Thinking about buying -- info on housing market (Las Vegas: credit, houses)

[Scottl]

I just read on a web site that Las Cruces is the number 1 growing city in NM and the 11th fastest growing in the country. Now again you have to look at who saying these things. It usaly comes from the business people who don't care about anything other then money. By creating a buzz brings in money. For me hearing that tells me I don't want to live there. If your from a large city Cruces is still small to you.

All this information you have to read between the lines. These are for the most part the same groups who help run the market up. The good thing about the negitive happening right now if there is one is investors aren't buying up the house's in your neighborhoods. Its real people looking for a home not an investment.

I'm looking in southern NM. I contacted the chamber of commerce for a relocation packet. I've also looked at what houses are available and if there in my price range. What I find interesting is with all the houses on the market I keep getting stuff from a builder to have a home built. In my opinion having a new house built when there's like 86 of them in my price range on the market wouldn't be smart. Here's why. Say I decide I don't want to live there 5 yrs later and want to sell. Now I'm just another house on the market and have to compete with the exsiting houses. The only thing that would give a newer house a leg is its newer. But its also going to be worth more.

Housing has become quite interesting. I just talked my brother out of buying a place in Oregon because of interest rates the loan companies want because his credit score isn't the greatest. He said well I'll refinance it in a year or 2. I told him you can't go into buying a house right now in todays market thinking that. In 2 yrs it could be worse you just don't know.

Here in Alaska our market is fairly strong in my area with an average house selling in 60 days. Now those are houses priced under $200,000. People are starting to wise up and buy within there means.

[Devin Bent]

The NYTimes has a story today that I think is on target for the NM housing market. Note the caveats at the end. I'll quote portions
**********************
AUSTIN, Tex. — The real estate market these days is a tale of two Americas, and one of them is not doing too badly.

In the America of big-city housing markets, especially on the coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth.

But in the other America, specifically in small cities like Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Mass., the available evidence suggests the real estate market is holding up. Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising.
...
“I would call them backcountry cities,” said Robert J. Shiller, an economist at Yale University and an expert on real estate markets who predicted the bursting of both the housing and stock market bubbles of recent years. “They are just going through normal growth, and they are out of the bubble picture.”

In figures released on Thursday covering 150 metropolitan areas, the National Association of Realtors said that median home prices were falling in 77 markets — but rising in 73.
....
How long the situation will last is anyone’s guess. One possibility is that the smaller cities are just lagging behind the big ones in seeing prices fall. And if the economy weakens drastically, all bets are off. But for now, buyers in these towns seem to feel they are getting a lot of house for the money; sellers and brokers are realizing that they have, so far, dodged a bullet.

*********************************
Shiller [quoted above] is not a real estate industry buzz generator. He is a pessimist who has been predicting the bust for years.

[jsc23]

Originally Posted by Devin Bent

I saw another story (I didn't save the url) that listed the top ten housing markets for continued growth. We should always take these with a grain of salt, because who knows? But numbers 2 and 3 were ABQ and El Paso which we might think of as the two bookends of the New Mexico growth corridor -- suggesting that New Mexico is not going bust.

Another factor for keeping the housing market healthy is the Texas economy in general which I believe is doing well. My impression -- anybody correct me if I am wrong -- is that Texas is an important source of housing demand in some of the ski areas, like near Taos or Ruidoso.

The Texas, particularly the West Texas, economy is a factor...mostly military industry, petroleum production and services. But other factors are probably more important: NMs petroleum industry is booming, ABQ is booming in high tech, specialty manufacturing etc.

Post high school education enrollments are growing rapidly.Not so much pressure on ABQ, but New Mexico Highlands Univ. in Las Vegas has main campus enrollment of 2500 this year, up from about 1300 5 years ago, and growing rapidly. College enrollments historically increase during economic slow-downs.

Another factor becoming significant is "Boomer" relocation. Whether retiring or relocating to telecommute, boomers are tending toward smaller towns in the intramontane west or in Appalachia.

So many factors created the overheated housing markets in various places... simply put, NM's market factor mix has been such that NM generally didn't overheat so the state now isn't suffering the "corrections" experienced by cities like Denver, Phoenix etc.

[jsc23]

Originally Posted by GregW3

I have always wondered how houses replaced equity stocks or commodities as America's favorite investment and speculative instrument. Perhaps it was the 50% margin restriction on buying speculative stocks while houses could be purchased “on spec” for 20% down (margin) or less. No wonder there was a huge run-up in housing prices without a concurrent increase in actual value as a living unit.

