New housing starts are at a 40 year low and new construction inventory levels are at the lowest since 1963. The trend for multiple family housing is on the rise and it’s common for college graduates burdened by student loads to move back home. Consider the consumer price index which has increased 160% in the last 30 years and includes a 150% increase in the cost of food and a 700% increase in the cost of college tuition. Conversely, mortgages have only increased 17% in that same 30 year period due to the difference in interest rates available now versus then while rents have increased 200%. It is no wonder that investors are turning back to real estate as a viable commodity to place their cash.

In Santa Fe, the final fourth quarter did see continued improvement overall in our housing industry. Most notably, new listings have gone done from 3194 homes for sale at the end of 2010 to 2604 in 2011. Pending sales were down 9% from the previous quarter but year to date closed sales did see a modest increase of 2.4% over last year. The percent of original list price a seller can expect to receive has fallen slightly to 87.9% while the days on market improved slightly to 243 days. The median sales price has fallen to $320,443 down almost $10,000 from the previous year; however, the month’s supply of homes is down almost 24% to 15 months.

The median sales price continued to decline in all areas of Santa Fe but two: the Northwest quadrant had an increase of almost 20% over 2010 for a median price of $627,500. The city Southeast north which includes the Railyard and South Capital saw an increase of 11% with the median price here at $579,000. Hard hit areas include Tesuque and Pojoaque whose prices have declined 42% from 2010 but sales here did increase 120%.

Most areas did see gains in the total amount of sales for 2011. The one exception was the Southwest County including Rancho Viejo and the Community College district out to La Cienega and Highway 14 which saw a decline of 20% of total sales for the year. For land sales it was a yet another tough year with a total of 35 lots reported sold with the average lot price at $125,000 up from the previous year’s average of $110,000.

So what is going to change for 2012? There are many signs that our economy is improving but we believe it is up to us to continue to pressure our government and financial institutions to put forth the initiatives that will bring further improvement. And while they are doing that it is incumbent upon us to keep our own sense of hope and optimism alive. The missing piece of the puzzle is consumer confidence so keep sight that our economy is improving slowly everyday and our continued appreciation of that can be contagious. Together we can make 2012 a confident year!

During the holidays they were everywhere. People were greeting friends and strangers alike with the warmest of salutations and everybody was nice, really nice. Even old Scrooge was wishing everyone well and merrily going about his way.  So what changes in January? Is it because we start thinking about elections, taxes, what we aren’t doing that we should be doing, and all those yucky kinds of things?  So instead of focusing on that, why not make this year different, why not make it a nice year? For those who make New Year’s resolutions and even for those thinking about making one here’s an idea for how we can all start the year off right. Resolve to be nice, that’s it just be nice.

If you have already made your New Year’s resolution you can simply take what you already have and attach the words “and be nice” to the end of it. For instance, I will quit smoking and be nice. I will lose 15 pounds and be nice, I will read more books and be nice. See how easy it is?

It seems that our generation has grown up believing the unfortunate myth that “nice guys always finish last. We have heard it said by our grandparents, our parents, and maybe you’ve even caught yourself saying it.  So it’s no wonder we don’t make resolutions about being nice. Unfortunately this notion has crept deep into our culture by way of the subconscious mind. Maybe that’s why Clint Eastwood doesn’t play nice guys. So before the next generation grows up believing in such fairy tales we think its time to debunk this untruth and replace it with a more positive message.

No matter what area of life we’re talking about it all gets better by adding niceness on top.  How do we achieve all our personal goals? Simply identify what your goal is, focus on it daily, and be nice.  All you need to do to make the world a better place is build a great family and be nice.  It’s really kind of simple if you think about it. To make a difference in the world today, all you need to do is give, care, share, and be nice.

Who knows, maybe in a generation or two we will hear the young folks say something like “Only the nice come out on top”.  The heart is really what’s at heart of the holidays. The heart opens our senses to appreciate everything from the cold air, to the snow-covered streets and most importantly, to appreciate each other, so let’s keep it open year round. On behalf of the Carson family we wish all our Santa Fe friends and families a healthy, prosperous and nicer New Year. Be marvelous, be brilliant, be inspired, and be nice.

