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Home / Articles / News / Features /  Brokeback Nation
Alameda Condos
Luxury condos like The Alameda are a hard sell amid the economic crisis.

Brokeback Nation

Recession hits hard, but Santa Fe holds on

December 23, 2008, 12:00 am

Feeling poor? Here’s some perspective:

High food prices drove another 40 million people around the world into hunger this year, according to the United Nations.

UN officials estimate 963 million people—one in seven human beings—are going hungry.

In New Mexico? Obesity is “epidemic,” the state Health Department reports. There are 3,030 hungry Indonesians for every obese adult in the City of Santa Fe.

This isn’t to minimize the pain of Santa Feans who have lost jobs or been forced to apply for food stamps, but New Mexico—and Santa Fe in particular—so far has been spared the worst in this year’s recession.

Silver linings aside, the current economic crash would make a list of top 10 stories in any year that didn’t come with a UFO landing or Messianic return.

In Santa Fe, luxury condos that would have sparked bidding wars in better times went instead to the auction block. Bankrupt department stores ran deep discounts as local businesses braced for a slow holiday season. Paranoiacs began hoarding guns and gold coins.

From January through October, Santa Fe lost approximately 200 jobs, according to the New Mexico Department of Workforce Solutions.




Unemployment rose but less dramatically than elsewhere. When it came to home foreclosures—the source of the current crisis—Santa Fe was better off than Albuquerque and points beyond. This spring, 1.16 percent of mortgages in Santa Fe County were three months delinquent. For comparison, the delinquency rate in San Bernardino County, Calif. is six times higher.

“New Mexico has been extremely fortunate in the real estate market,” Bob Hagan, who heads the state Securities Division’s investor education efforts, says. “I hate to get quoted on that because I’ll get a lot of angry calls from people that say, ‘Oh yeah?’”

Our relatively low foreclosure rate was no help to Thornburg Mortgage, Santa Fe’s largest private employer, which employs 156. The company got booted from the New York Stock Exchange in early December. Its stock price, as high as $140.50 in February, fell as low as 16 cents in November.

Even though Thornburg caters to high-income borrowers with excellent credit, the company couldn’t escape the nationwide credit freeze. “It’s a domino effect,” company spokesperson Suzanne O’Leary Lopez says.

Those dominoes keep dipping. Santa Feans should expect to see more empty storefronts in the coming months, business broker David Gilmore says.

“Do we have a problem? We certainly do. But it’s not as serious as in other parts of the country,” Gilmore says. “I can attest to that.”

Gilmore, who sells other people’s businesses for a living, moved to Santa Fe from Florida approximately a year and a half ago. Some of the homes he and his wife considered buying back then are still on the market—for 25 to 50 percent below the original asking price.

This means small businesses suffer because people can’t borrow against the value of their homes. “The fact is that people just do not have money, nor can they get financing to buy businesses or commercial property,” Gilmore says. “It’s not that the businesses aren’t worth buying—there are some very good deals.”

For instance, Gilmore represents “a particularly fine restaurant on Cerrillos,” with a “drive-through, the works.” He presented it to a half-dozen large chains, such as TGI Friday’s and Houston’s. “Not only are they not putting together new franchises, they’re closing down many of their existing operations,” Gilmore says.

Likewise, Gilmore marketed a bargain-priced dry-cleaning business last month. A dozen potential buyers showed interest, but “none of them could come up with $20,000 to get into this business,” he says.

Ultimately, the owner shut the store down and sold off all the equipment.

“It’s very sad. These are people who’ve worked very hard to be in their own business,” Gilmore says. “There’s no solution for them.”

 

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