Just a random thought... most people will admit they don't understand the stock market, but a lot of those same people may assume they know real estate investing. (Hey, I've bought a house before and done some handyman work...)

Most folks are more familiar with houses than with the arcana of a new IT server process. What a lot of buyers didn't understand is when you deal in real estate, the product you buy is not the house but the financial package. Buying residential property in an overheated market during a general economic slowdown financing 90-100% using two-tiered ARMs is like betting Jamaica Bobsled will take the gold.

A lot of mortgage companies were making the same sucker bet: that the market would continue to grow at so high a pace that foreclosure sales would become profit centers... but what happens when you dump inventory into the market while at the same time eliminating the buyers who were driving values up?

Like the stock market, when a boom becomes general knowledge, it's late in the game. And when hearing stories of fortunes made from minimal investment in real estate-- well, if everyone who came back winners from Vegas could be trusted, the casinos would be broke...

[Devin Bent]

Here is the url for the story that listed El Paso and ABQ as two and three as places to buy: Housing bubble: Top 30 cities to watch - Buy a House: MLS Listings & Home Buying Tips - MSN Real Estate

The report -- for those two cities -- is copied below. No other NM cities are mentioned, but they are all too small -- they don't ordinarily make lists like this.


"El Paso, Texas: Real estate market watchers have noted for some time now that Texas is a value buy. Local Market Monitor recently released a listing of overvalued and undervalued markets. Four of its 10 undervalued markets were in the Lone Star State, with El Paso the most undervalued market in the nation (the other undervalued Texas markets were McAllen, Dallas-Fort Worth and Houston).

"If I was an investor in real estate -- and I'm not -- I'd carefully consider Texas markets," Winzer says. "They had a big boom and bust about 10 years ago. They're at the end of that. They haven't been great markets for awhile, but quite likely, as economies improve there, people will move there, especially since prices are relatively modest."

Fortune ranked El Paso third on its list of markets set for strong appreciation in the next two years; another Texas market, San Antonio, was first.

Albuquerque, N.M.: This is another city at the bottom of John Burns Real Estate's Housing Cycle Barometer, a measurement of cities that are susceptible to a housing bubble. It's also high on Fortune's list of markets that should experience growth in the next two years and had a healthy increase (18% according to the NAR) in 2005. Locals say the area attracts Californians trying to escape high housing prices; once they discover the mild year-round weather, they don't want to leave."

[Hunter Wold]

Check out Grants...check the local realtors here. The prices seem very low and the area needs some boosting....good climate and it is a wanabe town...
HW

[Devin Bent]

Another interesting story on the housing market.

http://www.nytimes.com/2008/02/20/us/20exurb.html

I know some don't like the NYTimes but I think they are doing a good job on the current housing situation. Most others are writing about the boom and bust in CA, Florida, Nevada, etc, but the Times is looking at other states.

In Texas prices seem to be holding up in established areas but the development on the edges is slowing. I suspect that is what we are experiencing in NM also.

[Devin Bent]

The best housing price change data is provided by OFHEO which compares the sales prices of houses with their earlier sales prices. Most data you see is MLS which just looks at sales prices. Thus if for some reason more homes on the wealthier side of town are selling -- then prices seem to go up more than they have. Vice versa if homes on the less wealthy side of town are selling.

Also the OFHEO data picks up more NM metro areas than most data sets.

Office of Federal Housing Enterprise Oversight

So here is the data for the fourth quarter of 2007 -- this is percent change over fourth quarter 2006. (For some reason, I can't find Farmington, which I am sure was on their list in the past. Maybe it will show up later.)

(Excuse me -- it is not that good news for buyers -- it is good news for owners. But prices are going up more slowly, housings are on the market longer, there will be motivated for sellers, and bargains for buyers.)



ABQ 4.66
SF 4.99
LC 5.96

The state NM is 5.4, a very small amount higher than TX, which surprises me, and of course is better than AZ which is in the negative. CA is -6.6

For the entire US, the number is 0.1

This helps but the bust (to date) in perspective -- for the US as a whole, prices are flat.

[Devin Bent]

IMO the following link has good advice if you are thinking about buying now. It is general advice, not New Mexico specific.

Buying-in-a-Rocky-Housing-Market: Personal Finance News from Yahoo! Finance

[GregW]

It seems to me that $200,000 is way too high in a market where most folks are lucky to make a gross income of $40,000 per year. Speculating that the 200 grand houses will be worth 250 in the five years between corporate relocations might make it worth that much but not for a permanent home for a family.

I am looking forward to the day when housing prices again are based on the house’s value as a home, not as a speculative investment. If folks want to gamble there is always Las Vegas or Wall Street.