Last year, an incremental layer of buyers was added to a market that has been steadily gaining since 2015. After Covid-related spring lockdowns were lifted, the market got hot, and it remains so! Buying activity has been brisk, even during winter and early spring which are typically slower. Homes are going under contract fast–sometimes in a day or two. We are also seeing more cases of multiple offers, “bidding wars”, and homes selling above asking price. This kind of market behavior was heretofore very uncommon in Taos. The overall price level is rising at an accelerated rate.  We are also seeing an increase in sales of higher-priced homes, as well as of homes in less popular areas.

The pandemic has changed the way people work and where they want to live. 

It looks as if “working from home” is here to stay. The desire of many people to leave urban areas and to live in a more rural environment seems likely to remain a strong factor in national real estate trends. Taos will attract some of these people.

Through the first quarter, unit sales are 84 this year vs. 60 last year (+40%).  Dollar sales are up $15.9 million (74%), from $21.5 million to $37.5 million.

Currently, there are 48 sales pending, down from 59 last month, but still well above the historical average of 15-30 homes under contract at any given time. The high number of pending sales is partially due to delays in closing sales contracts caused by a huge backlog at Taos’s only two title companies; they simply cannot process orders in a timely manner.

Median and Average Prices

For the first three months of  2021, the median price (midpoint in the range of prices from low to high) is $410,000 vs. $325,000 in 2020, an increase of $85,000 (+26%). The average (mean) is $446,100 vs $358,700 last year, an increase of $87,400 (+24%). Some of the increases are due to the sales mix, with relatively more higher-priced homes selling; however, price per square foot of just about every type of home is up dramatically!

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

Price Discounting

Through the first three months, actual sales price has averaged 3.0% below the last asking price when the home went under contract; the discount from original asking price is 4.5%. 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 YTD
18.4%	16.9%	13.9%	13.3%	9.4%	10.3%	7.8%	7.2%	4.5%

Days On Market

The average days on the market so far this year is 121 vs. 151 in 2020, a decrease of 30 days (-20%).  However, we have seen desirable homes in preferred locations going under contract fast–sometimes in a couple of days.  Many of our buyers are from out of town, and they often are frustrated that a home they are interested in goes under contract before they can get here to see it.  Sometimes a video showing must suffice for a buyer to make a timely offer. 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 YTD
247	244	235	235	226	192	147	151	156	121

Inventory

At the time of this report, inventory had increased from the prior month for the first time since June 2020. There are now 196 homes listed for sale, up from 181 last month, but down from 243 a year ago (-19%). The highest inventory is 2020 was 273 (in July). 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.  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
334	333	324	316	285	264	274	257

With demand increasing – 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!

	2011	%	2016	%	2020	%	2021 YTD	%
Cash	65	43	91	36	103	31	26	31
Conventional loan	66	44	129	52	200	59	46	55
FHA loan	8	5	11	4	11	3	3	3
VA loan	1	1	10	4	13	4	7	8
Seller financing	8	5	7	3	4	1	0	0
Other	2	1	1	1	6	2	2	3
Total	150	100%	249	100%	337	100%	84	100%

Interest Rates

Over the past few months, rates on home loans have increased some, in line with rate increases in the market for U.S. Treasury bonds, but they remain extremely low by long-term historical standards. The 30-year fixed-rate loan is now averaging 3.11%, down from 3.34% a month ago, but up from under 3% during  the latter half of last year. Despite some recent volatility in the bond market–due to concerns about rising inflation and Federal Reserve policy–rates are not expected to increase much this year.

Conventional 30-year fixed	3.11%  (Nominal)	3.32%  (APR)
Conventional 15-year fixed	2.43%	2.68%
Jumbo  30-year fixed	3.12%	3.21%
5/1 Adjustable	3.20%	4.04%

Year-to-date unit sales are 27 vs. 10 for the same time period in 2020, a gain of 17 units (170%).  Dollar sales are up 135%. This is a strong start to the year, but the condo inventory shortage is even worse than for single-family homes, so this will again be a constraint on sales. As with single-family homes, there are no signs that inventory will increase significantly this year.

At the time of this report, there are 12 condo sales pending, the same as last month, and significantly more than the 3-7 that was typical up until last year. As with homes, some of this increase is due to the increased time it is taking to get sales contracts closed (backlog of title work, appraisals).

To give a sense of market dynamics, one of my buyers made an offer on a condo within a few hours of the listing being active in the MLS. The offer had an escalation clause allowing the buyers’ price to increase up to $13,000 above list price of $299,000 if there were competing offers. There were five offers submitted that morning, four of which had escalation clauses.

Median price through three months is $310,000 vs. $316,000 last year. a decrease of $6,000 (-2%). Average price was also down, at $293,500 vs. $337,300, a drop of $43,800 (-13%). Please note that 27 sales is probably too small a number to be representative of how the year will turn out; we should see actual evidence of rising prices as the year progresses. But note also that averages are affected by the sales mix of units: if relatively more smaller, less-expensive condos sell this year compared to last, the average prices will be less.

Price Discounting

Year-to-date final sales price has averaged 3.0% less than last asking price when the condo went under contract; the discount from original price is 4.5%. Again, three months is too small a data sample to project a trend.

2014	2015	2016	2017	2018	2019	2020	2021 YTD
12.7%	8.6%	11.8%	6.7%	6.5%	5.5%	3.2%	4.5%

Inventory

The number of condos listed for sale at the time of this report was 40, up 6 from 34 last month, but down 4 from 44 at this time a year ago. Of the 40 units currently available for purchase, 18 (45%) are at Taos Ski Valley, while only 22 are in or near the Town of Taos. Those 22 include a wide variety of size, age, style and price, so (just as with with houses) it is difficult to find more than a very few listings that work for any given buyer.

For example, if a buyer today wants a condo anywhere but at Taos Ski Valley, priced up to $250,000, there are only two listings: a studio and a 1-bedroom.  Both are under contract, so actually there aren’t any available at this time.  If the price limit is raised to $300,000, there are six additional units available (one 1-bedroom, five 2-bedrooms).

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
107	81	78	65	58	59	56	49

	2011	%	2016	%	2020	%	2021 YTD	%
Cash	14	48	34	51	43	58	15	56
Conventional loan	15	52	32	48	30	41	11	41
Seller financing	0	0	1	0	1	1	0	0
Other	0	0	0	1	0	0	1	3
Total	29	100%	67	100%	74	100%	27	100%

There have been no multi-family sales through the first three months of 2021, the same as 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.

Currently, there are 9 multi-family listings, with five of these under contract. So this segment of the market may start to gain some traction.

Land sales have really started to pop!

Some home buyers who have been frustrated in their search for an existing home to buy are deciding to buy land and build.  Currently there are 68 pending sales, up from 59 last month, and way more than typical. Of course, as with both single-family and homes and condos, a good portion of the increase in pending sales is due to the protracted time it is taking to close sales (title company backlog). However, we expect that 2021 sales will far outstrip 2020 sales by the end of the year.

Year-to-date unit sales are 52 vs. 26 in the same period in 2020, a gain of 26 (+100%).  Dollar sales are $3.93 million vs. $2.56 million last year, an increase of 54%.

Median price year-to-date is $61,300 vs. $82,500, a decrease of $21,200 (-26%). Average price is down $22,800 (23%), from $98,400 to $75,600.  As with condos, the sales mix this year includes more lower-priced properties, so the decreases in median and average price do indicate that prices are falling. As interest in land continues to grow, prices will start to rise, but that probably won’t happen until some of the inventory of is absorbed.    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 513 tracts listed for sale is up from 475 one month ago, and up from 492 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.

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