Market Confusion?

In a CNN interview, Warren Buffet was talking about coping with the current economy. He said, “If you are fearful and confused, you don’t get over being fearful until you get over being confused.”

Not all homes are created equal in the Santa Fe market. For people looking to buy a home here, the cost per square foot is all over the board. The range can be anywhere from $180 per square foot to over $1,000 per square foot! "On paper" a listing may look great when you're calculating price per square foot, but when you actually see it, disappointment settles in.

So how do you avoid the confusion? So many things need to be factored in when trying to determine market value: location, views, finish level, details, materials used, single or two story, lot size, floor plan, design, functional and economic obsolescence and more. Work with a professional who knows the market inside and out.

Now to address the other part of Buffet's statement: getting over being fearful. Start by defining what you're fearful of. Are you terrified of overpaying and not buying at the very bottom of the market? Do you think a better house will come on the market if you wait? Are you thinking interest rates will go down even further?

Remember, there won't be a red light indicator to announce that we have finally arrived at the bottom of the market. You have to watch the market closely and look for the indicators. Things like prices stabilizing, more properties selling, fewer discounts, and a closer balance of supply and sales.

Santa Fe was relatively insulated from the rest of the country with foreclosures and rapid appreciation. Unlike the Las Vegas, Miami and California markets, Santa Fe grew at a conservative, steady pace. I believe that built stability into our market and helped preserve equity.

No one likes to overpay and everybody wants the lowest interest rate. I believe that our market hit the bottom about 2 months ago and has stabilized. While I think prices will be somewhat flat for the next 3 years, interest rates will not. Look for increases in the next 9 to 12 months. And when rates go up, I believe it will be so fast, almost overnight and with a 1 to 2% move. Take advantage of the low prices and maximize your buying power with low interest rates.

Hope you're a little less confused after reading this. I'm always happy to meet with you in person and talk in-depth about the various factors in the Santa Fe real estate market. I love the City Different and am happy to help demystify your home buying or selling process however I can.

Time to Buy!

Timing is everything! A few weeks ago on a Friday, we were blessed with a foot of fresh snow at Ski Santa Fe. The bummer was that the ski area had closed two weeks prior, so to take advantage of this "gift," you had to hike up the mountain on your own. Not an easy task considering the elevation starts around 9,500' above sea level up to over 12,000'!

On Saturday, the weather cleared with lots of sun and just a little bit of wind. The conditions were perfect. Waiting another day would turn the light, fresh powder into mush which wouldn't be worth skiing. I seized the opportunity and had a blast, not to mention a great workout.

Our current real estate market conditions are somewhat the same. Timing is everything. The upside today is that home prices have come down and interest rates are ridiculously low. But there's a downside looming around the corner--inflation. The current administration is spending so much money that inflation is inevitable. Your hard earned dollar will have less buying power with inflation.

So what does inflation do for the real estate market? My research indicates that one way inflation will affect the real estate market is by causing interest rates to go up. Some estimates indicate that by the end of the year, we'll be looking at 6.75% on a 30-year fixed mortgage (non-jumbo). Today, they're around 4.75%. So what will a 2% shift cost you? Well, on a $400,000 mortgage, that 2% difference will cost you more than $500 more per month! Here's a link to a great article with more details.

Talk about less buying power! That same mortgage payment on $400,000 at 4.75% is equal to, more or less, about a $320,000 mortgage at 6.75%, so you just lost $80,000 of buying power. Not my idea of a good deal!

The time is NOW not only to acquire real estate at a low price, but also to get the most out of your money with a fixed mortgage at a low interest rate. Carpe Dinero!

Spring Snow Storms

Spring time in New Mexico! You just never know what the weather will do. Last Monday, I thought that I had skied my last run at Ski Santa Fe by hiking up (ski area closed April 5th) and skiing the fresh foot and a half of snow they received. Then, another storm rolled through on Friday and dumped another foot of powder. Just too much to resist, so hiked up again with a few friends and, as you can see from the picture, had a great run down Parachute.

The local real estate market is kind of like the weather, somewhat unpredictable, but exciting none-the-less.

There seems to be a bit of a positive shift in the market with buyer confidence gaining ground. With tax day behind many buyers, they are getting out and about and taking advantage of low prices, good selection and low interest rates. Showing activity is up on my residential listings, but land is still very, very slow.

The second home segment of the market is lagging behind, so prices are more negotiable than they have been in the past. So if you're considering a second home, now is a great time to cut a deal.

Santa Fe offers a great quality of life, a lot to do for the active lifestyle, incredible weather, world-class dining, culture and natural beauty. What more could you want? Live your dream!

What's the Buzz?

As a hobby beekeeper, I'm preparing for the bees to emerge from hibernation. On some of our recent sunny, warmer days, the bees have come out and about from their slumber. It's usually not the whole brood that emerges, just a few, unless they find something interesting.

