Halves, Haves and Have Nots
Nowhere is Santa Fe’s disparity more obvious than in the housing marketFeaturesWednesday, August 5, 2015
Joe Encinas starts to feel a little sick every time he thinks about how his brothers and sisters sold the family home in what is now an upper-crust neighborhood on Santa Fe’s east side.
It was no more than a stone’s throw from Upper Canyon Road, where Camino Cabra meets San Acacio. It sat well above the glitter of the art galleries and just far enough away from the flamenco dancers and the foot-stomping sounds of El Farol.
The two-story, 4,500-square-foot house went for $250,000 in 1999 after his mother, Corrine Encinas, fell behind on the property taxes, which had been increasing in lockstep with the Texans and Californians who started buying up properties in the neighborhood and redeveloping them.
The changing real estate market and the rising cost of living were overwhelming his mother, who’d been a banker for a few years but then later cleaned houses to make ends meet in the absence of her husband, a state penitentary guard who died in 1984.
It finally got to the point where the large Hispanic family could no longer afford the very home they grew up in. In dire straits, the family decided to sell. They took advice from a real estate agent, who convinced them to lower their asking price, claiming there would be no buyers. Six months later, the house sold for $500,000.
Encinas, who is in charge of maintaining the city of Santa Fe’s fleet of vehicles, was brave enough to tell his heart-wrenching story to SFR, something that clearly wasn’t easy for him. The entire affair has left a hole in his heart and a nausea that rises up from his stomach, thinking what could have been versus what is.
“I don’t go up there anymore, except for funerals,” the 52-year-old Encinas says. “It’s too frustrating. All that’s left is the church. The school’s gone, and you can’t see the old house. They’re too many big ones blocking the view.”
Then, when asked how he really feels about what’s happened to the old neighborhood, Encinas, who is the youngest of six children, pauses and then says, “It kind of makes you have bad feelings toward rich people.”
But then he takes it back with a laugh, almost embarrassed to reveal such thoughts out loud.
New wealth comes to town. Neighborhoods change. They’re always touchy subjects in Santa Fe—a city increasingly divided by haves and have nots, and people who only live here half the year, if that.
With an estimated 15,000 visitors daily this summer and virtually all hotels and motels booked up, there’s no question that Santa Fe is a tourist destination first and state capital second. And there’s no doubt that the appeal of the adobe, the sunny skies, the high altitude, the snow in the winter and the nearby national forests all have conspired to make it a top destination to retire or own a second home.
And that, in turn, has contributed to an influx of wealthy people who are willing to pay not necessarily what the property is truly worth, but what is being asked for.
There is a trickle-down effect on the cost of living here, so the verdict is still out on whether Santa Fe’s popularity is to be coveted or condemned. But this much is certain: It’s left a sour taste among those who have a hard enough time making the rent, let alone owning a house.
It’s also driven a wedge along lines of race and class, and nowhere is that more apparent than in the city’s housing stock, with its legions of short-term rentals that are advertised on various websites in an attempt to cash in on the unused luxurious space: thousands and thousands of wasted square feet.
It brings to mind that old George Carlin joke on how he’d love to take all of the country’s golf courses and build houses on them for the homeless, because the homeless aren’t really homeless; they’re “houseless.”
The Santa Fe City Council has struggled with the problems that come with the acquisitions of high-end second homes, palacial beings that sit empty, in contrast to low-cost housing, which is always packed to capacity.
The polar extremes are a common thread running through any tourist town, with its shuttles to ski areas and open-aired busses that carry pleated-shorts-wearing tourists around town, highlighting the city’s history, always a slightly humorous spectacle among those who live here.
But it didn’t always used to be this way. Encinas noticed the froufrou fallout in 1986 when he returned from the Air Force, still in uniform. Houses had been added onto, new ones loomed large where tiny ones once stood, fancy cars and different license plates crowded the place.
“We’d say, ‘Would you look at all these Texans,’” recounts Encinas, who now owns a modest home in La Cienega and commutes to work every day, joining what city housing stats say are 30,000 people who work in the city but don’t live here—roughly 60 percent of the workforce.
And every day on his way to work, Encinas passes by the nation’s 1 percent and the luxurious homes they own.
Exactly how many of Santa Fe’s mansions are second homes is a difficult number to pin down, but the sales of houses above $500,000 represent 20 percent of recent housing sales, and some of them went for between $2 to $3 million, according to the latest statistics by Multiple Listing Service.
For her part, Mari Kempes has scrolled past quite a few of them in her search for a place on Craigslist. The 27-year-old Kempes was desperately looking for a two-bedroom, two-bath that she and her brother could share earlier this spring. But she didn’t like the idea that lots of the owners lived out of state. So Kempes ended up renting from a local homeowner, and she loves it—although she admits she was exhausted by the long search to find the right rental.
