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Is 2011 Really the Bottom?

by Sandi Pressley

Let me start by saying I am a great believer in the supply-demand-price equation.  Everything that I look at trying to predict or interpret the market is through that lens. 

From my seat, this recession started in the residential real estate market in November 2007.  That was the first month where there was a dramatic decrease in closings (demand) from the same month in the prior year.  To go back a touch, in July 2007, the closings were about 9% less than the prior year.  We had always known that the market couldn’t sustain the pace of 2003 to 2006.  We had thought that a 10 to 15% slowdown was to be expected.  So, the summer of 2007 felt like the anticipated slowdown.  August, September and October started to get alarming when the citywide closings were down 25% year-over-year.  In November the deceleration was 33% and then December 2007, the closings were 35% lower than December the year before. 

By January 2009, the closings in Albuquerque were the lowest since 1998.  On a percentage basis, January 2009 had 58% fewer closings than January 2006.  The spring of 2010 benefited from the First Time Homebuyer Tax Credit which resulted in some artificially created year-over-year gains.  When July hit and the Credit expired, we slumped backwards, with 4 of the first 6 months of 2011 behind 2010.  However, at the start of 2012 I am optimistic for the following reasons. 

Good Sign #1.  In July 2011, things started to change.  July through December showed a 13.17% increase in units closed over the same period of 2010.  This was the first six-month period in three years that had been up over the previous year. 

Good Sign #2:  Decreasing supply.  Building permits have been steadily declining for 5 straight years.  In 2006, the biggest year, the permits for the MSA of Albuquerque (includes Valencia and parts of Sandoval counties) were around 6,600.  In 2011, the Albuquerque MSA finished up at just shy of 1,300 permits.  That is an 81% decrease!  While that has been devastating for the construction industry at every level, it does mean that supply is decreasing steadily.   At the same time, the current resale supply (4,156 active detached listings) is the lowest it has been since March 2007 (4,504 active detached listings), when it started climbing precipitously!  Demand up, Supply Down, but… 

Confusing Sign #1:  There has been a steady decrease in average sales price for the second half of this year as demand has been increasing and supply has been decreasing.  On the surface that is disconcerting, but remember that price is a trailing indicator.  That means that the last adjustment will be an increase in price.  There is also an artificial suppressant:  the appraisal issue.  What is happening is that the market is trying to recover as to price, but a number of appraisals are coming in below the market price of the transaction.  In response to the low appraisal the sellers and buyers are often forced adjust their price down to the appraisal, which in turn keeps the average price artificially lower than the market is indicating. 

I believe that we will start to see an increase in average price sometime in the first half of 2012, providing the demand stays steady. 

Good Sign #3:  There is pent up demand.  Where?  Household formations are the way a community grows.  They come from at least two places.  The first is job growth.  The second is organic growth.  Organic growth is when two residents in a community form a new household through some sort of union and then they buy or rent a house.  Statistics are showing that the 25 to 34 year old population who would like to and are capable of buying a home have waited and stayed living at their parents’ home during this recession.  As consumer confidence grows and prices stabilize, those people who have been waiting for the bottom will likely enter the housing market.  I believe we will see that in 2012 as well. 

Good Sign #4:  The housing affordability index is at an all time high.  High is good in this case.  With historically low prices and almost unheard of low interest rates converging, when consumer confidence stabilizes, there should be a strong motivation to take advantage of these unique circumstances, which will likely not reoccur for a long time. 

Confusing Sign #2:  The last issue is the constant chatter about the “shadow inventory” of homes that are either underwater (value below mortgage) or are delinquent in payments and no foreclosure has been initiated.  The worry is that there is a hidden potential glut of homes, which eventually will come on the market, flooding the supply side, which in turn would further depress prices. 

