2023 Q1 – First Quarter

Taos Real Estate Market Report

January – March 2023 (3 months)

Some short-term uncertainty but long-term picture still strong.

The market peaked in the third quarter of 2022, and then cooled from the frenetic pace that started in mid-2020. That rush to homes in rural areas such as Taos caused the market to become a very lopsided seller’s market, as buyer demand far outstripped supply of homes and condos available for purchase. Fierce competition among buyers resulted in many cases of “bidding wars.” Prices rose at an unprecedented rate (20%-25% per year in many cases). Days on the market decreased significantly. When interest rates spiked in the third quarter of 2022, market activity diminished. Buyers seemed to be pausing to determine what would happen with interest rates and the probability of a recession. There are still more buyers than sellers, but market activity is less intense.

For the first quarter of 2023 vs. 2021, the total market (all categories of property) was down 33% in terms of the number of closed transactions; dollar sales were down 45%. Single-Family Homes unit sales were down 33%. Condo unit sales were down 75%. Land sales were down 10%. There have been no Commercial sales so far this year.

Economists—and financial markets—are still divided on the course of interest rates, whether there will be a serious recession, and what effect these factors will have on real estate pricing and availability. Taos home prices are not rising so far this year, which isn’t surprising: the huge price gains of the past two years were unsustainable; some correction was inevitable. Nevertheless, Taos remains a desirable place to live, and given a continuing shortage of homes and condos listed for sale here, a severe market decline with sharply falling prices is unlikely.

Looking ahead to the rest of this year, we see the market slowly picking up, but with sales ending the year below last year’s totals.

Click each title below to view the data for that property type.

For the first three months of 2023, unit sales were 59 this year vs. 88 last year for the same time frame, a decrease of 29 sales (-33%). Currently there are only 14 pending sales, which is well below “normal.” April sales look on track to end the month at fewer than April last year.

Dollar sales for the quarter were down 40%, from $50.2 million in 2022 to $30.2 million in 2023. The market price level rose dramatically from mid- 2020 through 2022, when demand way outstripped supply. Prices rose 20% per year (more in some cases). In addition to the overall price level rising, there was an increase in sales of higher-priced homes, as people from more expensive markets (e.g., California) found Taos to be relatively inexpensive, and they could buy homes in the high end of the price range in Taos. In 2022, 34 homes sold at $1 million or more. That was up from 29 in 2021, and from 7 in 2020.

Median and Average Prices

For Q1, the median price (midpoint in the range of prices from low to high) was $470,000 vs. $457,000 in 2022 Q1, an increase of $13,000 (+2.8%). The average (mean) was $511,300 vs. $570,300 last year, a decrease of $59,000 (-10.3%). For full year 2022, the median price was $469,000. Here is how median and average prices have changed over the past seven years:

Price2016201720182019202020212022 2023 YTD
Median and average price trends since 2016
Price Discounting

Through the first three months this year, actual sales price has averaged 6.4% below the last asking price when the home went under contract; the discount from original asking price is 12.1%.  It would appear that some sellers are pricing homes as if the market were as hot as it was during the big surge of 2021-2022.

201320142015201620172018201920202021 2022 2023 YTD
18.4%16.9%13.9%13.3%9.4%10.3%7.8%7.2%4.5% 3.8%12.1%
Discounts from original asking price since 2013
Days On Market

For 2023 Q1, the average days on market is 111, a decrease of 27 days (-20%) compared to the same period in 2022. Due to an even tighter supply of homes available for purchase, average DOM is way below the norm of 2013-2016, even in a market that has cooled.

