Seller’s Market

Though Abbie Barronian’s house in Casa Linda is a little old with some undesirable quirks, there’s enough space for a dog to romp and she feels grounded there. For almost two years, Barronian and her two roommates have rented the house for just under $2,000 a month, happy to have found such a good deal in Santa Fe.

Earlier this month, the owners decided to sell the house and informed Barronian and her roommates that they would need to move out at the end of July. Hoping to stay, she contacted the owner’s realtor and made an offer—the asking price of $425,000, which was already $10,000 above what the comps estimated.

“They rejected it without a counter,” Barronian tells SFR.

When she asked why, they responded: To maximize the house’s exposure.

“I respect that,” Barronian says. “This is an investment for them, but it’s a home for us.”

The challenge of becoming a homeowner in Santa Fe—a lofty goal for many low- and moderate-income residents—makes up an important, though often under-discussed, element of the city’s bedeviling affordable housing crisis.

“When you hear the term ‘affordable housing,’ what do you think?” asks Johanna Gilligan, senior director of community development with Homewise, a nonprofit that offers low-cost financing and education to help people buy homes. “You just think rentals; you don’t think homeownership.”

Advocates agree that homeownership plays an essential role in addressing Santa Fe’s affordable housing conundrum, but in the current market, would-be new homeowners like Barronian likely will be forced to continue renting.

A special cocktail has driven the real estate market to the boiling point: housing shortages, high building costs and the “paradigm shift” to remote work born of the pandemic.

Roger Carson, president of the Santa Fe Association of Realtors, explains that homeowners want to take advantage of the situation, noting an increase in interest from owners to sell properties that “haven’t been valued this high, ever.” The high volume of sales leaves renters with even fewer options given the housing shortage, which stretches back to 2008′s real estate crash and even before.

Further, out-of-state buyers are outbidding local residents, Carson says, reflecting a national trend.

Santa Fe’s desirable living conditions only accelerate the problem, says Alexandra Ladd, the city’s director of the office of affordable housing. Ladd and other experts point to the already small supply of houses and limited options for different neighborhoods across the city, explaining that “the entry point into homeownership has gotten tighter and tighter.”

A comparison of the property sales during the first quarter of 2020 to that of 2021 spotlights the market’s high temperature.

According to the Santa Fe Association of Realtors, the median home price in the county leaped from $572,500 in 2020 to $650,000 this year. And homes spent an average of 59 days up for sale in 2020; that figure is 39 so far in 2021.

Additionally, the percentage of homes purchased with cash—a measure advocates say indicates higher-income buyers who are often purchasing a second home—rose from 23% to 28% between the first quarters of 2020 and 2021.

As a person in a “good financial situation” to make an offer on the house, Barronian recognizes that she isn’t the most vulnerable renter facing a hostile housing market.

“And for this to feel stressful for me, with a full-time job and a little money saved up and the ability to buy a house, I think it’s indicative of how traumatic and impossible it would be to have any less means,” she tells SFR.

Experts argue that New Mexican renters have limited protections and few ways of enforcing existing laws, which further emphasizes the need for more families to make the jump from renting to owning.

According to the National Association of Realtors, the national average wealth of homeowners in 2021 ($297,000) dwarfs that of renters ($8,000), showcasing the market’s inequality among families who rent versus own in Santa Fe.

“Now that the market is booming the way that it is, people are figuring out, ‘Hey I can really cash in,’” says Michael Barrio, executive director of Santa Fe Housing Action Coalition.

“And they’re not really thinking about or having regard for the way it impacts renters or whether or not they’re able to find another affordable unit or place to live,” he says.

While a free market dictates that owners can choose to sell to the highest bidder, advocates explain the current situation demonstrates that, if anything, the market is exacerbating an already existing issue.

Barronian acutely feels the paradox.

“We can buy this house, we can do this, it’s well within the range of possibility and would ground us here,” she says. But “the opportunity isn’t there.”

Barronian still plans to make an offer when the house goes on the market, but she knows what she’s up against.

“And based off of the market, it doesn’t look great,” she says.