I disagree for the following reasons.  First, when a family is foreclosed on or they short sell their house, they very rarely move into an apartment or move home with their parents.  They typically go rent a home, which is exactly what we are seeing in the current marketplace.  The consequence is that rents have been increasing significantly over the last year.  This does not create a new “vacant unit” in the market place as would new construction.  In other words there is no increase in supply.  Investors have been seeing this trend and with current low interest rates, purchasing single-family homes for investment has become a very attractive alternative.  In other words, a new buyer segment has entered the marketplace, absorbing those homes. 

It is for that reason that I don’t believe we have significant risk from the “shadow inventory.” 

In closing, if we review the timeframe of the Great Depression, which started in October of 1929, it is generally agreed that 1933 was the beginning of the recovery.  That was four years from the beginning of the Depression to the beginning of the recovery.  As I said in the beginning of this letter, we are at the end of our fourth year of this cycle.  Certainly, this Great Recession was not nearly as bad as the Great Depression.  If it took four years in the early 1930’s for the recovery to begin, I cannot believe, given the above information that we are not poised perfectly for our recovery to begin. 

I wish everyone a hopeful and prosperous 2012 and I hope that my predictions are correct!  Thank you for your business. 

Warmest Regards,

Sandi Pressley

 

Click here for the full year end report from the Greater Albuquerque Association of REALTORS®

"The Innocence of a Child"

by Sandi Pressley

"The Innocence of a Child”

This Holiday provides an opportunity for us to pause and enjoy the reason for the season.  Please take a couple of minutes out of this hectic time of year to enjoy this precious video.  May we all have child like faith, hope and joy this Christmas and throughout the New Year.

                                                                          Video

                                                                          Video

Merry Christmas and a Blessed New Year,

Sandi

Video Link: http://albuquerquehomesolutions.com/video/A-Kids-View-of-the-Christmas-Story-2

 

Abq. & Surrounding area November Updates.

by Sandi Pressley

November Monthly Highlights

 

 

  • Pending homes sales in the Greater Albuquerque

market are up 26.66% from November 2010 and

down 4.97% from the previous month.

 

  • The median sales price of single-family detached

home sales decreased for the third consecutive

month.

 

  • Single-family detached home sales rose 4.90%

from the previous month.

 

 

 

Click Here for the full November Report

 

Remember that it is a great time to either be buying or selling a home! Just call me for the details on why, 505-980-2999

And hers your morning coffee.....

Sandi

 

 

Abq. & Surrounding area October Updates

by Sandi Pressley

                  October Monthly Highlights

 

 

  • Detached home sales in October rose 9.48 percent

from the previous month and 24.12 percent from

the previous year.

 

  • The median sales price for detached homes sales in

October was at $167,000, down 7.22 percent from

the previous year.

 

  • Pending home sales for single-family detached

homes rose from the previous year by 19.85 percent.

 

 

Click Here for the full October Report

Be Thankful Video -Check it out-only 1:32 long!

by Sandi Pressley
VideoVideo

 

This is a message of thankfulness to acknowledge how truly grateful I am.  Also to help us all focus on how much we have to be thankful for.  This Thanksgiving we all need to have an "Attitude of Gratitude" and to simply remember to say thank you to others.  May this be a fantastic Thanksgiving for you and your loved ones.

 

 

 

 

 

 http://www.albuquerquehomesolutions.com/video/THANKY-YOU-A-Minute-With-John-Maxwell-Free-Coaching-Video

 

 

 

 

 

 

 

Find Us on Facebook

by Sandi Pressley

Good Monday Morning!

What a gorgeous sunny Southwestern day it is in the Albuquerque area. Our super blue skies with the golden trees along the Rio Grande Bosque is so beautiful! How blessed we are!

Social media is quickly becoming one of the most popular communication tools used by many of us.  Facebook, Twitter, Google Plus all are widely used.  Facebook now has over 800 million users with over 300 million people on line at any given time.  We want to remain on the cutting edge and make sure that we are providing Real Estate information consistently to anyone looking for that information in the Rio Rancho and Greater Albuquerque areas.  Our new Facebook business page has been designed to do just that.  Check us out at!  http://www.facebook.com/pages/Sandi-Pressley-Real-Estate-Team/233948076627601.  or just click the Facebook link below.  While you are there click the "LIKE" button and you will be updated on local Real Estate news and tips along with exciting new home listings.  

