Taos Real Estate Market Report
January – October 2023 (10 months)
The market has definitely slowed from the red-hot conditions of 2020-2022.
Sales in 2023 have been tracking below 2022’s pace all year, with the number of closed sales and the dollar volume down in all categories of property. For the total market (all categories), the number of sales is down 27%; dollar sales are down 34%. Single-Family Homes unit sales are down 28%, and dollar sales are down 32%. Condo unit sales are down 42%, with dollar sales declining 33%. Land sales are down 18%, with dollar volume dropping 27%. There have been only 3 Multi-family sales so far vs 6 last year. Commercial sales are down from 14 closed sales to 6.
The slowdown is attributable to several factors: First, the buying “frenzy” that characterized the market during the Covid pandemic of mid-2020 through 2022 was bound to subside. Second, the inventory of homes and condos listed for sale is at an all-time low. Third, as fear of the pandemic has diminished, the desire to relocate from urban areas to work from home in more rural towns has slowed some. Finally, the sharp spike in interest rates, anxiety about a possible recession and the fraught geopolitical situation are dampening buyers’ enthusiasm.
However, we believe that the long-term trend in Taos remains healthy. There will likely continue to be more demand than supply for homes and condos; this should keep prices somewhat buoyant. Taos will continue to draw people for whom the local climate, natural beauty, lifestyle and culture are attractive.
Click each title below to view the data for that property type.
For the year through October 31, unit sales are 223 this year vs. 308 last year, a decrease of 85 sales (-27.6%). This is a little improvement over the early part of the year, when sales were running about 30%-35% below last year. However, the trend of sales below last year will continue, and the year will end with 25%-30% fewer sales than last year.
Dollar sales for the year to date are down 32.3%, from $173.2 million in 2022 to $117.2 million in 2023. The market price level rose dramatically from mid- 2020 through 2022, when there was something of a buyer stampede, and demand way outstripped supply. There were many cases of bidding wars, with homes often selling well above asking price. Prices rose 20% – 25% per year. In addition to the overall price level rising, there was an increase in sales of higher-priced homes. In 2022, 34 homes sold at $1 million or more. That was up from 29 in 2021, and from 7 in 2020; so far this year, there have been 15.
Median and Average Prices
For the year through October, the median price (midpoint in the range of prices from low to high) is almost exactly the same as last year: $470,200 this year vs. $470,000 in 2022. The average (mean) is $525,700 vs. $562,300 last year, a decrease of $36,600 (-6.5%). So in Taos, prices are not falling dramatically; they have just stopped rising. Here is how median and average prices have changed since 2016:
For the year to October 31, actual sales price has averaged 4.3% below the final asking price when the home went under contract; the discount from original asking price is 8.4%. Some sellers have been listing homes as if the market were as hot as it was during the big surge of 2020-2022. That hasn’t been working very well, and we are seeing a lot of asking price reductions. In 2021-2022, sellers got full asking price much of the time.
Days On Market
For year-to-date 2023 , the average days on market is 117, exactly the same as in 2022 for the same time period. Due to the very limited inventory of homes available for purchase, average DOM has dropped dramatically from what used to be the norm in Taos: up until 2016, it took about eight months to sell a home. Today’s average is much lower, but still high compared to many parts of the country, where homes typically sell in 30-45 days. However, good homes in Taos in preferred neighborhoods are selling much faster than the average.
|Nov 2023||Nov 2022||Sep 2008|
|Up to $200k||7||14||190|
|$200k – $300k||9||16||109|
|$300k – $400k||18||35||69|
|$400k – $500k||21||34||39|
|$500k – $650k||26||34||35|
|$650k – $800k||25||27||27|
|$800k – $1mil||17||24||36|
|Up to $200k||58||61||44||26||16|
|$200k – $300k||64||70||49||47||21|
|$300k – $400k||74||83||64||72||45|
|$400k – $500k||27||45||55||62||49|
|$500k – $650k||24||42||53||66||37|
|$650k – $800k||16||15||34||43||26|
|$800k – $1mil||4||15||21||22||14|
At the time this report was prepared, there were 156 homes listed for sale, down 31 (-17%) from four months ago when there were 187 listings, and down 57 (-27%) from a year ago, when there were 213 homes for sale. The low point in 2022 was 194 in April; the high point was 254 in August. In September 2008, there were 518 homes listed for sale. Taos inventory consists of a wide variety of size, price, style, location, and condition — everything from manufactured to luxury homes. With only 156 listings on the market (which includes some that are under contract), it is difficult to find more than a few homes to show a buyer that might meet most of his/her criteria.
