Seth Payson

ENGL 2210
Tarabrina
02/23/2022

The
Housing
Market:
A Buyers Nightmare

By Seth Payson
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Table of Contents
Abstract……………… 3

Introduction…………. 4

Methodology………… 5

Results……………….. 7

Discussion……………. 11

Conclusion……………. 13

Works cited…………… 15
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Abstract
In the current real estate market in the Greater Albuquerque Area, buyers have been left

out to dry, unable to find a home and have an offer accepted. Data was collected from the

Greater Albuquerque Association of Realtors (GAAR) and numerous online sources. A

questionnaire was also filled out by realtors here in Albuquerque, NM. It was found that there

has been a large shortage of homes on the market and buyers have been unable to successfully

have an offer accepted and get to closing on the home that they want. I determined that

incentives from the city or state to home constructors would not be the most viable solution,

however, home buyers’ best option is to look for newly built homes where they can avoid a

bidding war.
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Introduction
Here in this report, we are taking a look at the current shortage in the housing market,

specifically the Greater Albuquerque Area. During my research, I was looking for current issues

that buyers in market are currently facing, mainly, the shortage of homes and the difficulty of

getting an offer accepted in this aggressive market. After finding our current issues, I began to

look at possible solutions to this problem, after extensive research and surveying multiple

realtors, the best option for home buyers is to look for new construction homes. Looking for

assistance from the city and state was also a thought, however, that quickly proved to not be a

feasible solution.

New Mexico, specifically, the Albuquerque area, is an ever-growing area, with thousands

of jobs entering the state, we are seeing more and more people make New Mexico their home.

However, it has become increasingly difficult for these home buyers to find and buy a home, the

past two year in the Southwest Multiple Listing Service, further recognized as the SWMLS, we

have been sitting with a standing inventory that is 25% of what it had been in prior years. This

has been in part due to the growth of the area, the ongoing pandemic and the lack of new homes

being built. Throughout this report, you will see how I collected my data, along with the way I

interpreted the data. Then you will see what conclusions were drawn from this data in order to

find the best possible solutions. This report is for anyone currently interested or involved in the

housing market that may be having trouble or are interested in my findings.

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Methodology
The research to this report was conducted in a simple and straight forward way. The goal

was to acquire statistics, conduct simple online research, and collect firsthand experiences from

multiple active realtors. The reason that I collected only from realtors was because they could

represent the multiple clients that they have worked with, rather than the actual buyers in the

market who only account for one situation, therefore I could collect much more information with

many less participants. As for the statistics, these were collected directly from the Greater

Albuquerque Association of Realtors. Lastly, some simple research over Google was conducted

to find possible solutions, ideas and examples from other cities and states.

Step 1
My first step consisted of collecting data from the Greater Albuquerque Association of

Realtors, these statistics represent the SWMLS, which covers Central New Mexico, specifically

the counties of Bernalillo, Sandoval, Socorro, Torrance, Santa Fe and Valencia. These statistics

show the problem directly up front, with direct numbers that are easily interpretable. This is the

background to the report, the research and report would feel incomplete without the numbers

which directly show the problem we are looking at.

As for the data I chose, I wanted to show recent numbers that give a good retrospect on

the city, growth and development has changed Albuquerque and in return that affects the real

estate market. For that reason, I only reached back to 2015 for my data.

These figures will be included and include a lot of information, yet all is not needed. So,

the focus will be the number of homes on the market and the trend of home prices.
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Step 2
My second step consisted of collecting and receiving firsthand experiences and inputs

from other realtors. A questionnaire was created for the participants, and due to the limited time,

I only asked five Coldwell Banker Legacy realtors in my office, only four of which completed

the survey. The only true limitation is the limited amount of participants, as all realtors are

independent contractors and we only work under the Coldwell Banker Legacy name, everyone’s

work is separate and independent.

