Looking back five years to 2005, the total value of homes purchased in the Santa Fe Multiple Listing database was $1.377 billion dollars. The next year, in 2006, sales peaked at $1.387 billion, even higher. But then the market fell apart and by 2009, total sales had dropped to $640 million… 42% of the peak value. So, by this measure, our market is down 58%. Look at another measure. The number of home sales peaked in 2005 at 3471 sales. In 2009, there were 1607 homes sold, 46 % of the 2005 number, a loss of 54%.

Have home values really been cut in half? Not at all. The volume is off because nearly everyone has been shocked into a fiscally conservative mindset by this recession, and credit has become very tight. Sales volume is down, but house prices are at about the same level as they were in 2005.

The average price of all homes sold in 2005 was $397,000, and in 2009, it was still $398,000. True, it had risen to $567,000 at its peak in 2007, but even that rise is not caused by actual changes in the value of any particular house. It is more a result of reduced sales in the lower price ranges, while demand for the more expensive homes was relatively strong. The quarterly Average Home Sale Price trendline peaked at $471,000 in mid 2007, and has now flattened at about $400,000, down 15% from the peak, the same level as in late 2005. The more conservative median home price rose from $282,000 in early 2005 to a peak of $367,000 in 2007 and fell back, but only about 15% in the third quarter of 2009 before bouncing back to $295,000 at year’s end. The red trendline on the Average Home Sale Price chart is off about 15% from its peak, near the 2005 average.

The number of homes sold this quarter is also above the number sold a year ago, and this is a long awaited break in the plunge that began in the second quarter of 2006. The more volatile monthly number of home sales shows a poor month in December, but trendlines on both the monthly and quarterly charts are trending up. The increase in sales this year is apparent in each of the six price categories, except for the over $1million homes where recent years were very strong.

The number of active listings is trending downward. Active listings at the end of 2009 are down 21% compared to the end of 2008, continuing this year’s trend of lower inventories, both quarter to quarter and year to year.

The falling inventory of homes on the market, the increase in the number of sales, and stabilizing house prices are key components of the start of the market recovery.

The economic core in Northern New Mexico is healthy. Certainly some cuts have been made, with more to come, but we don’t have to re-invent our economy. The arts, outdoor recreation, tourism, the military, science and technology, moderate cost of living, low population density, agriculture and energy and natural resources all strengthen New Mexico’s economy. Our main real estate “feeder” states – Texas, Oklahoma, Colorado – whence buyers come, are largely healthy too.