Santa Fe, New Mexico, is known for its rich history and beautiful desert landscapes. In fact, it’s one of the most popular tourist destinations in the United States. With an average of more than two million visitors annually, it’s no wonder that so many people are interested in real estate here.
If you’re thinking about entering the Santa Fe housing market, it can be helpful to understand the local market conditions before making an investment decision. Below is an overview of what's happening with real estate prices and inventory in the area so you can make an informed decision.
Market conditions
The real estate market in Santa Fe currently favors sellers and has done so since this time last year. Housing prices have soared while the number of buyers in the market has surpassed the available inventory of homes. Competition remains tough as buyers bid on some of the most sought-after properties in the city. Sellers in Santa Fe can charge top dollar for their luxury homes and expect a healthy return, especially if they have completed the proper repairs and upgrades. Bidding wars are expected to happen, so buyers must make their offer as attractive as possible to stand out among the competition. We expect Santa Fe’s market to begin neutralizing in 2023 as the city responds to the increased housing demand with new residential developments.
Cost of living
Santa Fe’s cost of living is 14% higher than the national average. The city is also 26% more expensive than the rest of New Mexico, making Santa Fe one of the top affluent locations in the state. The higher cost of living is primarily attributed to the area’s housing prices which are 61% higher than the national average. As the U.S. continues to battle inflation, the cost of necessities is expected to rise well into 2023. Those looking to relocate to Santa Fe should expect to enjoy the city’s upscale amenities for a premium price.
Median list price
The median list price for a Santa Fe home is just under $515,000, up more than 14% from last year. Some of the most significant hikes are seen among one-bedroom properties and larger estates with five or more bedrooms. These types of homes are becoming increasingly popular as Santa Fe’s solid job market and vibrant community attract young, single professionals and growing families. Sellers are in a prime position to maximize profits, while buyers should carefully consider how much house they are willing to afford. However, more than 60% of homes sold last month were purchased for a discounted price, indicating sellers’ willingness to negotiate. Like much of the country, home prices are expected to continue rising in Santa Fe in 2023.
Days on the market
Homes in Santa Fe sell quickly, typically under 30 days. Last month, 61% of homes were sold within one month. This is only seven days more on average than this time last year. Though a slight indication of a market cool-off is coming, Santa Fe’s housing market remains hot. Sellers in the city can look forward to quick closing, and buyers can be in their new homes sooner than anticipated. We expect days on the market to increase in 2023 as the market corrects and begins to neutralize.
Inventory
There are 334 homes for sale in Santa Fe, about 40 homes less than last month. Three-bedroom homes are the hottest commodity, comprising about 40% of Santa Fe’s total home inventory. As a city of over 90,000 residents, the housing supply is slim even before considering the competition from out-of-town prospects. Seventy-seven homes were sold this month, a 28.7% decrease month over month. Homes are selling fast, but not as often. Sellers may be taking their time to carefully consider multiple bids, while some buyers may be delaying their purchases as prices soar. Regardless, buyer demands are expected to continue exceeding inventory into 2023. However, the intense competition should relax over the year.
Mortgage interest rates
The average mortgage loan interest rate in New Mexico is 6.53% for a 30-year fixed-rate loan and 5.97% for a 15-year one. For comparison, the federal benchmark for a 30-year fixed loan is 6.67% and 6.04% for a 15-year loan, meaning New Mexico has some of the most affordable loan options in the country. This is great news for interested buyers, as they may be able to secure luxury estates at affordable prices. The lower interest rates can also encourage more buyers to enter the market, giving sellers options for more attractive bids. Interest rates will continue rising nationwide in 2023, and New Mexico will likely do the same.
Investment opportunities
Purchasing real estate is a lucrative investment, and it pays to know which neighborhoods are poised for growth if you’re looking to buy or sell in the near future. Many of Santa Fe’s exclusive neighborhoods have proven to yield significant returns and are rising in popularity. Santa Fe real estate has appreciated 132% in the last 20 years, with an average annual appreciation rate of 3.82%. Don Diego, San Acacio, and Las Soleras are among some of the top appreciating neighborhoods in the city. For those looking to get into the market, now is a great time to invest in Santa Fe properties.
Partner with a qualified real estate team
Santa Fe's real estate market is a great place to be if you want to make significant investments in the coming years. The city has undergone many changes in recent years and is continuing to grow, both as a major tourist destination and as an urban hub for young professionals and families.
If you're interested in buying or selling real estate in Santa Fe, we would love to help you find your perfect home. Contact the #1 Santa Fe realtors at Ricky Allen, Cathy Griffith, and Tara Early Team today!
