Rent prices are surging in Albuquerque.
In Albuquerque, we are over 15,000 housing units short of the recommended housing supply needed, as quantified by The Urban Land Institute. Currently, there is less than one month’s supply of homes on the market for sale. Apartment inventory for sale is at an all-time low and occupancy is the highest rate it has been in many years at 96% as shown by COSTAR. Usually, we would see plenty of new housing being built. But we have a major impact on construction due to COVID-19, affecting labor and creating a shortage. Consequently, we are seeing higher lumber prices, a 40% increase over the past year, going from $600 per thousand board feet to over $1,000/ TBF. Furthermore, we will see over a 20% increase in housing costs, driving average housing prices to nearly $300,000, making it more difficult for first time home buyers, potentially denying them the opportunity altogether. Rental rates will also increase resulting in renting a 1,000 sq ft 2-bedroom apartment at $1,500 per month, requiring an income qualification of $58,000 per year. This has become the perfect storm – limited supply, raising costs, and a pandemic keeping people in place. All this is happening, and we have tenants unable or unwilling to pay rent. Undoubtedly, people have lost jobs, gotten sick, and have children at home being home schooled. They are out of options. They have also not read or understand the CDC’s ruling prohibiting evictions, thinking they do not have to pay rent when they are able to, as their pensions or incomes have not been affected. Owners are in a vice, tenants are not paying, and operational costs are high. In addition to tax costs and utilities going up, owners are faced with trying to make repairs with less or no income. Rental assistance is mired in red tape as tenants are not able to qualify, or write-off getting assistance altogether due to the cumbersome paperwork requirements. Owners are unable to liquidate or refinance due to large rental balances and affected income. It has been estimated that there is over 40 Billion dollars outstanding in rents and growing. On a local scale, our company has an 8% delinquency rate equivalent to $300,000+ in unpaid rents. The effects are already being felt by owners and residents alike – and now an onslaught of legislation assaulting real estate. All proposed bills are well-intentioned, but the unintended consequences will further cripple the real estate market by limiting supply and affecting the inflow of capital. The following are what is proposed. Full bills can be found on the state’s legislative website: HB19 - Real Estate Transfer Act, SB333 - Foreclosure and Housing Study SB338 - Domestic Violence Victim Release from Lease SB349 - Mortgage Relief Act, HB291 – Adding New Brackets to the Income Tax, HB 111 – Housing Discrimination There is a whole range of proposed legislation affecting real estate without any orchestrated approach. The affect will be catastrophic – increasing taxes, facilitating the removal of tenants while leaving owners worried that the removal could affect the standing rental contract, and a housing discrimination bill that affects all owners. HB 111 dissipates an owner’s right to decide who they want to rent to. Removal maybe considered discriminatory in some cases. Arguments are made that owners just evict tenants. Eviction costs 2 to 3 times the monthly rent when considering lost rent, unit repairs, and leasing costs. On a four-plex this could be 25% of a building’s revenue for the year. Eviction is the owner’s last resort. This perfect storm will result in less housing, not more, exacerbating the homelessness issue. We currently have over 2,000 homeless waiting for housing. Putting limits on collections, removal for non-conformity, and non-payment will force owners to increase requirements so only those with better credit scores will qualify for housing. Unintended consequences will affect all New Mexicans. Read the bills; contact your representatives to express your concerns.
Information brought to you by the city councilman's office. New Mexico needs some good news and this week we brought it. For months, a small group of us including electeds and officials from the state, city and Mesa del Sol have been quietly meeting with Netflix officials about Albuquerque. Netflix wanted to create a new production facility and we wanted it in ABQ. Yesterday, we were finally able to share the news! Netflix is making Albuquerque it’s North American headquarters for film production and is investing another $1 billion (with a ‘B’) to do it. This deal, once approved the full City Council, adds an additional 300 acres and 10 new film stages along with a huge new office complex to Albuquerque Studios at Mesa del Sol where the company is already spending $1 billion over 10 years in a deal we launched in 2018. The new Netflix agreement will come before the City Council for approval on December 7th. Here’s how the deal works: In addition to the $1 billion already planned, Netflix agrees to spend an additional $1 billion in New Mexico over 10 years - with no less than $700 million spent right here in ABQ The expansion will include $150 - $500 million in new construction and employ more than 1,600 building trades workers to build it. Netflix is expected to spend $210 million with local businesses for goods and services. UNM estimates that the project will be “tax positive” (generating more in new taxes than it receives in incentives) in year one. To finance the project, the City will issue $500 million in Industrial Revenue Bonds. The City will retain title to the land and property until Netflix has paid off the bonds and met all benchmarks for employment and spending. The State is providing $17 million in LEDA funds to support new job creation. The City is providing an additional $7 million, including $6 million in infrastructure in-kind. UNM will receive an estimated $24 million through a deal with Land Commissioner Stephanie Garcia Richard because some of the expansion includes state trust land designated to benefit the university. So what happens next? Yesterday, tax districts at Mesa del Sol approved the first part of the plan to use Netflix tax revenue to pay for roads and other infrastructure. The City’s Development Commission gave their blessing as well. The project will come to the City Council for full approval on December 7th. This is a big deal for New Mexico, for Albuquerque and particularly for our Southeast ABQ neighborhoods where many film workers, vendors and businesses call home.
