First Half 2022

From mid-2020 through 2021, an incremental layer of buyers was added to a market that has been steadily gaining since 2015. After Covid-related lockdowns were lifted in spring 2020, the market got hot; then it really surged in 2021. People looking to get out of crowded urban areas flocked to “Zoomtowns” where they sought more space in which they could work from home. Homes sold much faster than had been typical in Taos–sometimes in a day or two. There were numerous cases of multiple offers, “bidding wars”, and homes selling well above asking price. There were many more homes sold in the high end of the price range than what was typical for Taos. Prices rose at a rapid rate – over 20% per year in some cases. This kind of market behavior had been very uncommon in Taos – even during the boom years of the early 2000’s leading up to the Great Financial Crisis of 2007-2008. 

So far in 2022, the market has cooled some. The number of closed sales of homes is down slightly compared to last year. However, dollar sales are up, as prices continue to rise. Through the first six months, unit sales are 171 this year vs. 176 last year, a decrease of 5 sales (-2.8%). Dollar sales are up $18.4 million (22%), from $81.9 million to $100.3 million.

Median and Average Prices

For the first six months of  2022, the median price (midpoint in the range of prices from low to high) is $475,000 vs. $410,000 in 2021, an increase of $65,000 (+16%). The average (mean) is $586,500 vs $465,600 last year, an increase of $120,900 (+26%). This reflects the increasing number of high-dollar sales, as well as the general rise in the overall price level.

Price	2016	2017	2018	2019	2020	2021	2022 YTD
Median	$283,500	$300,000	$311,000	$322,500	$344,000	$410,000	$475,000
Average	$306,100	$326,800	$370,500	$373,100	$390,500	$446,100	$586,500

Price Discounting

Through the first six months, actual sales price has averaged 2.0% below the last asking price when the home went under contract; the discount from original asking price is 3.7%. The trend of demand exceeding supply has caused the discount from original price to decrease steadily starting in 2013.

2013	2014	2015	2016	2017	2018	2019	2020	2021	2022 YTD
18.4%	16.9%	13.9%	13.3%	9.4%	10.3%	7.8%	7.2%	4.5%	3.7%

Days On Market

The average days on the market so far this year is 134 vs. 148 in 2021, a decrease of 14 days (-10%). Days on market averaged 250 during 2003 – 2016; since 2016, there has been a steady decrease.

2006	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022 YTD
247	244	235	235	226	192	147	151	156	141	128

Inventory

At the time of this report, there are 241 homes listed for sale, up from 212 last month, about the same as a year ago, when there were 242. The highest inventory is 2021 was 259 (in September). In September of 2008, there were 518 homes listed for sale. The average inventory decreased every year from 2013 to 2018; it stabilized in 2019, but decreased again in 2020 and 2021. This year, inventory will probably average about the same as last year. Taos inventory consists of a wide variety of size, price, style, location, and condition. It is difficult to find more than a few homes to show a buyer that might meet most of his/her criteria.

2013	2014	2015	2016	2017	2018	2019	2020	2021
334	333	324	316	285	264	274	257	225

With demand still robust – even among homes with less popular styles and locations – and with no significant increase in the building of new homes or the listing of existing homes, the inventory will remain inadequate relative to demand. Even though prices seem high at this point in time, they will probably continue to rise, albeit maybe not as much as they did last year. And Taos prices still compare favorably to other destinations in the intermountain west!

Home Purchase Financing

	2011		2016		2020		2021		2022	YTD
Cash	65	43%	91	36%	103	31%	139	40%	57	33%
Conventional loan	66	44%	129	52%	200	59%	180	52%	97	57%
FHA loan	8	5%	11	4%	11	3%	14	4%	5	3%
VA loan	1	1%	10	4%	13	4%	11	3%	8	5%
Seller financing	8	5%	7	3%	4	1%	2	1%	4	2%
Other	2	1%	1	1%	6	2%	3	1%	0	0%
Total	150	100%	249	100%	337	100%	349	100%	171	100%

Interest Rates

Since the Federal Reserve started its anti-inflation program of raising short-term interest rates, the rates on home loans have increased dramatically: The 30-year fixed-rate loan is now averaging 5.84%, up almost 3 points from the historic lows in 2021.

