Santa Fe Residential Real Estate Prices Climb, Even as Volumes Drop

On September 21, I wrote here on residential sales volumes in Santa Fe, which stand at about 70% of their 2020 and 2021 highs. It’s straightforward; higher rates have cut into local sales by roughly 30%. But prices have reacted to higher rates in a way we don’t normally expect. Usually, with 30% lower volume, you’d expect prices to fall. Instead, the opposite has happened. Depending upon which number one uses, single-family residential prices have exceeded 2021 highs by 17.2% to 23.8%. 

Weird.

Single-Family Sales Volume Review:

Q3 2021 Closed Sales:            563 units

Q3 2022 Closed Sales:            425 units

Q3 2023 Closed Sales:            378 units 

Here, the Q3 2023 figure is 67.1% of the 2021 high. 

Now let’s look at average price data for the same time frame. (Note that Sotheby’s International Realty presents a median figure and what they call an “average” figure, which is a mean. For a given data set, of, say, 41 things, a median is simply the midpoint, with 20 data points above and 20 data points below. The “average” as Sotheby’s calls it, is the sum of all the prices in the data set, divided by the number of units in the set. It’s a mean.) Both numbers are instructive.

2021, 2022, and 2023 Third-Quarter Price Comparison (using the mean):

Q3 2021 Mean Closing Price:                         $790,000

Q3 2022 Mean Closing Price:                         $880,000

Q3 2023 Mean Closing Price:                         $926,000, or 17.2% higher than Q3 2022 

If one looks at the median (again, simply the midpoint), things are similar.

2021, 2022, and 2023 Third-Quarter Price Comparison (using the median):

Q3 2021 Median Closing Price:                      $581,000

Q3 2022 Median Closing Price:                      $660,000

Q3 2023 Median Closing Price:                      $719,000, or 23.8% higher than Q3 2022

Volumes have dropped by 32.9%, and prices have climbed by roughly 20% during the same period. This weird situation, as I wrote here, is due to the mortgage-rate-lock-in effect. My expectation is that with continued higher mortgage rates (not a certainty, by any stretch), we’ll continue to see diminished supply and stable prices. 

Median and Mean Sales Prices Climb, Even as Sales Volumes Drop

Read Sotheby’s full third-quarter market report here.