The burden of Santa Fe's housing shortage falls on the shoulders of its lowest wage earners, a new report from the Santa Fe Association of Realtors confirms. Renting families, whose incomes drag nearly 40% below that of homeowners, have it the hardest.
Santa Fe City and County haven't seen a housing boom since before 2009. While the city has done somewhat better than the county in adding new housing stock to the market in recent years due to a change in its rules that allowed developers to pay a fee in-lieu of building affordable housing on site, the imbalance between supply and demand has created an untenable situation for many in the region.
Rising home prices, luxury home sales and income trends are among the many topics covered by the report that the real estate groups aims to produce annually, but some of its most striking statistics show how these factors impact renters.
The data indicates most people own rather than rent in both the city and the county, yet just under half of renter households in Santa Fe were cost burdened before the pandemic, meaning that they paid more than 30% of their income towards housing costs.
It is important to note the report does not include 2020 data.
"We are in a difficult situation," says contributor Daniel Werwath, executive director of New Mexico Interfaith Housing, who participated in a stakeholder team for the report. "There were already a lot of families living unaffordably before the pandemic, now, those numbers are likely a lot higher."
The report uses a tool called the Housing Affordability Index to show that the median price to buy a house in Santa Fe is also much higher than what someone making the area median income can afford.
Several trends in the data show how we got here.
First is the fact that very little housing of any kind got built in the city and county after the 2008 financial crisis.
Nearly 60% of housing stock in the county was built between 1980 and 2009, and less than 4% was built since 2010. Of the housing that has been built in the county over the last three years, most has been single-family homes. Within the city, there's been an increase in construction of multi-family units and apartment complexes in the last three years. Between 2017 and 2019, the city saw an 82% increase in construction of units due to these new projects.
Still, the Santa Fe metropolitan area currently has a shortage of 7,343 rental units, the report estimates.
Many of the units that were available to renters ten years ago are no longer on the rental market because they've been sold to permanent home owners, and many of the rental units that were classified as affordable housing have since been converted to market rate housing because they reached the end of the 15-year compliance period for Low Income Tax Credit projects, it says.
All of these things mean that the city and county are scrambling to play catch up.
Meanwhile, to add to the supply and demand problem, many people have moved to Santa Fe during that time frame who can afford to pay more to rent or purchase a home than locals. Retirees, people purchasing luxury second homes, and people working remotely have all driven up the price of housing.
Werwath worries this trend will only be exacerbated by the pandemic as more and more people working remotely can choose to live somewhere different from where their job is located.
"We will likely see that people are relocating to Santa Fe at an unprecedented rate," says Werwath. "When you have a supply and demand imbalance, prices will reset to the highest capacity to pay and the people who have the highest capacity to pay are not local workers."
This trend was already apparent before the pandemic. While area median incomes stagnated over the last ten years, the price of housing has gone up. Rents increased 11.7% in Santa Fe County between 2017 and 2019 alone.
As dire as this might seem, says Werwath, it doesn't have to be this way. "This is a solvable problem," he says, adding that policy solutions to invest more in affordable housing and make it easier to build in Santa Fe are critical.
Read the whole report here: sfar.com/2020santafestateofhousingrpt