Albuquerque Housing Market Set To Rebound In 2013?
Is the Albuquerque housing market set to rebound in 2013? There are four major issues that have caused home prices in Albuquerque to decline in value. First is the classic supply and demand issues, there have been too many homes on the market. There have been to many distressed properties on the market, distressed properties such as foreclosures and short sales will typically sell for less than market value. The entire United States has seen chronic high unemployment. Much of the populations are concerned about keeping their jobs and are not interested in making a major financial move in this economy. Last but not least are tight bank lending standards. Anyone could get a loan prior the the burst of the housing bubble.
I want to examine each of these issues over the past year. Supply and demand is a simple economic principle, prices decline with too much supply and prices increase as demand increases. Existing inventory in the Albuquerque metro area peaked at 7082 homes in July of 2008. Inventory levels have been declining steadily to the most recnet inventory level of 4083. Home prices should increase as inventory levels decline.
The number of foreclosures listed in the Albuquerque MLS in November 2010 was 393, 150 in November 2011, and 173 in December 2012. The number of short sales listed n the Albuquerque MLS in November 2010 was 558, 513 in November 2011, 606 in November 2012. This is not very good news for the Albuquerque housing market. The number of foreclosures and short sales must be reduced for home prices to increase. The total number of distressed properties is still high compared to a healthy Albuquerque housing market.
New Mexico has seen the unemployment rate drop from 8.8% in November 2010 to 6.6% in November 2011, 6.3% in November 2012. New Mexico is well below the national average whcih is a very positive sign for the Albuquerque housing market.
As for the bank lending standards, they are still tough and many would be home buyers have trouble getting a home loan. However, interest rates are at or near all time lows which make homes very affordable.
Many indicators are pointing to a recovery in the Albuquerque housing market. Overall inventory levels continue to decline and home buyers are finding it difficult to find the right home. My opinion is we will see the Albuquerque home prices increase modestly in 2013. Don’t expect the crazy days of the bubble but we should start to see the signs of a more normal market. We still need to burn off the inventory of distressed properties before returning to a normal housing market. I expect to see the inventory of foreclosures to decline throughout 2013. Hopefully lending standards will begin to ease and unemployment will continue to decline.
There is one major concern for the houseing market and our entire economy. Politicians in Washington DC are fighting over tax increases and the “Fiscal Cliff”. If politicians do not resolve the “Sequestration” issue, we could see the US economy fall back into a recesion. Another recession will be disasterous to home prices in Albuquerque.