Low inventory of available homes for sale has been a long standing issue in many parts of the country and the Albuquerque area is no exception to that rule.
In our review of 2015 we looked at low inventory and, 12 months on, the situation is even more acute.
Of course a lack of available homes isn't exclusively bad news, especially for sellers who can gain from reduced competition and more robust asking prices.
The main issue, however, is the lack of choice that low inventory creates for buyers and, while it's been a great year for real estate, we'll never know how much better it would have been if there was a larger selection of homes for people to choose from.
The latest real estate stats, for November, issued by the Greater Albuquerque Association of REALTORS® demonstrated that single family detached home supply was in the worst shape for many years. While we would expect to see a tapering off of supply as some people withdraw from the market for the holidays, what we saw last month was a much steeper decline than the normal smooth downward curve we usually see as we move away from the peak selling months. We await December's figures with great interest.
All that being said, however, buyers have still been out in force, but it seems that, to date, some sellers still aren't keen to help satisfy the healthy demand that's out there.
There's no single reason for this issue. It's most likely a mixture of contrasting market forces that have combined to create the shortage and none of them have their roots in this year's market.
Some homeowners are still underwater and therefore unable to move, while others are happily locked in to the low mortgage rates we've seen in recent years. Many investors are still disinclined to sell homes they are renting, as they are getting such a good return and new construction levels still have some way to go. On top of those reasons are a wide range of other factors such as later retirement ages, longer careers, improved health and people still recovering from the equity/wealth losses of the Great Recession years.
Of course the fact that there are so many diverse reasons behind the problem makes it more difficult to solve.
There was, however, a positive sign that we reported back in October, when we looked at the amazing comeback of home equity and a Corelogic study that showed home equity had more than doubled nationally between June 2011 and June of this year. Measuring home values against mortgage debt, total home equity across the nation stood at $6.1 trillion in June of 2011. By the same month this year, it had risen to $12.7 trillion.
Could it possibly be the case, therefore, that a lot of homeowners simply don't know what their home is truly worth today and would be very pleasantly surprised if they did? How many got disillusioned during those recession years and simply stopped thinking about moving upscale?
Perhaps the best cure for low inventory will, quite simply, be the continuing growth of jobs and confidence in the economy. The more the feelgood factor returns, the more likely homeowners are to be aspirational about owning a better home.
Whatever happens, right now anyone who is thinking about selling has a fantastic opportunity to enter a market with relatively few competitors and one where high demand means better sold prices, reflected in the price growth we've seen in the area all year.
Why not contact us today to discuss your options and obtain an accurate home valuation. If you're looking for an instant ball park estimate why not click here to use our handy online home valuation tool. You can also click here for an instant report of recent home sales in your neighborhood.