2006201320142015201620172018201920202021 2022 2023 YTD
DOM in 2006, for ten years prior to this year, and this year so far
April 2023April 2022Sep 2008
Up to $200k 814190
$200k – $300k 824109
$300k – $400k244369
$400k – $500k273339
$500k – $650k302535
$650k – $800k222227
$800k – $1mil131436
Over $1mil271913
Inventory by price segment
2019202020212022 2023 YTD
Up to $200k58614426 4
$200k – $300k64704947 9
$300k – $400k74836472 12
$400k – $500k27455562 13
$500k – $650k24425366 7
$650k – $800k16153443 6
$800k – $1mil4152122 4
Over $1mil462933 4
TOTAL271337349371 59
Unit sales by price segment

At the time this report was prepared, there were 159 homes listed for sale, down 20 (-11%) from three months ago, and down 35 (-18%) from a year ago, when there were 194 homes for sale. The low point in 2022 was 194 in April; the high point was 254 in August. The current inventory is the lowest ever in my records. 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 159 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.

2013201420152016201720182019202020212022 2023 YTD
Average inventory 2013 – 2023

There are no indications that inventory will increase substantially this year. There is very little “spec” building going on, and no increase expected in the listing of existing homes expected. Many current owners are enjoying ultra-low interest rates on their homes, so they are “staying put” for the time being. The inventory will likely remain inadequate relative to demand for the foreseeable future. This should keep prices from falling significantly even if the market continues to slow.

Home Purchase Financing
201120202021 2022 2023 YTD
Cash65 43%103 31%139 40% 132 36% 31 53%
Conventional loan66 44%200 59%180 52% 208 56% 22 37%
FHA loan8 5%11 3%14 4% 7 2% 2 3%
VA loan1 1%13 4%11 3% 13 4% 2 3%
Seller financing8 5%4 1%2 1% 8 2% 2 3%
Other2 1%6 2%3 1% 1 0% 0 0%
    Total150100%337 100%349 100% 369100% 59100%
How Home Purchases Were Financed
Interest Rates

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. Rates seem to have settled into a range of 6%-7%. The 30-year is averaging 6.39% at the time of this report. The recent “banking crisis” caused rates to fall briefly, but they are ticking up again. Buyers are probably adjusting to the new normal, after being spoiled by the unbelievably low rates that were available in 2020-2021.

Conventional 30-year fixed 6.39% 
Conventional 15-year fixed5.76%
Freddie Mac average rates as of April 20, 2023
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales

There were no foreclosure sales in 2023 Q1.  For the full year 2022, there were none either. The number of foreclosures has diminished steadily over the past several years. Currently, there are just three bank-owned houses listed for sale.

2023 YTD00%
Foreclosure Sales: % of total sales of Single-Family homes 2011 – 2023

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.

After a strong 2022, Condo sales in Q1 2023 were very sluggish: only 6 closed sales vs. 24 in Q1 2022 (-75%). Dollar sales were down 67%, from $9.3 million to $3.1 million.  The inventory of condos listed for sale is even more limited than for single-family homes, so this was a constraint on the number of sales. Also similarly to homes, there are no signs that inventory will increase significantly any time soon; therefore, prices should continue remain fairly firm, even in a cooler market.

Median price for the first three months was $517,000 vs. $420,000 in 2022, an increase of $97,000 (23%).  Average price was also up, at $514,500 vs. $389,400, a gain of $125,100 (32%).  The outsize gains are partly explained by the fact that three of the six sales were at Taos Ski Valley, including one at $850,000. Six sales is too sample a sample on which to gauge a trend; we expect that over the course of the year, prices revert to closer to 2022 levels.

Price Discounting

In the first quarter, final sales price has averaged 2.2% less than the last asking price when the condo went under contract, and 3.6% below original listed price.

20142015201620172018201920202021 2022 2023 YTD
12.7%8.6%11.8%6.7%6.5%5.5%3.2%3.3% 2.1% 3.6%
Discounts from original asking price 2014 – 2023 YTD

Days On Market – In 2023 Q1, DOM averaged 153 vs. 85 in 2022 Q1, an increase of 68 days (80%). Again, a sample size of just 6 sales is not enough to ascertain a trend.

The number of condos listed for sale at the time of this report was just 20, a huge decrease from 42 at this time a year ago. Inventory has been 17-20 for the past four months. Of the 20 currently on the market, nine have a pending sale. Very slim pickins’!

In 2006, there were often over 200 condos on the market at any given time, with the majority in or near central Taos; there were 149 condo sales that year.