That’s what we want for our clients; we want them to be winners. In order for that to happen the process needs to be artfully crafted. So that brings in our first rule of negotiation, win-win or no deal. This may seem difficult since real estate markets tend to favor either buyers or sellers. In a buyer’s market it would seem unlikely that a seller can come out a winner, but he can. For many sellers, winning usually means price but to become a winner a seller needs to do three things. First, determine motivation. Second, establish the goal and third lay out at least three main elements that support that goal.

If a seller is not really motivated it’s impossible to determine a winning solution. In a market where there are eight sellers for every buyer, the seller probably won’t get to the negotiating stage anyway. But if motivation is strong, say to move closer to the grandkids, then the goal of selling your house can have real meaning. Now the elements that support the goal such as price, closing dates, inclusions and concessions become the artful part of the process.

Avoid framing any element as winning or losing but simply as an exploration into potential outcomes. For sellers to win in a buyer’s market they must overcome the price objection. Keep in mind that that market value is not the fault of the buyers and for all the showings, these people actually made an offer. Next, when it comes to inspection objections, think outside of the box. If the buyer wants a new cooling unit and you know that the old one is fine, offer a home warranty instead. You won’t have to pay for a new unit and the buyer gets the assurance he won’t be stuck with surprise expenses. Buyers have a list of win items, too, and something as simple as moving a closing date may save them thousands or give them peace of mind so explore ways for both parties to win and don’t be afraid to ask for what you want.

The most important way to become a winner is to keep your emotions in check. Emotions are inevitable but they tend to make bad business partners. Never let them affect your mindset or your ability to get to the “win” objective of the deal. When making concessions always keep an eye on the bottom line and have your broker prepare a net-out sheet before submitting your response. More often than not your broker will need to negotiate with you before she can negotiate for you so don’t think she is working against you. She is really trying to help you succeed with your goal. Closing is a natural progression to successful negotiations and if both the buyer and the seller get what they want, isn’t that the best outcome of all?

The Santa Fe Association of Realtors recently published their 3^rd quarter statistics so it’s time again to look at the numbers. While the summer is believed to be the best to sell real estate, the wildfires kept buyers at bay. Both closed sales and pending sales were down slightly from same time last year but new listings were down, too, with 687 properties listed versus 816. Also improved was days on market at 224 for the 3^rd quarter versus 243 for 2010. The average sales price was $453,823 which was a 3.8% increase over the prior year. While the median sales price dropped a fraction 1%, the average sales price tells us that the entire market is recovering.

For the different city areas, the big winner in activity goes to the Southeast city limits with a 54% increase in closed sales and a 34% reduction in overall inventory. Our runner-up was the Airport/Agua Fria district with a 27% increase in closed sales and a 9% reduction in inventory. With 90 homes still available on the market and a median sales price of $183,100 it is no wonder that Santa Fe’s housing affordability index has increased to 107, an all time high.

The Northeast city limits saw a 9% reduction in new listings and an increase in the median sales price year to date (YTD) of $560,000 over $517,500 for 2010. The Southwest city limits saw a reduction in new listings to 315 properties versus 400 for 2010. Here, the median sales price declined to $207,000 from $225,000 from the previous year. The toughest area in the city, Northwest city limits, had a 20% increase in new listings and a 26% drop in closed sales. The median sales price YTD is $266,000 down from $340,000 of 2010.

For the county, the busiest area was Las Campanas with a 76% increase in closed sales YTD. However, the median sales price here has plummeted to $860,000 from $950,000 from the previous year. The areas surrounding Las Campanas had a 26% reduction in new listings but a 7% drop in median sales price to $637,500. Tesuque experienced a 50% increase in closed sales but a 12% decline in median selling price to $695,000 from $792,500 from 2010.

Old Las Vegas Highway and surrounds had a 31% increase in closed sales and a decline in new listings. The median sales price here was $345,000. Highway 285 had a reduction in new listings but a drop in closed sales. The median sales price was $402,000. Eldorado has been consistent in closed sales YTD with a small drop in median price to $319,000. Inventory here hovers around 10 months. The area of Rancho Viejo saw a big drop in new listings and a 16% drop in closed sales. The median sales price increased 4% to $295,000. The Southwest county had a 17% increase in median sales price to $280,950 but the inventory here remains high at 26 months.

It will be worthwhile to look at the numbers again in a couple of months to see how Santa Fe finishes the year. While not all good news, there is certainly evidence that the market is improving and that is the best news!