Have An Awesome Week,

Kindest Regards,

Sandi

 

 

                                       THIS WEEKS HOT HOME LISTING!

4009 Zarzuela Ave NW Albuquerque, New Mexico 87120

Listing # 715849:  5 Bedrooms   2 Full Bathrooms   1 Partial Baths   2800 Square Ft

Price: $325,000

Carefully maintained, freshly painted, original owner Raylee custom home on cul-de-sac lot w/amazing city & mountain views! 3-car garage w/8 ft doors to accommodate lg vehicles. One bedroom/office on main level. Delightful kitchen has double oven, gas cooktop, island, breakfast bar & large walk-in pantry. Huge master suite w/balcony to enjoy magnificent views, oversized jetted tub & lg walk-in closet. Beautifully landscaped back yard w/30x10 covered patio perfect for entertaining family & friends!

View Property>>

2011 New Mexico State Fair

by Sandi Pressley

2011 New Mexico State Fair

Date: September 9-25, 2011
Time: Sun, Wed & Thu, 10am-9pm; Fri & Sat 10am-10pm
Location: EXPO New Mexico
Address: 300 San Pedro NE
Admission: $7 adults, $5 children, $5 parking
Neighborhood: Uptown
Phone: 505-265-1791
www.exponm.com
 

 

Located in the heart of Albuquerque, the New Mexico State Fair is one of the largest fairs in the nation with PRCA rodeo and nationally known country recording stars, plus and Indian and Spanish villages. For 17 days, visitors explore art, agriculture, animals, entertainment, food, carnival rides, exhibits and shopping all in one place.

 

Open House

by Sandi Pressley

Debbie Ruckman (717-5219) will be holding open my listing at 6905 Poppy Pl NW on Sat Sept 10 from 1 to 3 pm, come by a view this great home.

24th Annual New Mexico Wine Festival

by Sandi Pressley

24th Annual New Mexico Wine Festival

Date: September 3, 2011 - September 5, 2011
Time: 12-6 pm
Address: North Camino del Pueblo
Admission: Adult $13 (incl wine glass), youth $5
Neighborhood: Neighboring Communities: North of Albuquerque
Phone: 505-867-3311
www.newmexicowinefestival.com
 
 
New Mexico's oldest wine festival offers wine tastings from several of New Mexico's wineries plus live entertainment, food, high-quality arts and crafts in Bernalillio, just north of Albuquerque.


The New Mexico Wine Festival at Bernalillo wraps up the summer with the premier wine festival of the southwest! Just north of Albuquerque, the historic town of Bernalillo is host to the biggest wine festival in the state. Lots of great music, arts and crafts, and those summer foods we all love make a perfect backdrop for wine, wine, wine!
 
Anyone under the age of 21 must be accompanied by a legal age guardian. 

Open House

by Sandi Pressley

Molly Kraft (908-1802) will be holding open my listing at 5701 Tierra Viva Pl NW, Albuquerque, NM  MLS # 703456, price $795,000 on Sunday, August 28th from 12:00 pm to 3:00 pm so please come by and view this AMAZING HOME WITH BREATHTAKING VIEWS!!!!

http://www.albuquerquehomesolutions.com/property/5701-Tierra-Viva-Pl-NW-Albuquerque-New-Mexico

Displaying blog entries 771-780 of 789

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Photo of The Sandi Pressley Team Real Estate
The Sandi Pressley Team
Coldwell Banker Legacy
10400 Academy Rd. NE Suite 100
Albuquerque NM 87111
505-980-2999
505-263-2173 / 505 293-3700
Fax: 505-212-0729

Quick links to this site are also SandiSells.net or SandiSellsHomes.com