Are you looking for a real bargain in real estate? Unfortunately, this is not exactly bargain-hunting time. We heard the same thing from three experienced Realtors.
“This is a strong seller’s market and there’s no inventory,” said Paul Duran of Keller Williams Santa Fe. “It’s not like 2010.
“When you get a call from someone who says, ‘I’m looking for a bargain,’ that immediately says he’s looking for a distressed sale — a property that’s in foreclosure — and there are very few of those now.”
You might get closer to a bargain if you zero in on a house with identified deferred-maintenance issues, such as imperfect stucco. As long as there are no structural problems that require attention, you can get a pretty good deal.
But don’t expect anything like that on the east side, where the location factor alone demands higher prices.
Interest rates are very low right now, which helps you buy more than you could five or six years ago, Duran said. But it’s hard to get something below the appraised value because there are so many people looking to buy because of the low rates. That just adds more steam to the seller’s market.
When you go see a Realtor and there’s nothing in your price range, you’re put on the “drip system,” which is an instant-notification system. The agent programs the system based on clients’ criteria, such as an acceptable price range and house size, and then as soon as something comes on the market, he or she is notified automatically.
“If I had a listing like that, I’d probably have 10 or 15 showings within 24 hours,” Duran said.
For new midrange homes, he recommended Rancho Viejo as a good deal. “That’s a great buy out there. In today’s market, I’d say it’s a bargain.
“The best way to look at it is that you’re going to be paying market [value], a fair price. Everybody wins. A bargain means somebody’s losing.”
Beverly Chapman, the head broker at Coldwell Banker Trails West Realty, said the lopsided seller’s market is a problem not only in Santa Fe but in Albuquerque.
The inventory of homes for sale in the Duke City, where the median price is about $225,000, declined by 37 percent from January 2019 to January 2020.
In the Santa Fe market, where the median price is over $450,000, inventory has been sliding for more than a decade. The number of available homes slipped another 33 percent from the fourth quarter of 2018 to fourth quarter of 2019.
Why don’t homebuilders fill that gap?
“So many builders went out [of business] in the recession,” said Chapman, whose brother Mike Chapman ran the family homebuilding company. The supply of laborers also took a dive, many having to move to larger cities during the slump.
“Chapman Homes made it through the downturn, but after it took three and a half years to do the 46 homes in Plazas at Pecos Trail, Mike wasn’t willing to go through all the rigamarole with the city and the neighborhoods to do it again,” she said.
There’s another wrinkle in the “bargain” void: A homeowner may be willing to sell and open up that listing, but where is he going to go if he wants something else in the same price range? “There’s no bargain for him to buy,” Chapman said. “That’s a stifling problem also.
“If you’re looking for a bargain right now, I think you have to regroup, you have to redo your thinking and know you’re going to have to spend a little more. You’re more likely to find a bargain in land or in the commercial market than in residential homes.”
Chuck McKinley of Sotheby’s International Realty said, “It’s just the wrong time. The problem was with the concept of getting a bargain, when you’re the average buyer, presumably looking under $500,000, is that you have to have access to inventory and the consumer doesn’t have that.”
You might see something on Zillow.com or other online sites, but by the time you act, it’ll be gone.
“The feed is very fast. It goes from Realtor.com, which is fed directly from our MLS database, and then out to the aggregators. We had a $650,000 house that had 30 showings in a period of three days.”
McKinley emphasized that a “bargain” indicates that you paid less than market value, “and that doesn’t happen in this market.”
The paucity of available homes midrange and under is more profound because of the number of people coming to Northern New Mexico. All three Realtors mentioned the fires in California and the cold winters in the East.
“We have this inventory problem,” McKinley said, “and then you include our quality of living and weather issues in other parts of the United States, and Santa Fe is very attractive.”
The pressure’s on.