Land at Southern Crescent

This landscape in the Southern Crescent neighborhood of the beautiful Galisteo Basin is typical of several listings offered by Debra Hagey. The parcels average about four acres with prices about $178,000.

In the middle of this prolonged virus crisis, people with investment portfolios may wish they had pulled money out of stocks and invested in real estate, specifically in land. During the past 18 months, there have been 388 sales of land parcels in the Santa Fe area. Bouncing off a recent national article titled “Why Land is the Perfect Safe Haven for Capital During a Crisis,” Home interviewed a small handful of local Realtors about this subject.

Debra Hagey, Santa Fe Properties, has a specialty in land listings, from Galisteo Basin to Abiquiu.

How are sales going?

We saw a lot of land go down in price during the economic downturn starting in 2008. I am seeing a little more activity in land. It’s still a hard sell, because people don’t realize how much it costs to build.

So many people decide it’s better to buy a house that’s already built and has landscaping. The problem is that there’s not much inventory, so that can motivate people to consider building.

Does land represent a save haven for investors today?

I will say that land is a great deal right now. People who purchased around 2004 to 2006 paid perhaps $300,000 for lots that are now selling for $180,000. I’ve sold lots in Las Campanas for $60,000 that were purchased for close to $300,000.

So if you have cash, buy a lot. I can’t say it will go up in value quickly, but I just can’t imagine lots going a whole lot lower than they are right now.

What about this idea that if people in the big cities work on the internet, they can escape to a more rural area and do their work wherever they are?

But internet access is still a challenge in remote areas, even in Glorieta. Typically our demographics are older people who have the opportunity to move out of the city and come to a smaller home, a nicer environment with good air quality and open space, but finding something more recent than a house built in the early 2000s is tough.

People come from other places wanting 10 acres or more and wanting city water, sewer, and gas, and I’m like, “I don’t think that’s going to happen.”

And what if you’re an investor thinking about doing a housing development?

You’d better have deep pockets. I sold 250 acres to an investor for $1 million, let’s say, and it’s cost him almost that amount to just get the planning and work with county and whatnot, so now he’s got $2 million in it. Those lots will be expensive when he finally gets to it, if he ever does.

David Dougherty, Dougherty Real Estate Co. said, I think buying land in this situation is a good idea.

How has the land market changed in the years you’ve been in this business?

It used to be that you could buy a piece of land and subdivide it, drill a well or two, and start selling away. It is hugely more complicated now because the county gets involved with access, there are requirements for topography, and on and on. Only the bigger guys like Pulte Homes have the resources — the lawyers, architects, planners, and engineers — to comply with all that.

The pandemic has been worst in high-density areas. Are people wanting to escape to more rural areas?

We have the 3,500-acre High Timber Ranch east of Tierra Amarilla that we’re listing with Hall & Hall, and they’re seeing quite a bit of activity out of major cities. Essentially these people want an escape hatch: if it happens again they want a place to go to and they won’t have to worry.

Paul McDonald, Sotheby’s International Realty, has worked in real estate since 1984.

Is land a good investment choice right now?

The City of Santa Fe is trying to unload land out at Santa Fe Estates, and when a friend was looking at it, I said, “Just be prepared when you buy land in Santa Fe, you have no income coming in and it can take five to 10 years to sell it. You’re much better finding something that has a structure on it that you can rent.

Look at the stock market. Those people wish they had bought land. It can sometimes be a space marker on a board game; it at least holds your money. How many people wish they’d bought one or ten lots on January 1 instead of hanging on to their stock portfolio?

If someone is judicious and they park their money, they can do quite well. You just have to be patient. But it’s pretty hard to not put some kind of rental property ahead of it so you’re enjoying $1,000 or $2,000 a month coming in whereas your land is just laughing at you every month.

How has the land market changed in your time here?

For decades, there was always the next big cut-up piece of land, the next big subdivision that was coming on the market and there isn’t one now. There are some big parcels out there, but I don’t see the county saying, Let’s cut these up into 1- and 2-acre lots; they have 5 and 10-acre minimums.

Monte Sereno was approved in the 1993 annexation and development agreement, and after decades of sales, we still have half of our inventory left. Las Campanas has developer inventory left 30 years later. You go talk to somebody starting off fresh and you want to sell them a few thousand acres as a developer and you’re going to tell them they’ll still be at this 30 years later? That’s a little harsh.

Santa Fe is a destination for people who want to leave the big city and still have great amenities, but growth in this area is limited by water supply.

That’s it. You’ve got Bill Gates in the back of your car, who can buy whatever he wants, but there’s nothing he could buy that he could go and get entitled, with affordable housing and water, with all the obstacles we have.

Our landscape is locked right now and I think we’ve been lulled into this continuum that more will come onto the market, but I think we’re at the end of the road. It’s like the Eagles song, ‘Cause there is no more new frontier, we have got to make it here.’

Deborah Bodelson, Santa Fe Properties, said Santa Fe is in demand.

The 3,000-square-foot home here is 10 or even 20 times better than you’ll get for the dollar in the other mountain communities — Jackson Hole or Telluride or Aspen. I showed a $3.3 million property last week to a couple that drove from Wisconsin in a fabulous Mercedes SUV; they drove in just to see $3 million-plus properties in Santa Fe.

You and your business partner, Cary Spier, are listing a 9-acre piece of land on Kachina Heights Drive. The price of the parcel was reduced from $3.7 million to $2.4 million last October, then it was reduced again to $1.8 million on April 1. Did that do the trick?

Not yet. I would have thought that that would be snapped up at $1.8 million. It’s a beautiful tract and the infrastructure was all done when there was an idea for condominiums. It’s crazy that someone hasn’t jumped on it.

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