Because I was looking for input from my participants as well as their buyer experiences, I

categorized my participants into 3 categories and wanted to make sure I had one from each

group. My first category were realtors who did 10+ million in sales in 2021, this category will

represent a veteran realtor who truly understands and excels in the business. My second category

was realtors who did between 2 and 8 million dollars in sales in 2021, this category represents

the majority of full-time realtors who are experienced yet, lack a little bit to be in the top

category. The last category was realtors who did less than 2 million in sales for 2021. These

realtors are often new and are just starting their business and learning, they lack experience and

do not have a data base of clients as established realtors do.

From the categories above, I chose one realtor from the 10 million and up category, three

from the 2-8 million dollar category and one from the 2 million dollar or less category. The

realtor who did not complete the survey was in the 2-8 million dollar category. One question in

my survey was to find out approximately how many buyers each realtor worked with in 2021 and

with that question, the input from my participants represents around 68 buyers in 2021.

The data collected will serve to represent the trouble that buyers have been having in the

current market and include some input on what other realtor’s think are possible and feasible

solutions to this problem. Some multiple-choice questions were asked and some open ended, I

told the participants that a few short sentences would be sufficient for open ended questions.
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Step 3
The final step in my methods was to complete online research. To look for my sources, I

used google and searched many key phrases and words, which included, US home shortage,

home buyer problems and solutions, how can the home shortage be fixed, etc.

Data outside of New Mexico is important to analyze, so I was looking for other areas that

have similar problems and from there I searched for how they have been handling the situation

and whether they have tried to implement any actions to help resolve the issue.

Throughout the online research process, I searched for reputable and trustable sources to

gather my data.

Results
The results of my research were slightly varied but every bit of data and research

collected will and does serve a purpose to this report. The data collected from GAAR shows

direct numbers that prove we have significantly less homes on the market than normal, and

significantly higher prices than normal as well. Our buyer experiences from the realtors were all

very similar, they all had a good bit of trouble with getting their buyers into a home. Their inputs

on possible solutions were a little varied. Lastly, I found that this has been an issue in multiple

areas around the United States but did not find much on solutions that have been implemented.

GAAR Data
Data from GAAR is portrayed below. You will see the listing inventory for the GAAR area

along with the average sales price of a detached home, dating back to 2010.
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Listing Inventory (GAAR)

Average Sales Price (GAAR)

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Questionnaire Results
For questions 1 and 2, the answer options were:
Strongly agree – Agree – Slightly Agree – Neither Agree/Disagree – Slightly Disagree – Disagree – Strongly Disagree

For question 3, the answer options were: Too High – Slightly High – Fair – Slightly Low – Too Low

Questions 4-9 were open ended.

Participant 1 did $10+ million of sales in 2021 and has been licensed for 5 years
Participants 2 and 3 did between $3 and $6 million in sales in 2021 and have been licensed for 2 and
4 years.
Participant 4 did less than $2 million in sales in 2021 and has been licensed for about a year.
1. Has it been difficult to successfully have offers accepted for buyers in the past year?

 Participant 1 – Agree
 Participant 2 – Strongly Agree
 Participant 3 – Strongly Agree
 Participant 4 – Strongly Agree

2. First time home buyers have been extremely difficult to get under contract.

 Participant 1 – Strongly Agree

 Participant 2 – Strongly Agree
 Participant 3 – Agree
 Participant 4 – Strongly Agree

3. Do you feel that the prices of homes have been fair to home buyers in the recent market?

 Participant 1 – Too High

 Participant 2 – Slightly High
 Participant 3 – Too High
 Participant 4 – Slightly High

4. Approximately how many buyers did you work with in 2021?

 Participant 1 – 25
 Participant 2 – 13
 Participant 3 – 20
 Participant 4 – 10

5. What have you found to be the biggest challenges for buyers in this market?

 Participant 1 – Getting offers accepted. With low inventory and a large number of buyers, prices have
shot up and it often takes an offer at least 20k over.
 Participant 2 – Trying to find the right home, there are very little options and when a house comes on
the market, if you don’t make it there that day and submit an offer it will already be gone.
 Participant 3 – Inventory, and all the bidding wars that you come across. If the buyers aren’t cash or
willing to pay over appraisal, you don’t have a chance.
 Participant 4 – Trying to tell buyers that they are going to have to overpay for a home if they want an
offer accepted. Everyone wants to save money but if you want to save right now, you’re never going to
get in a home.

