2022 – Recap of the year

Taos Real Estate Market Report

January – December 2022 (12 months)

A look back at 2022 and some thoughts on 2023

The market peaked in the third quarter, and has cooled off since then. It’s actually something of a relief to get back to a more “normal” market after the frenetic conditions we had from mid-2020 through mid-2022. The post-Covid pandemic surge brought huge changes to the real estate market. People were looking to get out of densely populated areas, and to acquire homes with more room to work and school at home. The rush to homes in rural areas such as Taos spiked, and demand far outstripped supply. This caused the market to become a very one-sided seller’s market, with intense competition among buyers for very limited inventory. Multiple offers, often above asking price, were common. Prices rose at an unprecedented rate (20%-25% in many cases). Days on the market decreased significantly.

For the full year 2022 vs. 2021, the total market (all categories of property) was up 6% in terms of the number of closed transactions; dollar sales were up 22%. Single-Family Homes unit sales were up 5%. Condo unit sales were up 12%. Land sales were exactly equal to 2021. Commercial sales were up hugely.

Buyers seem to be pausing to see if inflation and interest rates are really coming down, whether there will be a nasty recession, and what effect these factors will have on real estate pricing and availability. Taos prices are no longer rising rapidly – if at all – and they may actually start to decline some, but probably not as much as in some places in the nation. The price gains of the past two years were unsustainable; some correction was inevitable. However, 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 at the year ahead, financial columnists are split on what will happen to the economy. Recently there have been some indications that we may actually have a “soft landing” in which the Federal Reserve is able to keep interest rates high enough to get inflation back down to target without triggering a nasty recession. For Taos real estate, we see the market “pause” lasting for 6-9 months, and then momentum starting to pick up again.

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

For the full year 2022, unit sales were 369 this year vs. 350 last year, an increase of 19 sales (5.4%). There would have been more sales if there had been more inventory of homes available for purchase. Also, up until the latter part of the year, sales transactions were tied up in escrow for 4-5 months, due to the inability of Taos’s two title companies to process the volume in a timely fashion. The advent of an additional title company in late August, and the market cooling, have reduced the load on the title companies. Additionally, higher mortgage interest rates have reduced the number of re-financings at the title companies. All this has made for a dramatic improvement in the time needed to close a sale. It is now taking only 2-3 weeks to get a title commitment, and most closings can occur in 30-45 days. Currently there are only 21 pending sales, whereas in 2021, the number was in the 70’s and 60’s.

Dollar sales for the full year were up 14.9%, from $180.2 million in 2021 to $207.0 million in 2022. The market price level rose dramatically from mid 2020 through mid-2022, when demand way outstripped supply. In addition to the overall price level rising, there was an increase in sales of higher-priced homes. In 2022, there were 34 homes sold at $1 million or more. That was up from 29 in 2021, and from 7 in 2020. With the price level rise slowing/flattening, the percentage gains in dollar sales may be more in line with the increases in unit sales in 2023.

In the cooling market, we are something of a split market: better homes in preferred neighborhoods are still selling relatively fast, and at full or close to full price; however, less desirable homes are taking longer to sell, and buyers are able to negotiate more.

Median and Average Prices

For the full year, the median price (midpoint in the range of prices from low to high) was $469,500 vs. $427,000 in 2021, an increase of $42,500 (+10.0%). The average (mean) was $561,100 vs $514,700 last year, a gain of $46,400 (+9.0%). The year-to-date median price peaked in the third quarter of 2022 at $477,000, Since then it has decreased slightly, ending the year at $469,500. Here is how median and average prices have changed over the past seven years:

Median and average price trends since 2016
Price Discounting

For the full year, actual sales price averaged 2.1% below the last asking price when the home went under contract; the discount from original asking price was 3.8%. The trend of demand exceeding supply has caused the discount from original price to decrease steadily starting in 2013.

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

The average days on the market in 2022 was 112 vs. 141 in 2021, a decrease of 29 days (-20.6%). Days on market averaged 250 during 2003 – 2016. Even during hot market of the early 2000’s, the average was about 240. Since 2016, there has been a steady decrease, as the inventory of homes decreased but buyer demand increased. We may see this number start to climb some as the market cools.

2006201320142015201620172018201920202021 2022
DOM in 2006, for nine years prior, and this year so far
Jan 2023Jan 2022Sep 2008
Up to $200k1014190
$200k – $300k1332109
$300k – $400k284369
$400k – $500k303139
$500k – $650k312335
$650k – $800k212927
$800k – $1mil211336
Over $1mil252513
Inventory by price segment
Up to $200k58614424
$200k – $300k64704947
$300k – $400k74836472
$400k – $500k27455562
$500k – $650k24425366
$650k – $800k16153443
$800k – $1mil4152122
Over $1mil462933
Unit sales by price segment

At the time this report was prepared, there were 162 homes listed for sale, down 17 (-9%) from 179 last month, and down 38 (-19%) from a year ago, when there were 200. The low point in the past year 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 mobile to million-dollar homes. With only 162 listings (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.

Average inventory 2013 – 2022

With demand still strong — and with no significant increase in the building of new homes or the listing of existing homes expected — the inventory will remain inadequate relative to demand for the foreseeable future. This should keep prices from falling significantly during the current market “pause”, and it should keep prices trending upward in the longer term.

