says are “pricing out new Mexicans.”

“They’re absolutely impacting our market,” Kiegel said. “Especially if they come from bigger cities. … I wouldn’t say that’s the case across the board. But it is there.”

Rising interest rates

Inflation, and measures federal politicians have taken to curb it, remains a major factor in the local housing market.

In the early months of the pandemic, the Federal Reserve took a variety of measures to stimulate economic activity, including cutting interest rates. This interest rate, in turn, has played a role in the housing market in recent years – with mortgage interest rates also falling.

But the Federal Reserve raised interest rates last month to counter rising prices for consumers, which has also caused home mortgage interest rates to rise — a sign the hot market is hopefully slowing, said David Garcia, vice president of the Bank of Albuquerque.

However, experts say the market could remain tight in the Albuquerque area due to the low inventory of homes. Earlier this year, interest rates — and they vary from lender to lender — averaged between 3% and 4%, according to Luke Ham, Albuquerque branch manager of VanDyk Mortgage. Mortgage rates are now around 5% – and could continue to rise.

“Most of what has fueled everything over the last two years has just been (low) interest rates,” Ham told the Journal. “All of a sudden people said, ‘Shoot, I’m going to buy real estate.'”

Garcia – although he believes the market will remain relatively hot – said he can see home prices starting to level out as mortgage interest rates rise.

“I think prices will stabilize a bit and selling prices will even out a bit and slow down from the pace they have been up to now,” Garcia said. “But there is still a lack of inventory.”

But this rise in interest rates can also result in hundreds of dollars more in mortgage payments, Kiegel said. This, in turn, can mean that homes that were affordable for buyers just a few months ago are now out of reach.

“Your newcomer who has no equity and no house to sell and (who) has to cobble together every dollar for a down payment, this rate hike is going to really hurt because they can now afford less per month,” Kiegel said.

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