The cost of rent in Santa Fe has jumped more than 8 percent for those trying to occupy one of the city's few available apartments. Even for affordable housing, the leap has been substantial: a 5.5 percent spike since January.
That daunting assessment last month by real estate group CBRE's Albuquerque office is set against a backdrop of a rental market with razor-thin vacancy rates at larger apartment complexes.
"Santa Fe is unique," David Eagle of CBRE tells SFR. Despite a robust government employment sector, the market acts like a resort town, with a large disparity between homeowners and those looking to rent. Plus, he says, "the city is very underserved for market-rate units."
The city's occupancy rate remains sky-high, at more than 98 percent. Just 14 one-bedroom/one-bathroom apartments were available citywide during the September survey.
Average rent in Santa Fe for all types of apartments is at $1,010. One-bedroom/one-bathroom apartments are creeping toward that level, sitting at $954.
By comparison, only one sector of Albuquerque exceeds the average rate per square foot that applies across the entire city of Santa Fe. In the Northeast Heights community of High Desert, costs are $1.34 per square foot to Santa Fe's $1.25 citywide. The Duke City's occupancy rates were also high, around 95 percent, but average rent is far less than Santa Fe, at $829 for all kinds of apartments and $752 for a one-bedroom/one-bathroom unit.
At the city's Office of Affordable Housing, the first thing that struck director Alexandra Ladd was Santa Fe's percentage of affordable units: 45 percent of the apartments surveyed were affordable according to the federal Department of Housing and Urban Development, determined in part by local median income. Albuquerque's survey showed 19 percent.
While her job focuses on affordable housing, Ladd says part of the way Santa Fe will be able to ease its housing crunch is by building market-rate apartment homes to push rent down.
The survey notes the city's housing imbalance has been improving somewhat as "Santa Fe relaxes building requirements," a reference to a 2016 pilot program that allows developers to meet affordable housing requirements by paying a fee per market-rate unit instead of requiring 15 percent of all new units to be affordable.
“It’s a little general, but what I actually like about that phrase, [relaxing building requirements], is that it [reflects] a deliberate policy choice,” Ladd tells SFR. The city hadn’t had new market-rate apartment building in a decade prior to the new program. It’s due to sunset at the end of next year, and developers may be keeping their powder dry until determining whether the city will extend the program.
At CBRE though, Eagle says the city's housing market is tight enough that some developers are poised to move ahead, assuming the city will vote to prolong the sunset. Both Eagle and Ladd say building in Santa Fe involves significant lead time as developers work their way through the city's processes and line up both material and labor that can often be in short supply.
It falls to Ladd to help craft a report assessing the fee-in-lieu program. City staff will present a report to the City Council in December. Ladd says she and others plan to meet with both developers and service providers before then to determine the program's effectiveness not only in terms of new apartment construction, but also when it comes to whether those fees are leading to a better affordable housing scenario for Santa Fe.
Affordable housing is controlled in most cases by area income measurements, so the rise in rent reflected by the survey may be due in part to the local economy that's gaining momentum. Ladd points out that if incomes are rising in general, but lower earners don't see the same kind of salary increase, more people may qualify for affordable housing.
CBRE surveys large apartment complexes with more than 80 units for its rent assessments and occupancy rates in its review, which comes out three times a year. In Santa Fe, that means 22 apartment developments (12 of which are affordable) and roughly 3,600 units.