6. What have you found that helps buyers in this market?

 Participant 1 – Certainly the interest rates have helped people afford more in this market. It helps if
buyers are cash, or they are willing to pay over appraisal but not every person can do or afford that.
 Participant 2 – Cash buyers. Cash offers have the advantage.
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 Participant 3 – If they can afford it, new builds, the only downside is the amount of time to have them
built right now. Otherwise, they need to be willing to spend much more than they’re expecting to on
any homes they like. If they’re afraid they will never find a home.
 Participant 4 – If a buyer can come in with cash that certainly helps. You just have to be on your toes
and ready to pounce on any house that hits the market, they may have to settle for a little less.

7. What are the best options for buyers right now to find a home?

 Participant 1 – Don’t wait. With rising interest rates and high prices, if you wait and the interest rates
rise, you will not be able to afford a home.
 Participant 2 – To not give up, you’re going to overpay for a home. Once you find the right house you
just have to put in the best possible offer that you can make.
 Participant 3 – I think new builds are a great option, many of my deals last year were on new
construction. Again, the only downside is the time to build the home.
 Participant 4 – Look for a little cheaper home than the budget. Then you can offer more than asking
price.

8. Do you think newly constructed homes are a good option for buyers? Explain.

 Participant 1 – If they can afford it, yes. Material prices are starting to come down so that should help.
 Participant 2 – Kind of, they’re expensive but so are other homes on the market. The time to build has
just been lengthy but that has been getting better.
 Participant 3 – Yes. You will still overpay for other homes, or you can buy a new home. It takes most
people more than a couple months to have an offer accepted anyways.
 Participant 4 – No, you’re better off attempting to buy a resold home. New builds are expensive, and
they can take 8 months to be built.

9. Do you see the market going back to “normal” any time soon?

 Participant 1 – I think it will be another year or two at least of this market before inventory starts to
catch up. With so many buyers in Albuquerque the houses cannot be built fast enough.
 Participant 2 – Maybe a year, with interest rates rising there will have to be a shift in the market, and
it might even itself out.
 Participant 3 – Not really, it depends on what you define as normal, Albuquerque is a growing city so
it will probably never be the same as it was 4 or 5 years ago.
 Participant 4 – I’m not sure, I got my license in the middle of the pandemic, so this is all I have seen.

Online Research
From my online sources I found multiple articles that show this is happening nationwide.

As stated by Gleb Nechayev, “New residential construction is starting to catch up nationally but

is still far from reducing the shortage and, until then, upward pressure on housing costs will

likely persist” (Nechayev).

I was unable to find any sources whom discussed possible assistance from government

entities to help the housing market crisis.

Interest rates were also considered, and as we can see from the figure below. Interest

rates over the past two years have hit all-time lows, in an article from 2011, which was also a hot
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real estate market, Lane Wallace states that “The lower interest rates have brought out potential

buyers who couldn’t qualify a year or two ago” (Wallace). And as shown below, the interest

rates have hit all-time lows here in the past two years, conversely, attracting more buyers into the

market.

Discussion
The results of my research were close to what I expected. In short, there is an extreme

shortage of homes on the market and prices have increased due to this. The shortage has made it

extremely difficult on buyers in the market to find a home they like and to have an offer accepted

and successfully close on the home. Lastly, this is not only a problem here in the Greater

Albuquerque Area, yet there were not any other areas that have implemented substantial changes

and actions to try and resolve the issue.

The numbers collected from GAAR support our buyer experiences given to us by our

survey participants. With such a large shortage, it would only make sense that any buyers in the

market are going to have trouble finding a house. However, finding the right home is not as
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much of the problem as getting an offer accepted is. The number of sales per month has stayed

relatively stable, but due to the increased amount of people moving to Albuquerque looking to

buy a home and those who are now interested in buying due to low interest rates, homes are

hitting the market and seeing multiple offers within the first 24 hours that the house is for sale.

