The most recent data on Santa Fe’s housing market confirms what many have long suspected: there is a big affordability gap — the highest in years — and it’s getting worse.
In 2022, the difference between the average Zillow home value and the maximum affordable home price — which is the highest price a family making the area median income can afford while spending 30% of their income — was more than $300,000.
While the average value of homes on Zillow was about $520,000 in 2022, the maximum affordable home price dipped under $200,000 for the first time since 2015, partially due to rising interest rates.
“What that shows is that if an owner doesn’t already have a lot of equity built in a previous house to pay for that gap in affordability, they’re not going to be able to move to a bigger house if their situation changes,” labor economist Avilia Bueno said Wednesday during a presentation to city councilors on the Quality of Life Committee. “And that’s not even including how tight the inventory is.”
Bueno works for Root Policy Research, a Denver consulting firm that presented data on the city’s housing market.
City Councilor Jamie Cassutt called it “a sobering presentation.”
An affordability gap exists in Santa Fe’s rental market as well, where there is more than a $500 difference between average prices on Zillow and what average-income renters can afford.
Average income of the city’s renters, however, has increased as even higher-income renters have found home ownership unattainable. That puts pressure on the rental market, Bueno said.
The number of renters at every income level above $50,000 increased from 2015 to 2021, according to the group’s presentation, while the number of renters at every income level below $50,000 dropped — except one level, which rose slightly.
“It does provide some evidence that lower- and middle-income residents are being pushed out and not able to afford living in the city,” Bueno said, “and we have higher-income people coming in.”
Bueno’s firm analyzed income information, along with migration into and out of the county. In 2016, the average adjusted gross income of those moving into Santa Fe was $74,941. That number has risen every year until 2020, the most recent year shown, which is $140,774.
The average adjusted gross income of those leaving the county across the same period has remained relatively flat, about $74,000 to $79,000.
Root Policy Research is compiling the data to create a consolidated plan for the city, which is required by the U.S. Department of Housing and Urban Development every five years in order to receive certain funding opportunities. A plan will be available for public review by April 10, Bueno said, and the firm will have a completed housing strategy by the end of the summer.
Besides compiling data, Bueno said the group has been speaking with community groups to find out more about the housing needs in Santa Fe.
The group shared what some community stakeholders have reported, including concerns about how rising interest rates will present housing affordability challenges and further stress the current housing supply, “on top of resident resistance to development.”
Local groups also stressed the need for investments in permanent supportive housing, youth homelessness programs and long-term affordable housing projects, as well as shared housing options.
Councilors who sit on the committee asked about Bueno’s data points and fished for suggestions of policy that could turn around the deep affordability crisis that is prompting many in the city’s workforce to live elsewhere.
Bueno discussed some models like regional planning commissions that can provide local governments a way to collaborate on their shared housing challenges.
She also noted “affordable housing production,” adding “that’s going to require public funds.”