There are no indications that inventory will increase substantially any time in the near future. Although there is a fair amount of “spec” building going on, it’s nowhere near enough; additionally, many current home owners are reluctant to list because they don’t want to give up ultra-low interest rates on their home loans. There fore, the inventory will remain inadequate relative to demand. This should keep prices from falling significantly.
Home Purchase Financing
As soon as the Federal Reserve started its anti-inflation program of raising short-term interest rates last year, the rates on home loans also increased dramatically. The 30-year fixed rate loan jumped from around 3% in late 2021 to around 7% in November 2022. The 30-year is averaging 7.44% at the time of this report, down from a high of 7.79% in the week ending Oct. 26. There has been a lot of volatility in the market for US Treasury notes and bonds, which directly affects mortgage rates. Recent data on US inflation suggests that the Federal Reserve may not increase rates any more, and it may start lowering rates in 2024. Although mortgage rates are probably never going to get back to the low levels of 2020-2021, if they come down to 6%-6.5%, that would bring some buyers back into the market.
|Conventional 30-year fixed||7.44%|
|Conventional 15-year fixed||6.76%|
Note: Interest rates are impacted by occupancy, credit score, and down payment.
There has been 3 foreclosure sales through the first ten months of 2023. For the full year 2022, there were none. The number of foreclosures has diminished steadily over the past several years. Currently, there are just three bank-owned houses listed for sale; two have pending sales.
Please Note: These data do not include any condominiums developed or offered for sale by Taos Ski Valley Resort; those condos are not listed in the Taos MLS.
Condo sales through the first ten months of the year are down sharply: only 45 closed sales in 2023 vs. 77 in 2022 (-42%). Dollar sales are down 33%, from $30.5 million to $20.5 million. The inventory of condos listed for sale is very limited, so this has been a constraint on the number of sales. As is the case with homes, there are no signs that inventory will increase significantly any time soon; therefore, prices should continue remain fairly firm.
Median price for the year to October 31 is $409,100 vs. $349,000 for the same time period in 2022, an increase of $60,100 (+17%). Average price is also up, at $455,300 vs. $396,200, a gain of $59,100 (+15%). With such a disparity in the number of sales this year vs. last year, it is difficult to analyze the reasons for the large gains in median and average price. The composition of sales mix seems to be roughly the same, i.e., there is not a big change this year to sales of much larger–therefore higher-priced–units. The gains appear to be simply due to supply and demand.
Through October, final sales price has averaged 3.0% less than the last asking price when the condo went under contract, and 7.0% below original listed price. These discounts are less than those for single-family homes; again, this reflects an even tighter tighter inventory for condos.
Days On Market – In the first ten months of the year, DOM averaged 115 in 2023 vs. 127 in 2022, a decrease of 12 days (-9%).
The number of condos listed for sale at the time of this report was only 24, a decrease of 4 from four months ago, and a slight increase of 1 from 23 at this time a year ago. Of the 24 units currently listed for sale, 7 are located at Taos Ski Valley, 16 are in Taos and nearby. The condos in Taos range in price from a studio unit priced at $175,000 to a 2BR/2BA unit at $630,000.
In 2006, when condo development was at its peak, there were often around 200 condos on the market at any given time, with the majority in or near central Taos; there were 149 condo sales that year.
|Current||Year Ago||Sept 2008|
|Up to $150k||0||0||40|
|$150k – $250k||1||1||50|
|$250k – $350k||8||3||51|
|$350k – $500k||8||12||56|
|Up to $150k||10||8||1||0|
|$150k – $250k||21||16||13||6|
|$250k – $350k||18||30||33||11|
|$350k – $500k||22||22||31||12|
There have been no foreclosure sales so far in 2023, the same as in 2022 and 2021.