While foreclosures seems to be on the decline, many experts agree that short sales are on the rise and will be with us for another two to four years. A short sale is a transaction in which the selling price of the property is not enough to satisfy the mortgages held against it. Approximately one out of every five transactions is a short sale and as the economy continues to flounder and home prices struggle, more and more may find this avenue the only way out of hard times. If you are struggling economically and have wondered about this option, here is what you need to know.

You do not need to be behind in your mortgage payments to do a short sale. In fact, it would be better for your credit score to avoid the derogatory ratings created by the default prior to foreclosure. A short sale will affect your credit but not as badly as a foreclosure. The banks will require documentation from you to justify the short sale process. You will need a “hardship letter” that explains succinctly your economic circumstances. You will need to provide two years of tax returns, 3 months of checking account statements, your last 2 months of paycheck stubs, and a financial worksheet. Most banks will not try to pursue the difference if they realize that you just don’t have the money.

Short sales do take time to facilitate but the systems have improved. Two years ago, these sales took easily over six months to close. Nowadays, closings have occurred in as little as 45 days. Obviously, working with a broker who is familiar with the process helps a great deal. Having all your paperwork in order will also speed up the process. Larger banks often use an intermediary called Equator. This company is web based and allows your Realtor to upload and manage all files relating to your transaction in one cohesive place. They in turn negotiate with the bank who in turn must negotiate with Fannie Mae, Freddie Mac, or investor groups since few banks actually hold the notes on the loans they service.

If you have two or more mortgages on your property, the duration of the process will take longer. You will need the 2nd lien holder to accept far less than what is owed to release the secondary lien. In many circumstances, it is this 2nd lien holder who makes things tough when asked to give up their say, $50,000 second mortgage for $2,000. In a foreclosure, the primary lien holder can wash away a second so that is the worst-case scenario for them. Still, it is dealing with those tricky seconds that make the short sales difficult.

If you are considering a short sale, hire a Realtor familiar with the process because it is detailed and requires skill. Next, get all your financial paperwork ready to be submitted to the bank. Once a reasonable offer comes in and paperwork has been submitted, the bank will order a property valuation. If the offer is above 91%, of the current evaluation, in most cases the banks will allow the transaction to continue. Based on your financials, they may stipulate you bring some cash to closing. This could range from $1500 to $10,000 dollars. Be sure your purchase contract has language for you to back out of a transaction if the bank requires cash at closing or a promissory note for the difference if you are unable to accept those terms.

Remember, these transactions must be arm’s length meaning that a family member, neighbor, or friend is not allowed to purchase your home. In many cases, these sales are a necessary way out for folks who are experiencing economic hardship. Buyers can take advantage of homes sold for less than market value with patience and persistence. While these transactions are difficult, they can be a win-win for all parties involved.

It’s that time again as we review our real estate report card by way of our 2011 Second Quarter Statistics. How did our enchanting city do? Our real estate road to recovery appears to be a long and winding road.

The greatest news we have to focus on is the decline in new listings, down 22% from last quarter. That means the total month’s supply of homes for sale has decreased from 19 months to 15. Other good news, closed sales were up from last quarter and also from same time last year. Remember, last year the market was inspired by the Home Buyer Tax Credit. This year ready buyers and outstanding prices were the impetus to beat last year’s figures.

Certain segments of the market faired much better than others. The city limits Northeast saw a positive change in median sales price to $545,000 and a 50% increase in closed sales to 72 homes sold Year to Date (YTD). But, Days on Market (DOM) has increased to 289 and there was an overall decline in listing price received to 84%. The Tesuque area saw a large reduction in new listings, down 37%, to 63 homes and but the median sales price fell to $712,500 from $792,500.

Across St. Francis Drive, the city limits Northwest is still struggling. Closed sales are down 35 % and DOM has increased 65% to 203 days. Prices have fallen hard here; the median price is now $227,500. Down Cerrillos Road, the Southwest city limits is also very soft. New listings did decrease over 20%, but the median sales price here is now $209,000. The good news is that Santa Fe’s housing affordability index has increased to a 97. This means that the median household income is 97% of what is necessary to qualify for the median priced home. Santa Fe saw a low affordability index of 55 in the spring of 2007.

The city limits Southeast saw a big decrease in its median sales price, from $550,000 for 2010 to $415,000 for 2011. But, DOM has also decreased to 208 days while the percent of listing price the seller receives has gone up to 91%. That suggest sellers are more aggressive in this area and they need to be because closed sales have also dropped over 20% to 37 sold YTD.