"Maybe I have bad luck, maybe I am picky, maybe the market sucks right now for renters."
In a moment of frustration, she posted a message on Facebook, addressing it, “Dear Santa Fe: I refuse to pay $2,500 a month for some dumpy linoleum-riddled adobe that is ‘in a great location.’ I am sick of contacting owners, filling out applications, and stealing away from work to view properties only to be told that the property has been rented all of 11 hours after being listed...Maybe I have bad luck, maybe I am picky, maybe the market sucks right now for renters.”
That’s true. Rentals are going like gangbusters, with occupancy rates at 97 percent, according to the Albuquerque office of CBRE, a real estate firm.
Not only are the units virtually all rented out, but the average cost has increased 4 percent across the board over the last year, notes CBRE’s David Eagle, a senior vice president who’s been personally crunching the numbers for seven years for Santa Fe.
The one-bedroom, one-bath saw an unprecedented 7 percent hike, running about $830 a month on the high end, Eagle says. Of course, that’s just in run-of-the-mill neighborhoods, not in downtown, where the peal of the cathedral’s bells are like barking seals in a seaside setting. There, it would go for $1,200 or more.
“Santa Fe isn’t like Aspen or Vail or Breckenridge,” he says. “Those places are one-trick ponies. They empty out in the summer once the ski season is over.”
Not Santa Fe, he says. The saturated year-round rental market is just another indicator, perhaps, on how homeownership has increasingly moved out of reach for the average working resident. Fact is, the city’s median household income of $50,000 doesn’t match up with the median house price of $300,000, and local wages have only grown 1 percent since 2009.
And no new high-paying jobs are headed this way, at least those capable of turning the economy around on a wide scale. Glassdoor Economic Research ranks Santa Fe as 320 in 327 metro areas as a place to do business, not something you want to advertise if you’re the Santa Fe Chamber of Commerce.
None of this bodes well for the likelihood of increasing homeownership, especially among low wage earners.
“The millennials are suffering the most,” says Gregg Antonsen, who as a senior vice president for Sotheby’s in Santa Fe is in charge of 100 brokers and sees the market dynamics up close. “They were hit the hardest with the recession, and they didn’t get the jobs they expected with their college degrees. We need more jobs that will create a balance. We can’t just be a city that caters to the festivals and markets.”
While the city and nonprofits like Habitat for Humanity and Homewise do the best they can to help first-time home buyers, a ready solution seems to be expansion of the number of rental units.
Yet an antigrowth mentality among some locals has stymied the construction of multiunit apartment complexes, including one recently shot down on Agua Fría Street. The process of finding the land and getting permission to build on it makes Kempes’ search for a two-bed, two-bath look like a cakewalk.
The resulting housing shortage has spawned a relatively new phenomenon along Cerrillos Road: Former motels have been converted to studio apartments to inexpensively shelter those who live on the edge, in an already pricey city where the sales tax keeps going up.
Steve Lynch, a massage therapist by trade but primarily an aspiring stone sculptor, recently moved into what is now the La Villa de Thunderbird Inn.
La Villa doesn’t require the customary first and last month’s rent, and their monthly prices are between $575 and $800, a godsend to the downtrodden. All that’s required is a $200 nonrefundable rental fee.
“There have been times where I felt close to being put out on the street,” says Lynch, who learned how to carve from a Cherokee shaman in Georgia and now shows at El Farol Galeria. “I can remember several times when I would be driving to my massage clients’ homes, hoping they would tip me or pay in cash because I had no food and there was not enough gas to get home if that didn’t happen.
“Sometimes, we all feel like a piece of liver in a pack of wild coyotes.”
It seems this sort of dichotomy will always be at work here, a chasm between those who struggle and figure it’s just the price to live in paradise while the fat cats put up their feet and drink microbrews in their luxury homes. Or rent them out when they’re not there.
Similar lifestyles run rampant in Colorado ski towns, but the only difference is we’re not talking about some master-planned ski community that sits along a major interstate; we’re talking about Santa Fe, the oldest capital city in the country, rich in culture and history, dating back 400 years.
How did things get so dismal or so great? It depends on your view, whether it’s from a pine deck overlooking a bunch of piñón and juniper or from a rundown hovel, with a view of the cars passing on Cerrillos Road.
The very beginning can probably be traced to the great artists who’ve left their imprint on Santa Fe, which has now become the third largest art market in terms of total acquisitions, behind only New York and San Francisco, notes Antonsen, whose firm is known for holding high-end auctions as well as selling high-end homes.
Will Shuster, the guy who invented the burning of Zozobra, had a role in the migration to Santa Fe. Shuster came here in 1920, found his artistic expression and the cinco pintores rose up around him.
Georgia O’Keeffe added to the artistic mystique tenfold nearly a decade later, putting Santa Fe and Taos on the map by painting New Mexico’s beautiful landscape on canvas.