Home Purchase Financing
2011201620202021 2022
Cash65 43%91 36%103 31%139 40% 132 36%
Conventional loan66 44%129 52%200 59%180 52% 208 56%
FHA loan8 5%11 4%11 3%14 4% 7 2%
VA loan1 1%10 4%13 4%11 3% 13 4%
Seller financing8 5%7 3%4 1%2 1% 8 2%
Other2 1%1 1%6 2%3 1% 1 0%
    Total150100%249100%337 100%349 100% 369100%
How Home Purchases Were Financed
Interest Rates

Since the Federal Reserve started its anti-inflation program of raising short-term interest rates last year, the rates on home loans increased dramatically; however, lately they have come down some: The 30-year fixed-rate loan is now averaging 6.36%, down from over 7% in November. Rates still seem high to buyers who were used to the amazingly low rates around 3% that were available in 2020-2021. However, there was a time not that long ago when mortgage rates of 6-7% were “normal.”

Conventional 30-year fixed 6.36% 
Conventional 15-year fixed5.63%
5/1 Adjustable5.41%
Bankrate.com‘s Current Rates as of Jan. 20, 2022
Note: Interest rates are impacted by occupancy, credit score, and down payment.
Foreclosure Sales

There were no foreclosure sales in 2022.  For the full year 2021, there were just two foreclosure sales (2% of total sales). The number of foreclosures has diminished steadily over the past several years. Currently, there is just one bank-owned house listed for sale.

Foreclosure Sales: % of total sales of Single-Family homes 2011 – 2021

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.

2022 finished with 92 closed sales vs. 82 in 2021, a gain of 10 (12.2%). Dollar sales were up 34.5%, from $27.2 million to $36.6 million. As with single-family homes, buyer demand was much greater than the supply of condos listed for sale, 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 2022 was $350,000 vs. $316,100 in 2021, an increase of $33,900 (10.7%).  Average price was also up, at $398,200 vs. $331,400, a gain of $66,800 (20.2%). 

Price Discounting

For the whole year, final sales price has averaged 2.0% less than the last asking price when the condo went under contract, and 2.1% below original listed price.

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

Days On Market in 2022 were 122 vs. 152 in 2021, a decrease of 30 days (-19.7%)

The number of condos listed for sale at the time of this report was just 18, a negligible increase of 1 from a month ago, and down 32 (-64%) from 50 listings at this time a year ago. Currently, there are only six condos available that are priced under $400,000; there are nine between $400-$500K. Four of the current listings are over $800,000.

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.

1078178655859564948 39
Steady average inventory decrease 2013 – 2022
CurrentYear AgoSept 2008
Up to $150k 0 040
$150k – $250k 0 650
$250k – $350k22251
$350k – $500k101156
Over $500k 61129
Inventory by price segment
201120202021 2022
Up to $150k16108 1
$150k – $250k82116 13
$250k – $350k31830 33
$350k – $500k12222 31
Over $500k136 14
     TOTAL297482 92
Unit sales by price segment
2011201620202021 2022
Cash14 48%34 51%43 58%36 44% 45 49%
Conventional loan15 52%32 48%30 41%45 55% 47 51%
Seller financing0 0%1 1%1 1%0 0% 0 0%
Other0 0%0 0%0 0%1 1% 0 0%
    Total29100%67100%74 100%82100% 92100%
How Condo Purchases Were Financed
Foreclosure Sales

There have been no foreclosure sales in 2022, the same as in 2021.

There were 6 multi-family sales in 2022, one fewer than in 2021. Dollar sales were up 4.0%, at $$3,165,000 vs. $3,044,000. 

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 rising (i.e., cost of capital), buyers will 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. One of these is a motel that has been closed for years. It is suitable for conversion to rentals, and it has a sale pending.

2022 Land unit sales just equaled 2021’s total.

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 just managed to equal 2021, at 252 tracts sold. However, dollar sales were up 13.8%, at $31.3 million this year vs. $27.5 million (+$3.8 million). Back in peak year 2005, in the boom years leading up to the Great Financial Crisis of 2008, there were 339 land sales, with a total dollar value of $46 million; 2022’s unit sales were 26% fewer than that peak, and dollar sales were 32% less. Unlike the market single-family homes, the land market is nowhere near back to where it peaked before the GFC.

Median price for the year 2022 was $78,000 vs. $75,000, a gain of $3,000 (4.0%). Average price was up $15,100 (13.9%), from $109,000 in 2021 to $124,100 in 2022. Given that the supply of homes and condos listed for sale is not expected to increase much, interest in land should continue to grow, especially if 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 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 80112
$50k – $100k 127142
$100k – $150k 57 60
$150k – $200k 4542
$200k – $250k 2421
$250k – $300k 1316
Over $300k 5138
Comparative inventory by price segment
201720202021 2022
465386 68
345784 94
161726 31
151623 18
3414 12
207 6
2412 23
118147252 252
Yearly unit sales by price segment

Price Discounting

For the year 2022, actual sales price averaged 8.3% below the last asking price when the home went under contract; the discount from original asking price was 11.5%.

Days On Market

The average days on the market in 2022 was 447 vs. 351 in 2021, an increase of 86 days (25%).  

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

The commercial market saw a surge in activity in 2022!

For 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: The Hacienda del Sol B&B sold for $2.9 million; the old San Geronimo Lodge changed hands again at a price of $2.4 million; a retail complex near the Plaza sold for $1,035,000; the old El Taoseno Restaurant sold for $1.6 million and has been converted to the new Taos Lifestyle store; a self-storage business sold for $1.25 million; and the Yucca Plaza retail complex just north of Taos Plaza sold for $1 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 improved in 2022 as Covid fears dissipated. Additionally, the legalization of cannabis has added demand for retail space for cannabis dispensaries; probably five of this year’s sales were for this. 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. Of course, higher interest rates could affect the feasibility of some commercial ventures, so this may impact sales.

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