Albuquerque Housing Market Set To Rebound In 2012?
Any guesses as to what is the Albuquerque housing market set to rebound in 2012? There are three major issues causing Albuquerque homes to decline in value, too many homes on the market, distressed properties, high unemployment, and tight bank lending standards. 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.
The Albuquerque housing market has seen a 23.5% decline in the number of homes on the market from November 2010 to November 2011. There were 3926 homes listed in the Albuquerque Multiple Listing Service (MLS) in November 2010 versus 3002 homes for sale in November 2011. The supply of houses has declined dramatically in the past year and this is good news for the Albuquerque housing market.
The number of foreclosures listed on the Albuquerque MLS has declined dramatically by 55.1% from November 2010 to November 2011. The number of foreclosures listed in the Albuquerque MLS in November 2010 was 393 versus 150 in November 2011. The number of short sales listed on the Albuquerque MLS has declined by 12.8% from November 2010 to November 2011. The number of short sales listed in the Albuquerque MLS in November 2010 was 558 versus 513 in November 2011. Again this is very good news for the Albuquerque housing market. There is a dark cloud called shadow inventory, this is inventory of foreclosed homes held by banks that are not on the market at this time. 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. Again 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 real estate market. Don’t expect a rapid recovery as home prices fell by 8.5% from November 2010 to November 2011. My opinion is we will see the Albuquerque housing market stabilize in 2012 with home prices flat to slightly down in 2012. I expect to see the number of distressed properties to keep a lid on home prices throughout 2012 and early part of 2013, lending standards to ease, and unemployment will continue to decline. The real recovery will will begin in mid 2013 and I expect the recovery will be slow but steady.
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