Conventional 30-year fixed	5.84%
Conventional 15-year fixed	5.00%
5/1 Adjustable	4.26%

Year-to-date unit sales are 47 vs. 43 for the same time period in 2021, a gain of 4 units (9%).  Dollar sales are up 24%. This is a little surprising since the condo inventory shortage is even worse than for single-family homes.  As with single-family homes, there are no signs that inventory will increase significantly this year. Therefore, prices should continue to increase, albeit more slowly than during the surge of 2021.

Median price through the first six months is $345,000 vs. $317,200 last year. an increase of $27,800 (9%).  Average price was also up, at $360,000 vs. $317,300, a gain of $42,700 (14%). 

Price Discounting

Year-to-date final sales price has averaged only 0.7% less than last asking price when the condo went under contract; sales have averaged 2.5% above original price.

2014	2015	2016	2017	2018	2019	2020	2021	2022 YTD
12.7%	8.6%	11.8%	6.7%	6.5%	5.5%	3.2%	3.3%	2.5% above

Inventory

The number of condos listed for sale at the time of this report was 36, down 5 from 41 a month ago, and down 26 from 62 at this time a year ago. 

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.

2013	2014	2015	2016	2017	2018	2019	2020	2021	2022YTD
107	81	78	65	58	59	56	49	48	43

	2011		2016		2020		2021		2022 YTD
Cash	14	48%	34	51%	43	58%	36	44%	21	45%
Conventional loan	15	52%	32	48%	30	41%	45	55%	26	55%
Seller financing	0	0%	1	1%	1	1%	0	0%	0	0%
Other	0	0%	0	0%	0	0%	1	1%	0	0%
Total	29	100%	67	100%	74	100%	82	100%	47	100%

There have been 5 multi-family sales through the first six months of 2022, an increase from 3 for the same time period last year. 

Multi-family is and has always been a very small segment of the Taos real estate market.  However, we may see some increase in sales as home and condo buyers facing scarce inventory broaden their searches to include multi-family.  For example, some duplexes might be convertible to single-family residences with some building modifications.

Rents have been trending higher for years, so multi-family income properties should yield fairly attractive returns on investment. However, with interest rates rising (i.e., cost of capital), buyers may start to require higher “capitalization rates.” Higher cap rates mean buyers would pay less for a given income stream (net operating income).

Currently, there are 8 multi-family listings, with two of these under contract. So this segment of the market may be starting to gain some traction.

Land sales have cooled some, too.

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 68% over 2020! Some home buyers were frustrated in their search for an existing home to buy decided to buy land and build. 

So far in 2022, land sales have cooled some from 2021’s pace: there have been 121 closed sales, down from 138 last year for the same time period, a drop of 17 sales (12%). Dollar sales, however, are UP 14%, at $2.4 million this year vs. $1.3 million last yeat.

Median price year-to-date is $86,000 vs. $63,000, an increase of $23,200 (37%). Average price is up $30,000 (30%), from $100,300 last year to $130,300 this year. Given that the supply of homes and condos listed for sale is not expected to increase much, interest in land should continues to grow; therefore, 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 494 tracts listed for sale is down from 513 a year ago.

There have been no commercial sales in the first three months of 2021, compared to two in the same period in 2020.

For the entire year 2020, there were only 8 sales, with a total dollar volume of $2.9 million. With the growing number of people moving to Taos (for either full-time or extended stay living), the demand for commercial services should increase; this should in turn boost the commercial real estate sector.

2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
2	7	9	3	17	7	5	14	12	8

Currently, there are 31 commercial properties listed for sale, the same as last month. Three are under contract.

	2011	%	2016	%	2020	%	2021 YTD	%
Cash	28	69	63	70	110	75	44	85
Conventional loan	5	12	6	7	26	18	3	5
Seller financing	7	17	20	22	9	6	5	10
Other	1	2	1	1	1	1	0	0
Total	41	100%	90	100%	146	100%	52	100%

The availability of financing for land purchases is more limited than it was during the pre-recession years of 2000 – 2007.

Days on Market

For the first quarter of the year, the average time to sell a piece of land has been 380 days.  This is down 6% from the same time period in 2020, but not far off the average of 410 over the past 18 years.