Studying From Our Neighbor »Albuquerque Journal
ALBUQUERQUE, NM – Albuquerque is in the midst of a surge in housing costs that most experts agree cannot be compared to any in the recent history of the market.
Metro Albuquerque, long viewed as a less volatile market than many of its western neighbors, has seen the average single-family home sales price rise more than 25% in a single year, cementing it as one of the hottest home markets in the country.
“This is an incredible year-over-year increase in property values,” said Reilly White, associate professor of finance at the University of New Mexico’s Anderson School of Management.
………………………………………….. ………….. …………..
But while this type of spike is almost unprecedented in Albuquerque, other western cities have seen similar growth cycles in recent years.
In Boise, Idaho, the average home price has more than tripled in the past nine years. In Ada County, where Boise is located, the median sales price exceeded $ 500,000 in May after roughly comparing it to Metro Albuquerque a decade earlier, according to Boise Regional Realtors.
Real estate agents appreciate a growing local economy, good weather, and easy access to outdoor activities like skiing and mountain biking for growth. These amenities helped transform the city from a sleepy mountain town into one of the most popular midsize cities in the country.
“I know when (visitors) come they’ll fall in love with it,” said Jeff Wills, president of Boise Regional Realtors.
However, growth has cost Idaho capital. Rising prices have drained resources for affordable housing, sparked a backlash from residents who don’t want the city to keep growing and changing, and have driven some residents out of the area entirely, said the former Boise Mayor.
“I don’t know where we’re going in this particular market,” said Dave Bidder, who was Mayor of the city from 2004-2020.
While experts from both communities cautioned against directly comparing the two cities, they agreed that Boise’s experience over the past decade could teach Albuquerque some lessons for its own growing difficulties.
“People don’t understand how fragile these areas are, how fragile the various parts are,” said Bidder.
Boise then and now
After the Great Recession, home prices in Boise and Albuquerque were remarkably similar. As of December 2012, the typical value of a home in Albuquerque was $ 172,000, compared to $ 173,000 in Boise, according to real estate website Zillow.
But things were already beginning to change in Boise.
According to the bidder, the city launched public and private investments for around five years between 2012 and 2017 that would make any city jealous.
Bidder said Boise had built four new public library branches, completed several park projects and completed an expansion of the convention center during that time. Boise’s once-forgotten downtown area has been the site of numerous infill projects, bidders said.
Perhaps the crown jewel was a partnership between the city and wealthy Idaho benefactors who converted 55 acres west of downtown with gravel pits and slaughterhouses into a vast park with white water rafting along the Boise River.
“People were much less averse to new developments,” said Bidder. “In fact, they were pretty hungry for it at first.”
During the same period, house prices began to rise, Wills attributed to a mix of people relocating from other parts of Idaho and newcomers from larger cities in nearby western states.
“Boise is just set up so that we have a lot of bigger stores close by,” said Wills.
Between 2010 and 2019, Boise added 19,575 new residents, a growth rate of 9.3% according to data from the US Census Bureau. For comparison: Albuquerque only grew 2.6% over the same period.
He said this has caused the property market to shift from a buyer-friendly to a balanced market, and eventually to a seller-friendly market.
As of October 2014, the market began a phase of at least 39 consecutive months in which the supply of existing properties across the region declined year-on-year, according to a market report published by the brokers’ association in 2017.
Wills said the pandemic made that growth worse as remote workers from other cities, newly disconnected from the office, flocked to Boise in 2020 and early 2021 for their quality of life.
Wills acknowledged that Boise is a market today that most first-time buyers in certain parts of town cannot afford.
“I think the days when someone could shop anywhere in our valley on their first purchase are over,” he said.
“Isle of Despair”
While the rise in home prices has been a boon to existing homebuyers and wealthy newcomers to the Boise area, it has strained resources aimed at helping vulnerable tenants.
Deanna Watson, executive director of Boise City / Ada County’s housing authorities, said more newcomers mean more competition for the organization’s remaining subsidized units.
“It’s an area that is nowhere near affordable,” said Watson.
After the Great Recession, Watson said a number of apartment buildings were sold to out-of-state investors, evicting existing tenants, renovating the units, and starting renting them again at much higher prices. Other properties were converted into short-term rentals and taken off the market for long-term tenants. These factors, she said, contributed to a decline in affordable units across the city.
For tenants receiving assistance through the Housing Choice Voucher program, landlords can upgrade to monthly rents after the first year with no cap on the tenant’s payment. She said it is becoming more and more common for landlords to increase the price significantly after the first year, forcing tenants to choose between the higher costs or choose from a dwindling pool of cost-constrained units.
“You’re really only on this island of despair,” said Watson.
Motorhome parking spaces, which the Housing Office had endorsed as an affordable solution for tenants, have increasingly fallen out of the price range for many residents. In a recent case, Watson said a Boise RV owner saw rental and other costs increase by more than $ 6,600 a year in four months.
“I was stunned what you were up against,” said Watson.
Bidders said the increasing lack of affordability had contributed to an anti-development mindset in recent years. He said some residents, often recently transplanted themselves, are battling new market price developments that only compound the housing shortage.
“You have to have living space, otherwise things will get worse,” he said.
Compared to ABQ?
While Boise and Albuquerque are very different in some ways, White said home price growth in both cities has been driven by similar trends since the pandemic began.
The rise in teleworking, low interest rates, and broad federal and state stimulus programs helped create an environment in which homeowners and those who were already able to buy homes had more purchasing power and flexibility.
In both cities, overseas buyers from more expensive markets have contributed to the recent rise in costs. White said the city’s relatively new housing stock, good weather, and outdoor facilities have attracted newcomers, a priority similar to the one that fueled Boise growth.
Still, White said Albuquerque is facing some headwinds, including a weaker local economy and high crime rate, that could stifle growth in the city.
While prices haven’t reached the same highs as in Idaho’s capital city, they are still starting to affect the supply of affordable housing in the city.
Linda Bridge, executive director of the Albuquerque Housing Authority, said the growing housing market has led some investors to buy subsidized housing units and convert them into apartments at market prices. She said she knew about two apartment complexes in Albuquerque that have abolished housing assistance.
Whether or not Albuquerque is following in the footsteps of other less affordable western cities, Bridge said the city is already seeing a worrying shortage of affordable units.
“The trend we are seeing right now is certainly worrying,” said Bridge.