The Eldorado market has cooled a bit from the same quarter 2010 with closed sales down almost 10% to 43 sold homes YTD. The median sales price is also down somewhat to $319,000 and inventory here has actually grown a bit to 11 months. The Highway 285 area has seen a positive change in inventory with 72 homes for sale and a small increase in closed sales for the last quarter but overall the area is still falling, the median price now $429, 750 from $445,000 last year.

Las Campanas saw a huge increase in sales, up over 100% from the same quarter last year to a total of 27 sales YTD. A reduction in new inventory plus a small decline in selling price has given this area a boost. The Northwest quadrant saw a big decrease in new listings, down 37% to 123 homes for sale. The month’s supply here has been almost cut in half and the median price has increased over 20% to $673,000.

Airport Road is still suffering with a decrease in selling price, down to $190,000 and an increase in DOM to 156. Rancho Viejo and surrounds saw an increase in selling price to $310,000 but a reduction in closed sales. Inventory here hovers around a one year’s supply. Highway 14 and La Cienega saw a positive increase in median sales price up to $285,000 but a small decrease in inventory. Glorieta and Pecos saw a huge decline in median sales price, now down to $205,000.

Taking the good news with the bad, our market is surviving. Thriving here, suffering there, all part of the process on our long and winding road to recovery.

Greater than the failure of the banks and real estate market has been the catastrophic loss of faith in ourselves as a society that we are still capable of making the world a better place. Back in the 1990’s it seemed like everyone was a financial genius who knew ways for you to make money in your sleep. Now it’s easier to find someone who will scare you into the dark ages than to find good advice on investing in real estate. When it comes to succeeding at anything in life having guiding principles will improve your chances and investing in real estate is no exception. Here are a few proverbs to invest in.

“Vision without action is a daydream. Action without vision is a nightmare.” Get your sight on a goal and get going. Quick and easy short-term gains were the lure of the stock market not the real estate market. In real estate, the best plan is to earn your wealth over time, the old fashion way. The easiest expectations to manage are realistic ones so lay out your financial goals and be prepared to do the work it takes to earn it.

Unless you happen to know the winning numbers of next week’s lottery, there is no reason to keep secrets. Many buyers do not disclose their motives or ideas to real estate brokers for fear that someone else will scoop their idea and make all the money. They often want to get the information they think they need and disclose very little. These buyers are taking a huge risk and often they are so focused on a short-term gain that they end up with a long-term mess.

“None of us is as smart as all of us.” Create a team of professionals to help you execute your plan. Yes, the term professional implies that these people will be paid for their work and if you’re thinking that your profit margin is coming from doing the work of these experts, don’t fool yourself. Your investment team should consist of a real estate broker that you like and trust. A local broker with years of experience can use their knowledge to find you properties that can earn cash flow and develop equity. Next, you will need a contractor who gets along not only with you, but your broker, too. Contractors work well with investors; their knowledge and experience can trouble shoot problems that often are the difference between profit and loss. If your contractor knows that you will be a return client, they often go out of their way to give you the best of their abilities. Finally, get a property management company that understands your goals. Avoid leasing your own properties unless you have professional experience. Property management is not easy and can be contentious and litigious. Property managers know the laws and practices that will get your properties rented and keep them rented.

“Fall seven times, get up eight.” As evidenced by the remaining investors, brokers, and contractors, the key to survival and success is to get back up and keep fighting. Let’s face it, real estate investing is tough. But if you are looking for the potential to earn some money and develop long-term wealth, there are opportunities for you. Never lose sight that the journey is the reward and is best shared with others.

Readers with questions about how property taxes are determined will want to go to their mailboxes this April and look for your Notice of Value. Not a tax bill, the notice of value describes your property then identifies it by tax parcel number. The different classifications that affect your taxes will be summarized such as class of property, exemptions, adjustments, and so on. You will find values for both land and improvements. For residential properties, these are market values based on sales of comparable homes.

If you do not receive a notice of value you will need to contact the Assessor’s Office. New Mexico is a self-reporting state, which means that if you do not receive a notice of value it is your responsibility to contact the Assessor’s Office. They have just begun working with a new mass appraisal software program and have a few kinks to work out so you may find errors or discrepancies on the notice. If you believe any of the information is incorrect you have 30 days from date of mailing to report them.

