It has been quite a long time since homeowners in the Albuquerque real estate market were as excited about real estate as they are today. That said, the whole Albuquerque real estate investing community shares the same sentiment. While recent price gains and equity appreciation aren’t overwhelming, there are signs of a prosperous future on the horizon. Home builder’s confidence in the market jumped almost five points last month, matching its highest level since 2005. The index is based on what builders are saying about current sales, expected sales over the next six months, and how many potential buyers they are seeing. With growing enthusiasm from builders, this could be viewed as a sign that the Albuquerque real estate market may be ready to shake off its post-recession shackles.
The current median home price last quarter in Albuquerque was $172,200. Home prices are growing, but still lag behind the national number of $203,867. Over the last twelve months home prices in Albuquerque have gone up by 1.2 percent, down from a national average of 6.7 percent. Going back even further; over the past thirty six months, Albuquerque real estate has appreciated by as much as 5.7 percent, which is far below national price gains of over 28.8 percent over the same period. The recovery has been slow and steady for an area that was hit hard by the recession. Minimal price gains and equity appreciation in the past three years have helped propel the market out of a post-recession funk.
The Albuquerque real estate market was trending downwards long before the market collapsed. The amount of equity accrued by homeowners hit a peak for Albuquerque around 2002 and slowly declined until the bottom fell out in 2007. Since the recession, gains have been modest, but in line with historical averages. The following highlights how much equity has been gained relative to the year of purchase:
- Homes purchased in the Albuquerque housing market one year ago have appreciated by an average of $4,671; whereas the national average was $15,753 over the same period.
- Homes purchased in the Albuquerque housing market three years ago have appreciated by an average of $17,563; whereas the national average was $53,565 over the same period.
- Homes purchased in the Albuquerque housing market five years ago have appreciated by an average of $11,046; whereas the national average was $47,444 over the same period.
- Homes purchased in the Albuquerque housing market seven years ago saw a depreciation of $215; whereas the national average gained $17,200 over the same period.
- Homes purchased in the Albuquerque housing market nine years ago have appreciated by an average of $22,070; whereas the national average depreciated by as much as $100.
Equity gains alone are not the cause of optimism in the market, but they could be viewed as a positive sign for things to come. It is also just one of the many reasons that the Albuquerque real estate investing community is excited for what is to come.
Local economic trends offer a mixed bag, not unlike many other markets across the country. Locally, employment has held tight after suffering through a major decline in 2009. The currently unemployment rate for Albuquerque is 5.6 percent, which is slightly above the national average. Today’s unemployment rate represents a decrease of 1 percent in the last year. However, local job growth is a little low at 1.3 percent. The national job growth rate is just over 2 percent. This could be a reflection of the level of economic activity for New Mexico. The 12 month economic activity index for the state is 2.4 percent, which is below the national figure of 3.5 percent. The economy in New Mexico is growing and there are positive signs, but full market recovery will not happen overnight.
Renewed optimism in the economy has opened the door for builders to re-enter the market. Single-family housing permits are up over 19 percent from the same time a year ago. The market has definitely stabilized, and with new construction set to enter the market there will be more inventory to choose from. This could give home values the boost they need.
There are plenty of buyers set to take advantage of one of the most affordable big markets in the country. The local mortgage payment to income ratio for Albuquerque was 9.9 percent, whereas the national number was 14.3 percent. This number continues to get stronger, and has proven to be a staple of the local market. Affordability is one of the key items that need to be in place before a real estate market can thrive. If buyers are comfortable with their mortgage payments, you will see a higher concentration of buyers as opposed to renters.
In spite of the massive reduction of foreclosure inventory they are still having an impact on the market. Over the past 36 months New Mexico has had a higher statewide foreclosure average than the rest of the country. Locally there are just over 2,300 properties that are in some stage of foreclosure. This represents a large percentage of all homes currently on the market. The good news is that foreclosures are actually down 95 percent from the same time last year. Great strides in the foreclosure battle have been made, but there is certainly a long way to go. The good news, in terms of Albuquerque real estate investing, is the price tag on foreclosed properties. The median sales price of a foreclosure home was $109,895.
The Albuquerque housing market has hit the bottom and is on the way up. How quickly Albuquerque real estate rises, however, will depend on the strides it takes in getting rid of foreclosure inventory and how quickly the job market grows. Local builders are confident that these issues are behind the Albuquerque real estate market, as is evidenced in the spike in new construction permits. This confidence could be a sign of things to come.
Albuquerque Housing Market Summary:
- Current Median Home Price: $172,200
- 1-Year Appreciation Rate:1.2%
- Unemployment Rate: 5.6%
- 1-Year Job Growth Rate: 1.3%
- Population: 556,495
- Median Household Income: $48,355