Now that all the troublesome real estate scenarios have been analyzed, we can begin to pick up the pieces. Granted, this has happened before, but just exactly when? The "oil bust" of the mid-1980's had an interesting impact on Santa Fe real estate, but that was a regional event and inventory did not grow as fast as it has recently. Many are having difficulty remembering when things were so cloudy in economic terms. Property ownership as a safe haven can still be a good choice, but you must be willing to stay long enough to truly realize the gains that are possible. Home ownership has long term rewards that are both financial and non-financial, making it difficult to remove the emotion when buying and selling. The point would be to move deliberately rather than find you are in need of a quick fix with a stressful sale.

Our study of the local market continues to show a bit of success, despite a blizzard of negative national press. Some price ranges and neighborhoods seem to be growing and thriving, yet others have not had an easy time of it. As stated in the January 2008 issue of this newsletter, a large majority of the increase in housing inventory and almost all the slowdown in sales has been in the lower price ranges. This is due to the combination of homebuyers not having high-risk financing tools available and the fact that speculators had focused largely in the lower price ranges. Yes, there are sales below $500,000, but the supply greatly exceeds demand, so many sellers feel they are facing an uphill battle. And yes, sellers are truly missing the go-go days of 2004 through 2006. We have now evolved into a buyer's market and that is fantastic news for buyers. If this is the low ebb of the market, then by definition there are meaningful advantages for buyers. Sellers will be glad to learn of your interest in their property.

This little capital city that calls New Mexico home is hardly the place to view all trends, but we see some encouraging signs. People seem to be coping with a reduction in disposable income as spending slows and also making do with an apparent decrease in new money invested here. At the same time, the state lodger's tax revenue (an excellent measure of tourist traffic) continues to climb and our rock bottom unemployment rate has gained national attention. Are we in an exceptional place that is going to thrive while others stumble? The most logical near-term predictions include a soft or flat real estate market for Santa Fe, with an expected amount of frustration and plenty of reasons for it. We cannot promise improvement while the downward trending lines continue downward. This could be a sign that we now have only one direction to go.

Included below is a new chart showing the Rate of Absorption for home sales based on inventory and number of sales over the previous 12 months. This may be the most revealing chart as it shows the measureable slowdown of home sales. Coming off the hottest market ever, in 2005, we averaged 5.4 months to sell homes listed for sale as of March 31, 2006. Now we are at 13.8 months in 2008. Those are likely the extreme highs and lows of this statistic. Somewhere between 6 and 9 months would be considered a balanced or ‘normal' market. In 2005, conventional wisdom was that there was insufficient inventory to choose from. Now there appears to be too much. The question is; how long will it be before we can return to that balanced or typical market? Many think at least a year and others believe 18 months is possible.

As a gentle reminder, the first quarter is always our slowest quarter, and in a slow and difficult market, it may look as if we are stagnant. But there is activity; our showings coordinator has been setting up an increasing number of home showings the last month. That is a sign of change we welcome. We also like the idea of a timely slogan for real estate in 2008; we have hope and believe in change. And we are working hard to achieve positive change.