Assuming that the information is correct, the next step is to determine the tax.  Once adjustments are made, the new amount is multiplied by the millage or mill rate. Mill rates differ by school district and in Santa Fe County we have 4 school districts. Mill rates are higher for commercial properties than they are for residential and they go up or down depending on projected government budgets and the size of the tax roll, therefore if there is a budget shortfall the mill rate may be raised to close the gap. For the city of Santa Fe the effective tax rate is currently about $671.07 per $100,000 of assessed value. A helpful formula would be: Market Value /100,000 X $671.07. So, if you buy a million dollar home in Santa Fe your taxes should be around $6,710. 07.

If you are wondering why taxes seem to still be going up even when market values have gone done here is one explanation. Due to inconsistent market adjustments by previous Assessors there is a great disparity in valuations and many properties are assessed below market value. A 1978 statute required the Assessor to value all property at 100% of its market value but in 2003 new legislation put a 3% cap per year as the maximum amount a homeowner’s property tax could be increased. So here’s the twister, if market values drop 10% but your property is assessed 20% below market value, your taxes are still subject to a 3% increase.

The 3% cap is removed once a property sells and after each sale an affidavit affirming the sales price is sent to the Assessor’s Office establishing the market value for that property. This creates a new problem referred to as “Tax Lightening” because of the jolt the new homeowner gets when taxes are adjusted to market value. Every legislation session takes on this issue and there have been many proposals, such as rolling back everybody’s taxes to 2003 values, but as of this writing there has been no progress. We will follow up on this important issue in an upcoming post.

The County Assessor’s office determines property tax values and if you plan to challenge your property tax this is the place to begin. There are several categories to protest such as agricultural use, residential classification, but if the core of your protest is market value then you will need to focus on the appraised value that the county assessor has determined for your property. Once you identify that amount compare it to comparative values in your neighborhood and if you have an unfavorable discrepancy then you should file a protest.

It is the responsibility of the County Assessor to determine and maintain current and correct values of property and many times discrepancies can be resolved by meeting with your assessor and sharing with them the comps you have and compare them to the comps that they used. This is one of those cases where you get better results with sugar than salt and if you are friendly and honest with your presentation you will get better results. If you do not get the result you want dealing directly with the assessor’s office you have the right to have your case heard before the County Valuation Protest Board.

The Protest Board is comprised of impartial, objective local residents who volunteer their time to resolve these disputes before they go to district court.  Once you have a hearing scheduled, focus on preparing your case so that it is accurate and organized.  It is really important to keep in mind that the taxes you pay this year were from appraisals done the previous year, so if you are protesting 2010 taxes your case will need to be built on 2009 comps. Your evidence can come from a real estate broker who will compile sales of homes from 2009 that are similar to yours and can even appear as a witness to help your case. Appraisals are also helpful but make certain that you order a retroactive appraisal, as the board will not consider a current market appraisal.

When you get to the hearing you should know all the players. The assessor who appraised your property will be there and often an attorney for the county (you can have an attorney, too).  A representative from the State Taxation and Revenue department will chair the hearing and then there will be the two board members.  The property tax code states that there is a presumption of correctness and values are presumed to be correct. This means that the burden of proof falls on the shoulders of the property owner and therefore you will present your case first. State the value you believe for your property and present your comps to the chair to enter as evidence and don’t be unnerved by the county attorney who will probably object to most of your evidence. The chair does not rule on objections, only acknowledges that objections are made so keep on going. Focus your presentation towards the board because they are the ones who will rule on whether or not to make a change in your valuation. Once you finish, the county will make their presentation which will likely be well organized and professional. Be ready to refute their comps if they are not representative of your neighborhood and keep in mind that your goal is to defend the value you stated. Be respectful and courteous and even if you don’t slam dunk the county, the board may give you the benefit of the doubt if both arguments are reasonable.

Fiery rhetoric often accompanies disputes over taxes so before you begin your campaign for property tax fairness, be sure of what you are disputing. If your goal is to vent anger over unfair discrepancies between your taxes and your neighbors, or to argue the constitution, or recite a list of government waste and corruption accusations, you will be wasting a valuable opportunity and your efforts will fall on deaf ears as the only jurisdiction the board has is over valuation of your property and nothing else. If you have the comps and keep your protest within parameters then you stand a really good chance to have your taxes adjusted. Our government is a reflection of ourselves and if we want it to be honest and civil, again the burden is on us.