Published 11 December 2016
On November 29th, the S&P Indices, which provides benchmarks for investable products used in the financial sector, such as mortgage-backed securities, released the results of the latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index for September. According to the report, the index “surpassed the peak set in July 2006 as the housing boom topped out”. In other words, U.S. home values are now back to where they were ten years ago.
Unfortunately for New Mexicans in general and Las Crucens in particular, our respective economies continue to lag behind the national trends. In our area, it’s still 2003 in the new-home market and just cracking 2005 in the world of existing homes. The average sales prices I’m about to share with you were taken from the archives of the Las Cruces Association of Realtors on the last day of each year with the exception of 2016, which was measured on the last day of November.
According to the way-back machine, the average sales prices of the new and existing homes, townhomes and condominiums sold in 1995 were $113,628 and $94,638, respectively. By the time the millennium rolled around in 2000, values had risen to $165,184 and $119,264. If you haven’t already done the math, that’s a 45.4 percent increase in new-home prices and a 26.0 percent in existing-home prices over the 5-year period. A little more math reveals average annual appreciation rates of nine percent for new homes and 5.2 percent for existing homes.
New-home values continued to rise until reaching their peak of $252,208 in 2006, which represented an increase of $135,580, or 122 percent, over 1995’s average price of $113,628. The average existing-home price didn’t reach its peak of $210,438 until 2008, also providing a 122 percent, or $115,800, increase over the 1995 benchmark. Between 1995 and 2006, new-home values increased by an average of 11-percent per year. Existing-homes appreciated at an average rate of 9.4 percent per year between 1995 and 2008.
Between December of 2006 and November of 2016, the average sales price of new homes dipped to a low of $177,211 in 2012 before rebounding to today’s average price of $201,459. Existing-home prices hit their low of $171,820 in 2013. Since then, the average existing-home price has struggled to reach today’s average of $176,163, which is an increase of just $4,343 over the past 3-years.
Given the condition of our state’s underwater budget, bleak jobs picture and the detrimental impact of rising mortgage interest rates, it’s anybody’s guess how our real estate market will perform in 2017.
See you at closing.
Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He can be reached at (575) 642-2292 or Gary@GarySandler.com.