Just a few months ago, one of O’Keeffe’s paintings sold for $9 million, in keeping with the theme that people will pay extraordinary amounts of money for something possibly worth far less, given the whims of the market and the unpredictable power of supply and demand.
Whatever the case, both Shuster and O’Keeffe were artistic pioneers, and others would follow. Canyon Road would become blocks and blocks of art galleries as the creative floodgates opened. It all offered a glimpse of the high prices to come as Santa Fe became a mecca among wannabes and the real deal.
The intricately built acequias on the city’s east side tell the story of those who were here first, the Hispanic farmers. But in the last two decades, family after family either have been outpriced or have chosen to sell their houses.
Rick Martinez, 62, who had long since bought his home in the Barrio de la Cañada neighborhood, grew up across the street from Acequia Madre Elementary. Just five years ago, his family parted ways permanently with the east side when his brothers and sisters (some pictured above) sold their childhood home in the 500 block of Calle Corvo.
They got over $500,000 for it, although as Martinez tells it, selling a few years earlier could have fetched up to $800,000. That would have meant moving Dad out of the house in the sunset of his life, and that wasn’t an option.
While Martinez’s story isn’t nearly as sad as that of Encinas, he has now gone on to become a housing activist who keeps tabs on the city’s changing neighborhoods.
He’s a part of the Neighborhood Network, an advocacy group that’s a de facto bodyguard for vulnerable pockets of the city, working against steroidal, high-end development that could only lead to another exodus if left unchecked.
But make no mistake about it, he says. All the neighborhoods are changing. They’re changing on the west side, in the Hickox area, along Don Gaspar and Alto streets, and east of St. Francis Drive, and the change is as real as the passage of time.
Not time as in timeshares—which overrunneth as well in this city—but time as in the parents are dying in these large Hispanic families, and their children are now coming to a crossroads: What to do with the family house?
Some siblings, Martinez says, simply don’t command the sorts of salaries that can buy their brothers and sisters out. The prices have soared too high, so they end up selling it and dividing the sale among themselves.
Yet there are success stories of holdouts.
“There are a lot of families who’ve gotten together and come up with plans to make sure they keep the house in the family,” he says.
There’s a price to be paid, whether you rent here, you own here or you’re merely staying here part time. There’s a cost that comes with the triangulated view of the Ortiz, the Jemez and the Sangre de Cristos, and with the New Mexico cuisine: Will it be red or green?
The bipolar housing market swings hard in both directions, sometimes helping, sometimes hurting, depending on where you sit. City officials know they need to do something. But what?
They’ve already tried an inclusionary zoning rule that requires developers to build and sell part of each project at fixed prices to income-qualified buyers. Although those rules are still in play, they’ve been no magic fix, especially in light of a drastic slowdown in construction. In 2009, officials tried to impose a tax on sales of high-end homes, the revenues from which would have been earmarked for housing projects, but voters shot that down, with heavy influence from the real estate lobby.
"Seek solutions to Santa Fe’s housing affordability crisis especially as it pertains to gentrification, inequity and the widening gap between rich and poor."
At its last meeting, the Santa Fe City Council passed a resolution ordering staff to “seek solutions to Santa Fe’s housing affordability crisis especially as it pertains to gentrification, inequity and the widening gap between rich and poor.”
Alexandra Ladd, in charge of special housing projects for the city, is going to get right on that.
It’s a daunting task for a woman who wears an assortment of hats and doubles as a policymaker while keeping an eye on affordable housing programs in the city. Ladd parcels out an estimated $1.8 million a year in federal and city subsidies so that hard-working residents can afford rent or buy a home for the first time.
But so much more needs to be done, so much more money is needed and as many as 6,000 more rentalshould be built soon, she estimates. The goods news is that the city, with 80,000 residents, isn’t expanding, but there’s no great decline; people may move from one neighborhood to another, but nobody’s leaving town.
That she and her overworked staff will find the answer remains to be seen.
“I don’t know if I can do it single-handedly,” Ladd says.
After all, she can’t push some rewind button. There’s no undoing the tectonic shifts that gave rise to the Santa Fe Basin, which beckons the ‘“pow-pow” people; there’s no unmaking of O’Keeffe’s paintings, no unburning of Zozobra and certainly no returning to the insanity and the unrealistic and widescale home loans that led to the recession.
Every once in a while, she’ll field an errant call from some kid who’s taking that “Go west, young man” phrase literally and wants in on one of the highest minimum wages in the country, and she’ll try to discourage him, the mother that she is.
“I’m sort of a wet blanket like that,” she says. “I know that homelessness here can happen in second. It can happen when you car breaks down and you need to fix it. I can happen when your hours are cut back on the job, and that’s the last thing I want in this city.”