20132014201520162017201820192020202120222023 YTD
1078178655859564948 39 19
Steady average inventory decrease 2013 – 2023
CurrentYear AgoSept 2008
Up to $150k 0 040
$150k – $250k 3 350
$250k – $350k42251
$350k – $500k 91156
Over $500k 4 629
Inventory by price segment
20202021 2022 2023 YTD
Up to $150k108 1 0
$150k – $250k2116 13 0
$250k – $350k1830 33 1
$350k – $500k2222 31 1
Over $500k36 14 4
     TOTAL7482 92 6
Unit sales by price segment
201620202021 2022 2023 YTD
Cash34 51%43 58%36 44% 45 49% 467%
Conventional loan32 48%30 41%45 55% 47 51% 233%
Seller financing1 1%1 1%0 0% 0 0% 0 0%
Other0 0%0 0%1 1% 0 0% 0 0%
    Total67100%74 100%82100% 92100% 6 100%
How Condo Purchases Were Financed
Foreclosure Sales

There have been no foreclosure sales so far in 2023, the same as in 2022 and 2021.

Through Q1 2023, there have been no multi-family sales, a decrease of 1 for 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.

Rents have been trending higher for years, so multi-family income properties should yield fairly attractive returns on investment. However, with interest rates having increased, investors will start to require higher “capitalization rates.” Higher cap rates mean buyers will pay less for a given income stream (net operating income).

Currently, there are 9 multi-family listings, all of which are duplexes or triplexes, except for a 56-unit motel that has been closed for years. It is suitable for conversion to rentals, and it has a sale pending. One of the duplexes and one of the triplexes also have pending sales.

2023 Q1 Land unit sales were 10% fewer than 2022 Q1.

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 were frustrated in their search for an existing home given the low inventory and intense competition, so they decided to buy land and build. 

In 2022, the sales pace slowed, and 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. The main reason is very high building costs: it costs much more to build than to buy an existing home. Additionally, long lead times to start and complete construction are another major deterrent.

Median price for the first quarter this year was $72,500 vs. $84,500 in 2022 Q1, a decrease of $12,000 (-14%). Average (mean) price year-to-date was down $24,500 (-20%), from $123,500 last year to $99,000 in 2023. Given that the inventory of homes and condos listed for sale is continuing to dwindle, interest in land should continue to grow, especially if building costs come down some. Therefore, the number of sales and average prices should trend upward – but only gradually. 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 397 tracts listed for sale is up 4 (1%) from a month ago, and down 12 (-3%) from a year ago.

Current MonthSame Month last year
Up to $50k 76120
$50k – $100k 115144
$100k – $150k 53 65
$150k – $200k 4549
$200k – $250k 2226
$250k – $300k 1316
Over $300k 5750
Comparative inventory by price segment
201720202021 2022 2023 YTD
465386 68 11
345784 94 26
161726 31 7
151623 18 4
3414 12 1
207 6 2
2412 23 1
118147252 252 52
Yearly unit sales by price segment

Price Discounting

For the first quarter this year, actual sales price averaged 10.5% below the last asking price when the home went under contract; the discount from original asking price was 15.4%. Compared to single-family homes and condos, buyers of land are able to get bigger discounts.

Days On Market

The average days on the market so far this year is 346, 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.  

20132014201520162017201820192020 2021 2022 2023 YTD
465390605464472388332471 351 437 346
Average inventory 2013 – 2022
How Land Purchases Were Financed
2022 2023 YTD
Cash 188 75% 4790%
Conventional loan 35 14% 0 0%
Seller financing 28 11% 5 10%
Other 1 0% 0 0%
    Total 252100% 52100%
Land Purchase Financing

The commercial market has cooled after a surge in 2022.

There haven’t been any sales of commercial properties so far in 2023. At this time, there are 30 commercial listings, with two under contract. 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.

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 strong likelihood of a recession this year, 2023 may be a quiet year in this sector of the market.

2011201220132014201520162017201820192020 20212022 2023 YTD
2793177514 12 8618 0
Commercial Sales 2011 – 2022
Taos Real Estate Market Report