• Gary Sandler
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    Published 21 July 2017

    LAS CRUCES – The number of  new-home building permits pulled by local homebuilders can tell a lot about state of homebuilding in Las Cruces. Since the process of building a home can take up to six months from the date a permit is issued, builders have to be confident at the outset that a sufficient number of buyers will be in the marketplace by the time construction is completed to absorb the additional inventory.

    Based on recent permit data from the city of Las Cruces, local builders are indeed optimistic about future sales. A total of 242 new-home permits were issued by the city during the first six months of this year, representing a 26 percent increase over the 192 permits issued during the first six months of 2016. The percentage of new-home sales in relation to the number of overall sales is also trending upward.

    During the first six months of 2016, new-home sales accounted for around 10.5 percent of the total number of home sales that took place within the city limits. Fast forward to the first six months of this year, and the percentage rises to eleven — a half-percent increase. Although approximately one in 10 of the homes sold over the past 18 months have been new construction, the percentage of new-home sales has varied wildly over the past few decades.

    During the mid-to-late 90’s, newly-constructed homes accounted for around 20 percent of all single-family home sales. The percentage average dropped to 11.7 between 1999 and 2002, before beginning to once again increase. The share of new-home sales rose steadily over the next 5 years, eventually peaking at 37.5 percent in 2007. Then came the crash, and sales began to decline.

    It was at that moment when builders found themselves with an excess of inventory that took years to unload. Many had to close their doors and some found themselves bankrupt as the unsold inventory took its toll. The share of new-home sales continued to decline over the next few years, finally reaching its low of 9.7 percent in 2014. The trend then reversed and began its “snail on Valium” rise to its current level.

    So who’s buying new homes today? “We’re selling to entry-level, move-up and luxury buyers, said Kimball Hakes, president of Hakes Brothers Construction, LLC in Las Cruces. Hakes went on to say that “we offer homes in all price ranges,” and that the company has spec homes in its inventory from which buyers can choose. Jason Lorenz, president of both Veloz Homes and the Las Cruces Homebuilder’s Association, sees the market from a different perspective. “We don’t have any spec homes,” said Lorenz. “We build custom and semi-custom homes to order.”

    Both builders have noticed a marked increase in the number of retirees who are moving to Las Cruces. “Retirees are responsible for half of my business,” said Lorenz. Hakes made a similar observation, saying that “we’re seeing more retirees from out-of-state.”

    Both Lorenz and Hakes see an increase in the number of move-up buyers. Move-up buyers are typically former first-time buyers who are moving up to higher priced homes after selling to new first-timers.

     When it comes to pricing, both builders said that they try to keep their prices as competitive as possible, but that the increased cost of lumber, coupled with the implementation of the city’s Public Safety impact fee and mandated minimum-wage increase, have added between $5,000 and $10,000 to the cost of a typical $250,000 home. The average price of the 99 newly-constructed homes sold through June of this year was $213,790.

    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

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      Gary Sandler