Albuquerque Real Estate is Looking Up
Good Monday Morning!
Almost no new apartments have been built since 2008. The single family building permits in 2010 were 1,440 for the Albuquerque Metro Area. They dropped to 1,192 in 2011. In 2012, we saw the first increase over the prior year since 2006! We went from 1,192 to 1,428, a significant year-over-year increase but still more than 1,000 under the “breakeven” number. To put that into perspective, more than 6,600 building permits were pulled in both 2005 and 2006! The increasing number of permits last year is an extremely good sign for two reasons. The increase indicates returning consumer confidence and demand in the market place. Second, because building houses creates jobs!
To recap, I now really do believe the bottom is behind us. Here is why:
- The inventory of resale homes is the lowest it has been in 6 years.
- We have 18 straight months of year-over-year increases in the amount of homes being put under contract. In other words, a consistent increase in demand.
- There have been 4 years of very low building permits, which are finally increasing.
- 2012 would be twelve years since the last bottom in the prior cycle, mirroring the 12-year cyclical history of the Albuquerque market.
Anecdotally, we are seeing multiple offers for the first time in many years. This is the actual ground level indicator of the shift in balance from over supply to balance.
Let me close with this thought. In both of the last recoveries, the post 1988 and post 2000 bottoms, the highest rate of appreciation was 5 years from the bottom. If we mark 2012 as the first positive year, our highest rate of annual appreciation in this cycle could be just 4 short years away from now. Do not expect gigantic annual appreciation in the next two to three years, but if we mirror either of the last two recoveries, we should see a 2 to 3% annual increase, which could, in the next 4 years, reach a one-year increase of 9%.
Combine that timing with interest rates below 4%, and I think if a homebuyer were ever to consider buying - the timing is perfect. For the sellers who have waited through the recession, the light is at the end of the tunnel!
Have An Awesome Week!
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AND HERE'S YOUR MONDAY MORNING COFFEE!!
Sincerely,
Sandi
