What Is Going On In The Rio Rancho Housing Market?
The headlines are all the same, housing market is recovering. In fact the, home prices in the Albuquerque Housing market are up by approximately 10%. The median home price in the Rio Rancho housing market is down by 9.57% in July 2013 as compared to July 2012. The average home price in the Rio Rancho housing market is down by .4% in July 2013 compared to July 2012. This is not a one month abnormality. The average home prices in the Rio Rancho housing market have declined in June 11.17%, May 6.6%, April 11.12%. These declines are for the months in 2013 compared to the same months in 2012. During this same time the number of homes sold in the Rio Rancho housing market has been on fire. The number of homes in the Rio Rancho housing market in July 2013 increased by 52.14% compared to July 2012. The number of homes sold in the Rio Rancho housing market increased by 39.53% in June, 34.13% in April, and 36.08% in March. The increases are for the months in 2013 compared to the same months in 2012. Housing prices are increasing in many cities across the United States but not in Rio Rancho. I wondered what is wrong with the Rio Rancho housing market, there is a huge increase in volume but prices are falling.
It is my opinion that one of the drivers for in the increased number of sales is due to large investors from out of state is buying up single family residential properties to be used as rental properties. It is a fact that there is at least one major investor that has been buying single family residential homes in the Albuquerque and Rio Rancho area. Real estate investors are focused on profitability and are not going to over pay for an investment. This explains why there is an increase in volume without the increase in price. Real estate investors will only buy homes that meet their financial projections. The fact there are large investors purchasing single family homes in Rio Rancho is a good thing for the Rio Rancho housing market. You are probably wondering how this is a good thing. These large real estate investors are focused on profitability and they must believe that home prices are going to increase in Rio Rancho in the next several years. This is good news for home owners if these investors are correct in their projections.
Another driver for home prices declining in the Rio Rancho housing market is the number of distressed properties in the market. Distressed properties are either bank owned homes (foreclosures) or short sales. A short sale occurs when the owner of the mortgage (bank or investor) agrees to allow a home to sell for less than is owed on the home. It is widely understood that distressed properties sell for less the non-distressed properties. Distressed properties that sold in July 2013 made up 32% of the total sales. The number of distressed properties actually declined in July. This is a very good sign for Rio Rancho home owners, because home prices should increase as the number of distressed properties decrease.
Interest rates have increased dramatically in recent months and this may also have a negative impact on all housing markets.
This article was written by john Myers on 9/7/2013 and the data comes from the Greater Albuquerque Association of Realtors.