It’s the typical Santa Fe story: A family preparing to move to the City Different searches for a home, only to find housing options sorely lacking or too far out of their price range.

For more than two decades, Santa Fe has experienced one of the tightest housing markets in the country, with a rental vacancy rate close to zero and an inflated homebuying market out of reach for midlevel buyers.

The issue is particularly concerning for renters.

According to the Santa Fe Association of Realtors’ 2020 housing report, there is a shortage of about 7,343 rental units in the Santa Fe area, with an average rental cost of about $1,000.

Help is on the way.

According to the city Land Use Department, 5,000 housing units are in the development pipeline, with 760 completed since 2017 and over 2,200 under construction. On average, the department is issuing about 500 construction permits — slightly below pre-pandemic numbers — and 2,000 construction inspections per month.

But city officials and industry experts tasked with approving and monitoring new housing developments say it’s difficult to gauge how much of a dent the new units are putting in the problem.

Land Use Department Director Eli Isaacson said he believes the city is “narrowing that delta,” but it’s difficult to pinpoint a number of housing units the city should be striving for, or if there is an exact number at all.

“This is a level of housing production the city has not seen for a long time,” Isaacson said. “… We are more than making up for lost time right now, but it’s hard with the other factors that are going on right now to really have a handle on what is that number that we ultimately need.”

In 2004, the city passed a zoning ordinance that required developers to set aside 15 percent of their proposed units for affordable housing.

Developers scoffed at the idea and started looking at other areas across the state to build their projects. New multifamily developments effectively dried up.

That changed after the city began to allow developers to pay a fee in lieu of offering units at below-market rates.

City officials have touted the change as a spur in the hip of developers. Critics, however, say it provides developers an opportunity to skirt affordable housing requirements, further damaging the city’s goals of creating housing for lower-income residents.

Affordable Housing Department Director Alexandra Ladd said the fee-in-lieu system is not intended to shepherd the construction of affordable housing, but to help add to the city’s short supply of housing.

Of the 5,000 units in the pipeline, 551 are considered affordable. Of those, 377 are in District 4, where the bulk of new land permits are being taken out. District 4 stretched from part of Agua Fría Road at its northwest side, along Rufina Street, crosses Agua Fría at its northern tip, runs southeast along Siler Road, follows Cerrillos Road to St. Michael’s Drive on the northeast side, includes areas west of Yucca Road and east to St. Francis Drive and largely bordered on the south by Interstate 25.

Ladd said it’s not necessarily bad the majority of developers of multifamily projects are paying the fee rather than offering affordable units. She said renters who are most in need of affordable housing are also likely in need of other wrap-around services they won’t receive at market-rate projects.

“That is why we are putting a lot of the resources raised into projects with more supportive services,” Ladd said.

The idea is that more units will drive down the cost of less desirable units.The city also uses its Affordable Housing Trust Fund to provide rental assistance. Ladd said a good indicator of how the city is faring on its housing crisis is the vacancy rate, which is almost zero.

“That says your market is really unhealthy and you don’t have enough units for people to live here,” Ladd said.

Roger Carson, president of the Santa Fe Association of Realtors, said there are many factors in the city’s housing shortage, and the infusion of units isn’t a sole indicator the market will soften.

The entire housing spectrum needs to be considered, he said, including midlevel housing for homebuyers and renters looking to make a step up from their starter home or apartment.

“It’s certainly not about hitting a number quote,” Carson said. “That is not going to solve your problems.”

Another factor to consider is rising construction prices, which are being passed on to homebuyers and renters, he said.

According to the National Association of Home Builders, surging lumber prices over the past year have added approximately $36,000 to the average cost of a new single-family home and about $13,000 to the market value of an apartment.

Carson said homebuyers are now moving out of town when looking for an upgrade instead of searching within city limits.

“The big picture is more housing is good because we have a shortage and people need housing,” Carson said. “The complex issues relate to the issues of affordability, density, those kind of issues.”

Tom Fitzgerald of Fitzgerald Real Estate Associates said he expects more units to make Santa Fe more affordable for renters but will have a slower impact on the homebuying market.

“Those apartment are going to help,” Fitzgerald said. “They will make Santa Fe a little more vibrant. I don’t think anyone can put a number on how much. Sometimes you’re right and sometimes you’re wrong.”

Fitzgerald said homes in older neighborhoods are being snatched up by people from out of state, who can afford to place a 50 percent down payment or purchase the property outright.

More new homes might alleviate that by providing new stock for interested homeowners to purchase, which also might free up rentals for midlevel buyers.

But Carson said there is also the question of “where” that needs to be taken into consideration.

“With Santa Fe, you will run out of land really soon,” Carson said. “It looks like there is a lot of land, but when you look at a map, then it gets super complex.”

The city of Santa Fe has announced a $200,000 growth management study to examine land use ordinances and appropriate parcels for new housing.

Carson said from an academic point of view, Santa Fe’s growth is an interesting case study, but from a humanistic lens, the city has some “big challenges” to contend with.

