Published 17 September 2022
There’s an interesting phenomenon taking place in Las Cruces-area real estate. While one portion of the market continues to favor sellers, another is more advantageous to buyers. The phenomenon is not new. It routinely occurs when economic factors impacting the supply and demand model begin to provide buyers with an advantage over their home-selling counterparts.
The segment of the market still going strong could be labeled “the best homes for the money.” Buyers in that realm continue to outnumber the inventory of available properties, according to a Sept. 15 report from the Las Cruces Association of Realtors. During the first two weeks of September, 47.3 percent of the sales closed at or above the asking price. All other home-sellers found it challenging to attract buyers to their properties.
The steep rise in mortgage interest rates is staggering and the main force driving the change. Take, for example, a buyer seeking a $250,000 mortgage. The buyer who financed in January, when the 30-year fixed rate was 3.22 percent, would have had a monthly principal and interest payment of $1,084. Had the buyer taken out the same mortgage on June 2, when the rate was 5.09 percent, his payment would have risen to $1,356. Had he waited until Sept. 15, when the rate rose to 6.02 percent, his payment would have ballooned to $1,502. And, if $1,084 was the buyer’s maximum qualifying payment, the most he could borrow at today’s rate would be $180,400; a drop of $69,600 in buying power.
In addition to rising interest rates, other market conditions are contributing to the additional leverage many buyers are currently enjoying. For example, one-third of the sellers whose transactions closed during the first two weeks of September reduced their asking prices at least once prior to receiving an offer. Other changes include a steady decline in the number of newly signed contracts, dropping to 185 in August from the 221 in April; a growing inventory of homes for sale, rising to 314 units from the 221 homes available in April; and a decline in the median sales price, from $295,000 in August to $280,000 in the first half of September. The median is where half sold for more and half sold for less.
What is interesting to note is that the sales prices reported today were set in stone when the purchase agreements were signed, which is typically 30 to 60 days prior to closing. The delay makes setting an asking price somewhat challenging, especially when comparing a property to similar properties that sold when prices were higher.
See you at closing!
Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He loves to answer questions and can be reached at 575-642-2292 or Gary@GarySandler.com.