Some buyers can simply not afford to overpay for a home, some cannot overpay due to their loan

and some simply don’t want too. With the responses from our realtors, to have an offer accepted,

it will often take at least an offer that is 20 thousand dollars over the list price.

Looking at the questionnaire, all of the realtors surveyed agreed or strongly agreed that it

has been difficult working with home buyers, especially first-time home buyers. They all had

similar answers when asked what the biggest challenges were, those were the low inventory and

getting an offer accepted. When asked what has helped buyers, our “veteran” realtor mentioned

that low interest rates have helped buyers afford homes in this market1, two of them mentioned

that paying cash will help and one mentioned that new builds are a good option. Two of our

realtors also agreed that new construction homes are a good option for buyers, one slightly

agreed, and one did not. The one who did not agree was participant 4, who is a new realtor.

Our realtors did not have much to say when asked what the best option for buyers was.

To sum up their answers, you’re going to overpay, and you just have to try your best, however,

one did mention that new homes are a great option.

As for my online research of secondary sources, it did not go to prove much besides those

other areas around the country are having similar issues in their housing markets. The older

article that discussed interest rates and how lower rates attract more potential buyers is

important, as it shows that this is how things generally work and this is not an anomaly over the

past 2 years. I was unable to find any areas that implemented anything by their city or state

government.

1
See “Interest rates” in Results for more.
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Conclusion

While originally believing that assistance from the city and state may be the best possible

solution to help buyers in the current market here in the Greater Albuquerque Area. It

immediately appeared that that was not a viable solution and I found no supporting evidence.

However, the amount of new builds are beginning to increase and this may be the best way for

buyers to find and buy a home.

After research and collection of data, including taking in what other realtors had to say,

the best option for buyers now is to look for new or undeveloped homes. While it may take some

time for a house to be built and a new house may cost a little more than an aged home, buying

new would eliminate buyers from getting involved in bidding wars and ultimately overpaying for

the home anyways. From my research, the production of newly built homes is starting to pick

back up, making this a much more viable option for buyers in the market than it was a year ago,

when very few newly built homes were going up. Otherwise, buyers will be stuck with low

inventory and battling in bidding wars, as they have been for the past two years.

My next solution is not as feasible, however in theory it could possibly work. That would

be for the city or state government to step in to create more residential areas and to assist and

provide incentives to home builders to have more homes built faster. While this sounds good on

paper, there was no evidence that any other cities have tried this, therefore I have no data that

shows it would work. Furthermore, taking this solution to the city or state would be a lengthy

process that they may not support and even if they did, by the time they were ready to offer any

incentives or solutions, this will likely not be as big of a problem. As previously stated, the

number of new builds are already on the rise, and that will continue.

Looking towards the future, this will turn into a problem of the past. As more homes are

built, there will be a much greater inventory here in Albuquerque and buyers will not face as
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much trouble finding and obtaining homes. No help from the city is needed, and with the

pandemic coming to a close, home builders should be able to start building homes at a great rate

again.

All in all, the best solution for buyers in the market right now, is to look for newly built

homes, otherwise they will be stuck back in the same circle that so many buyers have found

themselves in. I have heard of buyers that have been looking for 6+ months, in this amount of

time that is spent attempting to outbid other buyers on homes that are few and far in between, a

new home could be fully constructed for your leisure.

Thank you,

If you have any questions or any useful input on this subject, please feel free to reach out. I am

always open to constructive criticism and new ideas. My contact information will be included

below…
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Works Cited

GAAR. “Market Statistics.” Greater Albuquerque Association of REALTORS®,

http://www.gaar.com/market-statistics

“Mortgage Rates.” Freddie Mac, 10 Nov. 2021, http://www.freddiemac.com/pmms/

Nechayev, Gleb. “Where Is the U.S. Housing Shortage?” Counselors of Real Estate, 22 Nov.
2021, https://cre.org/real-estate-issues/where-is-the-u-s-housing-shortage/.

Wallace, Lane. “Interest Rates Attract Buyers.” Monterey Herald, Monterey Herald, 11 Sept.
2018, https://www.montereyherald.com/2011/11/12/interest-rates-attract-buyers/.