“The City Different has a character, it has a history, it has a way of doing things that is unlike anywhere else,” Carson said. “It is unique here, and I would hate to see that lost in the decade ahead due to sprawl.”

(16) comments

KT Rivera

Being a destination of choice, Santa Fe will never build it's way out of its demand. If the goal is to build affordable housing for those that work in the city, then preferences should be given to that population. For all the new apartments being built, I would like to see ordinances that give first occupancy chances to those who work in Santa Fe, but currently live out of town. That group should be given first option to occupy new housing if they want to move into town to live where they work. Without that option, all the new construction will continue to go to the highest bidders... a never-ending spiral.

Tom Ribe

We are seeing big subdivisions spring up out b I-25. These are cookie cutter houses that look like houses in Tucson and they are built fast, probably by out of state workers and out of state companies. A subdivision was recently built in White Rock that destroyed archeological sites and is a real eyesore. Soon the neighborhood by I-25 will look like Rio Rancho.

LeRoy Sanchez

After World War 2, so-called “cookie cutter” tract homes put millions of Americans in houses for the first time. Elitists need to recognize the importance of that. And by the way, Rio Rancho is a fine, affordable place to live with excellent public schools.

Susan Garcia

Yes!!

Alder del Tangio

Welcome to the new future of Santa Fe - traffic, smog, congestion. There is no real long term plan to all this building other than the plan pushed by developers - who are not here to created affordable housing. They do everything they can to get out of it. You can voice your concerns to the land use director at: esisaacson@santafenm.gov. As for the water debate - we have water today, not necessarily tomorrow and the overall data is not that favorable, despite some wells currently in a rested state. I suggest this article as an alternate view on NM's water crisis: https://lajicarita.wordpress.com/2020/09/19/water-reckoning-looms-in-new-mexicos-future-were-not-prepared-for-whats-ahead-of-us/

Joan Conrow

Wish I could say I had more confidence in the city's land use manager, but it really doesn't sound like he has a plan other than allow any project that a developer pitches.

Stefanie Beninato

Correction: It seems that there is overwhelming support for schools, libraries, senior centers, veterans' centers as per bond issues passed by those voting who often are as you described.

Cynthia Lamb

I agree there should be housing equity, but there has been no mention of “the elephant in the room” where do we get the water to support this new growth? This is the more pressing issue, we are experiencing extreme drought with possibly no end in sight for decades. This sounds pessimistic, but it is a very real concern that needs to be solved. Growth & opportunity don’t have a chance if we don’t have water.

Lupe Molina

It's not an elephant in the room. We have water and the city addresses it regularly. Perhaps a better question: Why does this only come up in terms of affordable housing and not golf courses, construction in Las Campanas, and resort landscaping?

https://www.santafenewmexican.com/news/local_news/annual-report-says-santa-fe-water-supply-is-steady/article_b4934366-a6a2-11eb-a5b9-dfa334e0c2e4.html

Paul Davis

There's adequate water available if it only needed to serve residential purposes. That's likely to remain true even in the worst case drought scenarios (which I'd consider a repeat of the 80-1000 year drought of the 1200's). We have direct access to groundwater now, which changes things dramatically (not always for the better).

The issue is not as simple as "is there water?"; rather, it's closer to "how do we use the water we have?". That includes questions of how we prioritize traditional (flood) and improved (drip) irrigation practices in agriculture versus residential requirements. Agriculture uses more than half of all the water used in NM.

Tom Ribe

And most of the water used in agriculture is wasted growing feed for cattle. Cattle can be raised in the midwest where it rains. We should phase out all alfalfa and hay growing in favor of human food. A huge portion of Rio Grande water is wasted on feed for the dairies in the southern part of the state.

Guy Hence

Bingo! Cynthia your spot on! The only area in the state that has an abundance of water is Taos County. Streams and rivers are rocking but Santa Fe treats the area like a step child with roads in serious disrepair likened to Afghanistan and significant poverty. Seems all the money goes into Santa Fe, Alb and Las Cruces. People are looking towards Taos but prices are high, low inventory etc.

Christian Vanschayk

Demand for affordable housing is driven in large part by inequality related factors beyond local control. We must do what we can. We must also focus on economic development to raise income levels and increase our tax base so we can do more.

Lupe Molina

Bingo, Christian! And that starts with making sure that political donations don't translate to policy decisions. The political donor class of this city is disproportionately retired transplants who might vote D but are fiscally conservative at their age. We have to make sure to progressively tax the wealthy who get all the favors and make sure that everyone is invested in education and housing.

Stefanie Beninato

It seems that there is overwhelming support for schools, libraries, senior centers, veterans' centers as per bond issues by those voting who often as you described.

Lupe Molina

You do have good points Stefanie, but the fact that those go to bond issues is part of the problem. I wish the governing body would take a little more initiative to progressively raise property taxes. Bond issues funded by GRT are regressive. But you are right. Encouragingly, a lot of folks do come out for the bond issues and make the right choices IMO.

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