Case in point, yesterday was a beautiful day and I noticed a few bees buzzing about. So to give them a little boost, I put out about a cup of honey water. It didn't take long for the word to get out about this gourmet treat. In no time at all, lots of bees were buzzing about this delectable deal. I was amazed that the bees were able to retrieve all of the honey water within a few hours.

This is a great way to picture the current real estate market in Santa Fe, New Mexico. Buyers are starting to emerge and realize the great opportunities out there. Although not currently a feeding frenzy, great deals are being snatched up. Once these deals are gone, they're gone. It's only the buyers who are willing to take advantage of the deep discounts, low interest rates and good selection who will benefit the most.

It's my opinion that there are some great deals for buyers and this condition will not last. Interest rates are incredibly low, often with a window of a few hours of being able to lock in the 4 5/8 % range. If you find a deal, don't delay.

I believe that pricing discounts for buyers will not be as great from about late spring through summer, as that's one of the most beautiful times in Santa Fe. Properties show better with the landscaping at its best. Lilacs are beginning to bud out, and tulips, daffodils and many other bulbs are blooming. Fruit trees and aspens are just about ready to leaf out as well, so don't delay in buying. Carpe Diem or more appropriately, Carpe dinero.

Top 10 Things to Expect in the Housing Market in 2009

Today's entry is an easy one as I'm recovering from a day of spring skiing in Taos, New Mexico. Just trying to help stimulate the local economy. Great weather and ski conditions.

The question that everybody wants answered, "What's going to happen in 2009?" Here are some interesting points. Have a great weekend!

Click here: Top 10 Things to Expect in the Housing Market in 2009 : HGTV FrontDoor Real Estate

Some Market Movement?

At the time of this posting, a few areas of Santa Fe have experienced some positive movement over the past week. This is NOT an April Fool's joke. It's encouraging to see this type of activity. So where's "the action"? The Northwest quadrant (excluding Las Campanas) seems to be gaining some steam with 3 properties in the $600,000 to over $800,000 range that went under contract. Having viewed a good bit of the inventory in this area, I feel that properties that priced to sell are finally paying off and buyers are taking advantage of the deals out there. Like I always say, "priced right is half sold."

Another area enjoying some activity is Eldorado, and surprisingly, 4 properties above $450,000 went under contract last week! A bit surprising considering that the median price in Eldorado is currently $419,000 and of the 16 homes that have sold so far this year in Eldorado, the average sales price is just over $367,000. This upper-end shift in sales is encouraging and believe that it gives some insight to this crazy, unpredictable market.

These are just two areas that stood out as far as activity is concerned, but looking at the market as a whole, what I see selling are homes for full time users. People still have to have a place to live and what better time to buy it than now--low prices, low interest rates and pretty good selection. The second home market seems to be quite slow as people are being very cautious in spending those discretionary dollars. In my opinion, primary residence sales are out pacing second home sales.

Where are the prices going? I can only estimate that the typical primary residences will be holding their values and we will see fewer deals out there. Typical vacation homes will be a little more unstable. Santa Fe offers a great quality of life with four "gentle" seasons. People relocating here are living their dream now, versus waiting for the bottom or the economy to improve or a number of other things. You can't spend your life waiting for everything to be perfect. Often that's the best way to miss the boat entirely. We only have a certain amount of time on this planet, so live your dream now!

New Federal Tax Credit Provides Opportunity For First-Time Homebuyers

Effective January 1, 2009, qualified first-time buyers may be eligible for a federal tax credit of up to $8,000.00. Some highlights below:FOR FIRST-TIME HOMEBUYERS ONLY:Qualifying homebuyers have not owned a principal residence during the three-year period prior to the purchase.AMOUNT OF THE TAX CREDIT:Equals ten percent (10%) of the home's purchase price up to a maximum of $8,000.00.LIMITED TIME ONLY:The tax credit is available for homes purchased on or after January 1, 2009 and BEFORE December 1, 2009.NO REPAYMENT REQUIRED:Unlike the previous tax credit, this tax credit does not have to be repaid, but homebuyers must use the residence as a principal residence for at least three years OR face recapture of the tax credit amount.TAX CREDIT IS REFUNDABLE:The Homebuyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. A refund check may be issued to the taxpayer for a portion or even all of the refundable tax credit (depending on the taxpayer's tax liability).INCOME RESTRICTIONS:Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. (Partial tax credits may be available for taxpayers with incomes over these limits. Restrictions apply and the borrower should consult their tax advisor for details).2008 TAX RETURNSTax credit can be claimed on 2008 federal income tax returns IF the home was purchased on or after January 1, 2009.

Troy Lepisto
Home Loan Consultant
Santa Fe, NM 87505
505-984-0297 Office505-670-6399 Cell
1640 Old Pecos Trail Suite D
Mail Stop: MSN-BR465-8Santa Fe, NM 87505