July saw continued strong unit sales of existing homes in Albuquerque as well as a solid increase in the speed of sale as compared to July of 2014. We also saw the inventory of available homes remain much tighter than last year. These factors should result in higher prices, but just the opposite happened and both mean and median selling prices for Albuquerque homes declined in July. Let’s take a closer look.
769 homes sold in July at a mean price of $207,968 for a total volume of sales that came to just under $160M. So, while that mean home price was down 5.04% from last July’s $219,002, the overall sales volume did increase 12.87% from $142M.
The median price of an existing home sold in Albuquerque this July was $177,000, also down a notable 3.80% from last July’s $184,000 median sale price. For the entire year through the end of July (YTD) prices remain up, though only slightly with the mean selling price of $211,185 up 1.42% over last year’s $208.236 and the median selling price of $178,922 up 2.30% over the YTD median of $174,900 at the end of July 2014.
So June’s strong showing for both the month and the corresponding first half numbers does not seem to have held up in the heat of July.
The price per square foot of a sold home hung in there in July, with the mean price of $112 unchanged over July 2014 and the median price per square foot of a home sold in Albuquerque up a buck from $108 in July 2014 to $109 this July, a .93% increase. The YTD price per square foot fared better with the mean price up 1.85% from $108 last year to $110 this and the median price up 1.92% from $104 to $106 YTD. So, basically, that’s suggesting so far this year sellers are getting a bit more for the same sized home than they did in 2014. Looking at just July that price per square foot holding steady yet average prices declining says buyers bought smaller homes in July.
Also interesting to note is that while REO (foreclosure) sales declined YTD by 7.93% from 555 through July 2014 to 511 at the end of this July, July itself actually saw a 19.40% increase in REO sales from 67 in July 2014 to 80 this July. That’s almost certainly a factor in July’s weak selling prices, though I don’t believe 13 extra REO sales can account for the price decline in its entirety.
I suspect another factor may be that buyers, particularly investment oriented buyers, are starting to feel the pinch of Albuquerque’s declining inventory of available homes and are pursuing the lower priced, investment grade homes more vigorously. Albuquerque is a great rental market and the lower priced homes cap out much better, particularly homes priced in the low $100ks. I expect we’re seeing those lower priced homes being grabbed up, both by investors and by budget conscious owner occupants. It’ll be interesting to see how the market looks toward the end of the year. If I’m right, prices will come up nicely.
If you look at the Sold Listings by Price Range chart above, you can see the bulge in sales right in the middle and thought bulge seems to skew slightly to the higher numbers, up to about $400k, by comparison to last year it actually skews slightly toward the low side of the middle, with the biggest increases falling at or below the median $177,000 home price. The declines above $500k and lack of sales above $1M over last year also helps pull the mean (and median) price down for July.
A look at the range of actively listed home prices shows a fairly clear trend of fewer homes available at the lower prices, particularly at and below that $177k July median.
I’m looking forward to what the next few months bring and whether we’ll see some consistent price appreciation. For our selling clients, that’s a good thing and Lisa and I would welcome it. For our buying clients, not so much, though buying in a climbing market beats the heck out of buying in a diving market, as long as you have a good strategy and can make reasonably quick decisions.
If you’re thinking about selling or buying a home in Albuquerque and would like a more specific analysis of a particular area, neighborhood or home, drop us a line and we’ll put one together for you.
– Joe LaMastra, August 27, 2015