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It’s no secret that the Las Cruces real estate market is losing steam. The number in the headline is just one of many indicators that together paint a picture of just how much steam our market is losing. The data that follow were gleaned from the archives of the Las Cruces Association Realtors on Sept. 3.

A total of 463 new and existing homes, townhomes and condominiums were in inventory on Jan. 31 before steadily rising to 690-units by Aug. 31. That’s an increase of 227-units, or 49%. The additional inventory wouldn’t be a problem if the number of buyers entering the marketplace grew at the same pace. That has not been the case, however. Two datasets that illustrate the extent of the imbalance are the number of new purchase agreements signed and the number of buyers who paid over the asking price.

With respect to the former, the number of new contracts signed increased over the course of the first half of the year, culminating with 258 new contracts signed in June. It was downhill from there, however, when the number of new contracts signed dropped by 18.6% to 210 in August. The number of buyers paying over the asking price peaked at 50% in May of 2022 before dwindling to just 8.8% in July of this year. The fact that some buyers continue to pay over-asking indicates that there is still moderate competition for homes that are “the best for the money”.

As sellers came to the realization that the number of homes for sale was outpacing the number of buyers available to purchase them, they began to compete with one another for the buyers’ attention. New-home builders accomplished this by reducing their prices, adding interest rate buydown or upgrade incentives which in some cases amounted to $20,000 to $30,000 depending on the price point of the home, or a combination of both. Sellers of existing homes also sought to attract buyers by reducing their prices and offering incentives. For example, 108 sellers reduced their prices in March of this year. By July, the number had risen to 185 – a 71.3% increase over the span of the four-month period.

The price reductions have lowered the median asking prices for both new and existing homes. The median is where half are asking more and half are asking less. Between May and August, the median new-home price fell by 16.7%, to 338,330 from $406,110. During the same period, existing-home prices fell to $289,000 from $325,000 – an 11.1% decrease. As one would assume, lower asking prices result in lower selling prices. Between May and August, the new-home median sales price fell by 9.2% to $338,639 from $373,000. The decline to $275,000 from $304,500 represented a 9.7% reduction in the median sales price of existing homes.

The final and possibly best leading indicator of market direction is the list-price-to-sale-price ratio, or how close the final sales price was to the asking price at time of sale. New-home prices typically sell for 100% of their asking price because lowering the price on even just one house effectively lowers the prices of all the homes in inventory. The latter was the case between March and July, however, when the ratio dropped to 97.4% from 101.3%. The number rebounded to 100% in August when generous incentives replaced further reductions in price. The existing-home ratio peaked at 98.5% in May before declining to 95.8% in August.

While the numbers confirm that production and prices are falling, the movement doesn’t hold a candle to the loss of value following the 2007-2008 mortgage meltd8own when the Las Cruces median price declined by just under $1,000 per month for 48 straight months. Woe be the seller who at that time said “I’m in no hurry”.

See you at closing!

Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces, New Mexico. He loves to answer questions and can be reached at 575-642-2292 orGary@GarySandler.com.