Year-to-Date August 31, 2022

From mid-2020 through 2021, an incremental layer of buyers was added to a market that had been steadily gaining since 2015. After Covid-related lockdowns were lifted in spring 2020, the market got hot; then it really surged in 2021. 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 2000s leading up to the Great Financial Crisis of 2007-2008. 

So far in 2022, the market has cooled some. We are not seeing a lot of offers written as soon as a new listing comes on the market; bidding wars have subsided some. However, dollar sales are up, as prices continue to rise. Through the first eight months, unit sales are 228 this year vs. 233 last year, a decrease of only 5 sales (-2%). The negative variance to last year has diminished over the past couple of months. One reason may be that the title companies are closing escrows faster than they were, so the number of sales getting closed each month now is greater than the monthly number last year. A new title company opened for business on August 28, and this will definitely speed up escrows. Additionally, with mortgage interest rates so much higher, the number of persons re-financing is way down; this, too, will allow title work to get done faster, and escrows to close faster.

Dollar sales are up $13.9 million (12%), from $115.5 million to $129.4 million, as prices continue to rise. However, the rate of price increase is slowing down from last year’s pace.

Median and Average Prices

Through the first eight months of  2022, the median price (midpoint in the range of prices from low to high) is $477,000 vs. $419,000 in 2021, an increase of $58,000 (+13.8%). The average (mean) is $567,600 vs $495,600 last year, an increase of $72,000 (+14.5%). This reflects an increasing number of high-dollar sales, as well as a rise in the overall price level. Here is how median and average prices have changed over the past seven years:

Price	2016	2017	2018	2019	2020	2021	2022 YTD
Median	$283,500	$300,000	$310,500	$322,500	$343,500	$425,000	$477,000
Average	$306,100	$326,800	$369,500	$373,100	$398,700	$513,800	$567,600

Price Discounting

For the year to August 31, actual sales price has averaged 1.7% below the last asking price when the home went under contract; the discount from original asking price is 3.5%. 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	2022 YTD
18.4%	16.9%	13.9%	13.3%	9.4%	10.3%	7.8%	7.2%	4.5%	3.5%

Days On Market

The average days on the market so far this year is 121 vs. 143 in 2021, a decrease of 22 days (-15%).  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	121

Inventory

At the time this report was prepared, there were 252 homes listed for sale, down 2 from 254 last month, and down 7 from a year ago, when there were 259. The low point this year was 194 in April. The highest inventory in the past twelve months was 259 (in September 2021). In September 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. Taos inventory consists of a wide variety of size, price, style, location, and condition – everything from mobile to million-dollar homes. With only 252 listings (many of which 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.

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 for the foreseeable future. Even though prices seem high at this point in time, they will probably continue to rise, although more slowly than they have risen during the past two years.  

Home Purchase Financing

	2011		2016		2020		2021		2022 YTD
Cash	65	43%	91	36%	103	31%	139	40%	75	33%
Conventional loan	66	44%	129	52%	200	59%	180	52%	129	57%
FHA loan	8	5%	11	4%	11	3%	14	4%	6	3%
VA loan	1	1%	10	4%	13	4%	11	3%	11	5%
Seller financing	8	5%	7	3%	4	1%	2	1%	6	3%
Other	2	1%	1	1%	6	2%	3	1%	1	0%
Total	150	100%	249	100%	337	100%	349	100%	228	100%

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.

Year-to-date unit sales are 61 vs. 51 for the same time period in 2021, a gain of 10 units (20%). Dollar sales are up 42%. This is despite the fact that the condo inventory shortage is even worse than that for single-family homes.  As with homes, there are no signs that inventory will increase significantly any time soon; therefore, prices should continue to increase; as with homes, the rate of price increase will be slower than during the surge of 2020-2021.

Median price through the first eight months is $349,000 vs. $317,200 last year, an increase of $31,800 (10%).  Average price is also up, at $374,100 vs. $316,100, a gain of $58,000 (18%). 

Price Discounting

Year-to-date final sales price has averaged 1.7% less than the last asking price when the condo went under contract; sales have averaged 1.1% below 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%	1.1%

Inventory

The number of condos listed for sale at the time of this report was 39, up 3 from a month ago, and down 22 from 61 listings 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	44

	2011		2016		2020		2021		2022 YTD
Cash	14	48%	34	51%	43	58%	36	44%	28	46%
Conventional loan	15	52%	32	48%	30	41%	45	55%	33	54%
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%	61	100%

Foreclosure Sales

There have been no foreclosure sales so far in 2022. There were none in the full year 2021.

There have been 5 multi-family sales through the first eight months of 2022, a decrease of 1 compared to 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 6 multi-family listings, with one of these under contract.

Land sales have slowed from last year’s pace.

Land sales really took off last year 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–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 to buy decided to buy land and build. 

So far in 2022, land sales have cooled some from 2021’s pace: there have been 163 closed sales, down from 186 last year for the same time period, a drop of 23 sales (12%). Dollar sales, however, are UP 10%, at $21.4 million this year vs. $1.9.5 million last year.

Median price year-to-date is $83,500 vs. $67,900, an increase of $15,600 (23%). Average price is up $26,200 (25%), from $105,000 last year to $131,200 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, especially of building costs stabilize or come down some; 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.

Price Discounting

For the year to August 31, actual sales price has averaged 8.9% below the last asking price when the home went under contract; the discount from original asking price is 12.8.

Days On Market

The average days on the market so far this year is 493 vs. 387 in 2021, an increase of 106 days (27%).  

How Land Purchases Were Financed

	2022 YTD
Cash	118	72%
Conventional loan	25	15%
Seller financing	19	12%
Other	1	1%
Total	163	100%

The commercial market has seen a surge in activity in 2022!

So far this year, there have been 13 sales with a total dollar volume of $11,774,000. Three of these sales were over $1 million: the old San Geronimo Lodge changed hands again at a price of $2.4 million; a large retail complex near the Plaza sold for $1,035,000; and the old El Taoseno Restaurant sold for $1.6 million. For the entire year 2021, there were only 6 sales, with a total dollar volume of $1.9 million. The lingering impacts of the Covid pandemic continued to affect the commercial sector in 2021. Confidence has improved in 2022. Additionally, the legalization of cannabis has added a new element of commercial buyers to the market. 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.

2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022 YTD
2	7	9	3	17	7	5	14	12	8	6	13