Once heralded as the ideal place for a young family or newlyweds seeking their first home — avoiding high prices in Albuquerque — Rio Rancho was the place to be.
“Rio Rancho was built on affordable housing,” Lectrosonics President Gordon Moore told the Aug. 11 meeting of the Rio Rancho Governing Body, when the Dominium site plan discussion came up.
Moore told the city council about he and his wife’s move to Rio Rancho in 1978, when they couldn’t afford to buy a home in Albuquerque.
Now, he said, his employees – his company pays $9.5 million annually to its workers – are having trouble finding affordable homes in the City of Vision.
“We were all there at one point in our lives,” was Councilor Bob Tyler’s reply to Moore’s plight.
Moore’s comments were featured in a short video presentation at Thursday morning’s NAIOP Rio Rancho Roundtable meeting at premiere Cinemas, with the main topic “Rio Rancho: Rising to the Reset,” billed as a residential roundup.
What’s affordable to one family may not be affordable to another. Yet when asked how many homes in the $200K to $250K price range could be sold now, the answer seemed to be as many as were available.
But there really aren’t any available, and it seems that’s now the low end of home prices.
Prices have surged 35.7 percent since January 2020, and 80 percent of that increase has taken place since January 2021. The median resale price – not for new homes – is now $330,000.
It was noted, too, that building materials prices are on the rise, although the cost of lumber has decreased, but there have been lengthy delays in obtaining the materials.
For example, one panelist said there are long delays for garage doors, and with a garage door installed, there is a security issue for a house under construction. Also, the prices of windows have risen as well.
Couple those factors with a shortage of housing in the metro area – an all-time low of 1,500 active listings by the Multiple Listing Service – and a drop to 40 new starts, said to soon dip to 30 starts, means more people vying to buy what’s available.
Typically, that results in people offering more than the actual asking price of homes on the market.
According to the National Home Builders/Wells Fargo Housing Market Index, “Just 42.8 percent of new and existing homes sold were affordable to a typical family.”
People will almost always prefer owning to renting.
“The pride of home ownership is never going to go away,” said Wade Messenger, vice president of Operations for the Pulte Group.
So, what to do in a state where the median household income is $54,000?
Among the possibilities: Build more multiple-family projects, such as the Dominium complex that came under fire at the city council meeting; decrease the lot size, because land has become more valuable and expensive; increase the density, making it better cost-wise for builders, and, suggested Messenger, “We’re gonna have to start building smaller homes to handle the market.”
As for the lot size, city records show fewer than 4,000-square-foot lots make up 27 percent of new home permits, while medium-sized lots of 5,000-5,500 square-foot lots made up 32 percent of new home permits. Smaller lots not only cost less to buy, but require less cost in preparation for home construction.
The average cost per square foot now, he said, is $200.
“We’re not making affordable housing, we’re making expensive housing,” said one audience member.
Original source found here.
