There’s something of a misperception out there as to what’s happening in the Santa Fe market now; I have heard people use the word “weak” and say things like “in this market, you don’t wanna [insert verb]…” as if to imply that the market is flat. That’s not the case. The reality is that the market should be seen as reverting to pre-pandemic inventory levels. More of an equilibrium.
Admittedly, it can seem to brokers like things have slowed dramatically. On some listings, they’ll list a property and not get any showings. And in general the talk around the office is that things have really slowed down. Well, compared to 2022 and 2021, that may be the case in some respects. But a look at the numbers shows there’s a bit more to it.
The chart below shows nine months worth of showings and closings from October 2023 through June 2024. We see the usual overall trend of slowness in the winter and fever in the summer. There are healthy numbers of showings on Sotheby’s listings (the numbers in the bars), and healthy numbers of closings on Sotheby’s properties too (the green line). In Santa Fe overall (the pink line) the numbers are likewise strong. In short — nothing unusual.
So let’s take a look below at the same data from a year later. One would think that with such a dramatic slowdown supposedly at hand, this chart would look a whole lot different; indeed you’d think it would look pretty dismal. The fact that it doesn’t tells you that the market is actually regaining a normal complexion.
Above, we see exactly the same story, only with stronger numbers. Sotheby’s showings (again, the numbers in the bars) are very strong, much stronger than in the same period last year. Likewise for Sotheby’s closings (the green line); the numbers are markedly higher than last year. And for Santa Fe overall, the market appears more robust.
So What Gives? Inventory is Dramatically Higher
Anecdotally, we hear about how much things have slowed. But if you look at the above data, you can see that’s not true. So what’s the deal?
There’s more stuff for sale.
Let’s look at inventory trends for Santa Fe as a whole recently. What’s the story? A gradual and persistent increase in inventory. These increases are not subtle and have accelerated recently with so many economic and geopolitical uncertainties. So while the market may seem to have slowed down markedly, the reality is the market’s just building inventory, and when there are more houses to look at, each one gets fewer looks.
In a market such as this, using data to price properties is ever more important. There is now zero tolerance for overpriced properties. I recently took a listing and (for these reasons) did very thorough pricing research; the data showed that previous asking prices on the property weren’t justified by the comparable sales and were too high by a wide margin. Fortunately, our clients listed to me and the data, and we priced the property well. In the first five days we had three offers with another on the way, and wound up accepting a cash offer that was $225,000 over asking price. I think some brokers are simply having trouble adjusting to the reality that the era of “throw a dart” pricing is coming to a close. You can read into this that there is a marginally more softness in prices and that buyers won’t be elbowing each other to the closing table in the near future. That is true. And overall, inventory returning to former levels is a pretty good thing for buyers.
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