Through October 2023, there have been 3 multi-family sales, a decrease of 3 compared to the same time period in 2022.
For the full year 2022, there were only 6 multi-family sales; in 2021 there were 5. Multi-family is and has always been a very small segment of the Taos real estate market. In peak year 2005, there were only 8 sales.
Sales this year include the old Sun God Lodge, a 56-unit motel on the main commercial road through the south side of Taos. It sold for $1,265,000. It is supposed to be converted to affordable rental housing.
Rents have been trending higher for years, so multi-family income properties could yield fairly attractive returns on investment. However, with interest rates having increased, investor buyers will pay less to achieve a desired rate of return (“capitalization rate“).
Currently, there are 17 multi-family listings, including three apartment buildings (6-, 9-, and 20-unit properties). Those three apartments are under contract, along with a duplex and a triplex, for a total of 5 pending sales.
2023 first half Land unit sales were 13% fewer than in 2022.
So far this year, 108 tracts have sold compared to 124 for the same time frame in 2022. That’s a decrease of 12.9%. Dollar sales are down 23.6%, from $16.2 million to $12.4 million. Median and average prices are down 10.2% and 12.3%, respectively.
Land sales aren’t down as much as residential sales this year; however, land sales hadn’t increased as much as homes and condos did during the 2020-2022 market surge, so the pullback in this year’s cooler market isn’t as pronounced. The primary constraint on land is very high building costs, and the long lead time to start and complete construction of a home. It costs much more to build than to buy an existing home, and good builders are booked up for at least two years.
Land sales really took off in 2021 after being in the doldrums ever since the recession that followed the Great Financial Crisis of 2007-2008. Unit sales in 2021 were up 69% over 2020–although the number of sales was still 27% fewer than peak year 2005. Some home buyers who were frustrated in their search for an existing home due to the low inventory and intense competition decided to buy land and build.
Then In 2022, the sales pace slowed as buyers realized how long it would take to get a home built. Total closed sales for the year were up just 6 units over 2021 (258 vs. 252). Dollar sales were up 15%. Back in peak year 2005, in the boom leading up to the GFC, there were 339 land sales, with a total dollar value of $46 million; 2022’s unit sales were 24% fewer than that peak. Unlike the market single-family homes, the land market is nowhere near back to where it peaked before the GFC.
Median price for the first half this year was $76,800 vs. $85,500 in 2022 for the same time frame, a decrease of $8,700 (-10.2%). Average (mean) price year-to-date is down $16,100 (-12.3%), from $131,000 last year to $114,900 in 2023. Whereas in the market for homes and condos there is much more demand than supply, in the land market the reverse is true.
Current inventory of 380 tracts listed for sale is down 1 from three months ago, but down 122 (-24%) from a year ago.
|Current Month||Same Month last year|
|Up to $50k||70||114|
|$50k – $100k||119||168|
|$100k – $150k||48||58|
|$150k – $200k||49||56|
|$200k – $250k||23||34|
|$250k – $300k||17||10|
For the first half this year, actual sales price averaged 9.6% below the last asking price when the home went under contract; the discount from original asking price was 14.1%. Compared to single-family homes and condos, buyers of land are able to negotiate substantial discounts in many cases.
Days On Market
The average days on the market so far this year is 365, down from the average of the previous ten years of 447. But as you can see, DOM for land has been up and down over the years.
|2013||2014||2015||2016||2017||2018||2019||2020||2021 2022||2023 YTD|
How Land Purchases Were Financed
The commercial market has cooled after a surge in 2022.
There have been only two sales of commercial properties through the first half of 2023, with total dollar sales of $1.7 million. Last year at this point in time, there had been 11 sales with total dollar volume of $10.9 million. In the full year 2022, there were 18 sales with a total dollar volume of $14.5 million. Six of these sales were $1 million or more. Higher interest rates no doubt are affecting the feasibility of some commercial opportunities. Currently, there are 28 active commercial listings, with just one pending sale.
With the growing number of people moving to Taos (for either full-time or extended stay living), the demand for commercial services — and therefore commercial real estate — should continue to increase over time; however, given higher interest rates and the possibility of a recession this year or in 2024, 2023 may be a quiet year in this sector of the market.