From A Fever in Summer to Balance in Fall
It’s difficult to overstate how much the Santa Fe residential market is driven by seasonal tourism flows. It’s pronounced. It happens every year, predictably. A few months ago, I wrote on the topic here. Yet even when we anticipate a fall easing and know it’s coming, it manages to present itself as something of a surprise.
A More Balanced Market
If you were to talk with 50 Santa Fe real estate brokers (fortunately, I’ve done this for you), all would mention something like “things have slowed down” and “there’s softness in pricing that I didn’t feel in June.” We’ve all also observed that properties sit on the market a little longer now versus in the summer. It’s part of the normal seasonal shift from summer’s frenzy to fall’s more laid-back pace. A listing that was perfectly priced in June might now appear overpriced, for example. Along with the accompanying ebb of showings (which is, incidentally, a leading indicator of closings) all this is to say that a normal winter pattern has taken hold in Santa Fe.
Back to Pre-Pandemic Listing Counts?
Right now, we all feel a bit of a buildup of active listings, at least anecdotally. Our office can certainly see it. And it turns out, there’s countywide data back it up. Over the span of a few months, the listing count has returned roughly to pre-pandemic levels (these data run from January 2019 to October 2024).
Normalizing Inventory Levels?
The time it takes to work through inventory appears also to have normalized. And while it’s too early to declare this indicative of a sort of long-term post-pandemic normalization, that may be what’s happening. The next six or nine months will tell us.
Listing Price v. Sold Price
Some softness in pricing is evident currently, but it’s not super pronounced. As brokers, in our first-hand experience, the softness may feel a tiny bit more pronounced than the numbers demonstrate. We’ll see what the next months hold.
Why The Shift?
If you were to talk to 50 brokers (again, you poor soul) you’d hear the same story on what’s happening. But if you were to ask them why, you’d hear 50 different tales. My instinct tells me that recent industry changes (which have a goal of encouraging transparency and price competition) have befuddled a fair portion of the public, who observe that real estate has been conducted in fundamentally the same manner in the U.S. for 50 years — and suddenly they see major change. My hunch is that some have chosen to pause as they relearn the ropes, and that the market feels this as an easing in demand.
What else could be at work? As I forecasted in this post, mortgage rates are actually a bit higher, despite the Fed easing. The 10-year treasury, off of which fixed-rate mortgage loans are priced, sits at 4.41% as of yesterday’s close, putting average home loan rates back around 7.00% (the bond market doesn’t like political uncertainty at all). There are indeed mixed economic signals now, but most data point to continued strength (at least for now). So it’s somewhat reasonable to pin a shift in demand on the industry changes prompted by the DoJ settlements. Yes, the changes intend to encourage competition and transparency, but at the moment, they’ve encouraged confusion.
Back in The City Different, we await the inevitable seasonal pickup in activity.
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