Albuquerque real estate market peaked in 2007 and was in decline from 2008 to 2011. Albuquerque home prices rose an average of 1.36% from 2012 through 2015. Average home prices increased by 4.13% in 2016. Much of the housing market in the southwest US have seen much higher price increases.
National home prices finally surpassed the previous 2006 peak in 2016. Albuquerque home prices in 2016 are still 8.4% below the peak prices in 2007. Here is our 2017 Albuquerque real estate market predictions.
Our number one 2017 Albuquerque real estate market prediction is average home prices will continue to increase in the 4% range.
Average home prices in Albuquerque increased every month on a year over year comparison in 2016. Inventory of homes in Albuquerque declined every month on a year over year comparison in 2016. The number of homes sold increased every month on a year over year comparison in 2016. The result is higher demand and a low supply of homes should cause home prices to increase.
In addition, consumer confidence numbers are high and the current low unemployment rate makes it likely home prices will increase.
Our number two 2017 Albuquerque real estate market prediction is inventory of Albuquerque homes will remain low.
Home builders almost stopped building homes after the collapse of the housing marking in Albuquerque in 2008. There is currently a shortage of developed lots for builders to build new homes. Albuquerque’s two largest home builders are rushing to develop new subdivisions. The largest home builder in Albuquerque stated they are developing 6 new subdivisions to meet demand for new homes.
All new subdivisions are in the early stages and most will not be completed until the summer of 2017. We should see an increase in supply of homes in the second half of 2017, however supply will remain tight.
Our number three 2017 Albuquerque real estate market prediction is inventory of Albuquerque homes will remain low.
In November 2016, mortgage rates in Albuquerque increased above 4% for the first time in two years. By historic standards mortgage rates are still low. However, the Federal Reserve Chairman has been calling for higher interest rates for a few years. The Federal Reserve policy makers indicated they anticipate three rate hikes in 2017.
The bottom line is there is no consensus on mortgage rates. Mortgage rates will decline slightly if the economy continues to grow at it’s current rate or if the economy stalls. Mortgage rates will increase if the growth in GDP picks up.
Our number four 2017 Albuquerque real estate market predictions is inventory of Albuquerque homes will remain low.
Albuquerque wages are down by 3.3% since the housing crises began in 2008. Albuquerque wages are up a total of 4.4% over the past 5 years. Albuquerque home prices have increased by 11% in the past 5 years. Clearly wages are not keeping up with home prices.
Albuquerque’s two largest home builders are developing new subdivisions in order to keep up with the demand for homes. For the past several years, Albuquerque home builders have been building homes on inexpensive lots that were purchased during the housing collapse at fire sale prices. New homes have been built on most of these inexpensive lots. We will see a shift in 2017, new homes will be constructed in the new subdivisions currently being developed. There is no doubt, these new lots will be much more expensive than the current lots. New home prices will increase in cost to cover the new more expensive lots.
Albuquerque mortgage rates are currently above 4% for the first time in two years.
This combination of market forces is sure to make Albuquerque real estate less affordable.
This is a great market if you are thinking of selling your home. Albuquerque is clearly a seller’s market. Get your home ready, set a fair price for your home and it will sell fast.
This market is not great if you are thinking of buying a home. However, I believe we are at the beginning of a long term housing boom in Albuquerque. Buying sooner is better than buying later. Home prices are increasing and it is possible interest rates will continue to increase. This will make it more expensive to purchase a home in the future.