NM housing market surviving better than other states

ALBUQUERQUE -- While other states in the Southwest, namely Nevada, California and Arizona, are getting hit hard by the housing crisis, New Mexico has remained somewhat insulated. The recent statewide slump, however, is giving New Mexicans a taste of what other regions have been experiencing for the last few years. Overall, across the nation foreclosure rates were up 8 percent in July, and up 55 percent since July of last year, according to the most recent numbers.

"We didn't experience the same price appreciation as the coasts, so we're not seeing the results of the crash," says Erin Quinn, senior policy and program adviser for the New Mexico Mortgage Finance Authority (MFA). Quinn says there has been a slowdown in building and there is extra housing inventory, but property values are not plummeting like in other areas.

"The move-up market in New Mexico is getting hit," says Michael Sivage, a home builder and vice-chairman for the MFA. "New home inventory has decreased in the past few years and the new home inventory in Albuquerque is pretty much gone." He adds that the resale market is different. With more people willing to wait longer periods to sell, he says there's more of an inventory in that market.

New Mexicans' cautious borrowing habits may be part of the reason the state skirted the national housing bubble. "We tend to have a conservative borrowing population in New Mexico," says Quinn. The fact that people in this state typically move less than other areas also helped, she says.

A general rule for predicting housing appreciation is the rate of job growth. "We've seen some very good job growth," says Quinn, "but nothing like Nevada and Arizona." Because of the appreciation that accompanied the employment boom in Nevada, it is one of the worst hit by the housing crash. According to a July report by Realtytrac.com, one of the largest national databases of foreclosures, 1 out of every 106 houses in Nevada is in some stage of foreclosure. By contrast, the figure for New Mexico was 1 out of every 1,563.

Quinn and Sivage agree that the housing market in New Mexico is extremely localized. While there is a shortage of housing in many rural areas, cities like Albuquerque, Santa Fe and Las Cruces are taking the biggest hits. Yet Quinn acknowledges that there are places around the state and even within Albuquerque that are appreciating.

In a recent interview with KKOB radio, Sivage stated:

Albuquerque obviously has been hit very hard. We're a very large metropolitan area. We're currently building at about 40 percent of our peak permits. But, even places like Las Cruces is building at 46 percent of its peak permit level, and Santa Fe, even worse today, is building at 15 percent of its peak permit level.

Quinn and Sivage also note that one of the biggest problems right now within the state housing market is that the average cost of a home is higher than the median income for the state. "In order for the market to pick up again, this needs to be corrected," says Sivage, "but we're not going to see that with builders shaving off profits because that's already being done. Builders at this point are just trying to break even." He adds that the state might see the construction of smaller homes with less amenities in order to narrow the current disparity.

Sivage adds that there might be an overcorrection to the building market taking place whereas building lenders are tightening up the amount they will lend up front on projects. He says this is most likely adding to the foreclosure statistics since builders are forced to foreclose on homes if they can't fund the difference that's being cut.

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