Santa Fe, New Mexico
October 24, 2007
State of the Market
3rd Quarter 2007

The national new homeowner surge has ended, and while we kept fighting off the image of a
real estate correction in Santa Fe, we have not been able to escape the consequences of mortgage
troubles elsewhere. While New Mexico and Santa Fe do not have large numbers of foreclosures, we
are seeing the market impact that is inevitable when feeder markets such as California and Arizona
have sellers unable to sell. The housing sales slowdown seen in many markets may be attributed to the
large number of new home buyers in the last five or six years that purchased using aggressive and
risky mortgage products, many of whom were not qualified to make those purchases.
So what do we do now? We work through it, market by market and house by house. Some
homeowners have little or no equity in their home, giving them little incentive to keep current on
payments if misfortune were to occur, such as a job layoff or major illness. Lenders may end up
owning those houses eventually and will put them back on the market, sometimes at a sales price
below other homes already listed. These discounted homes naturally drive down prices and/or
increase the time on the market for homes without comparable price reductions. Rather than dwelling
on the problems, we would like to be part of the solution and work through the inventory selling the
homes that are for sale now and will be soon. Once prices are on the rise again, we can go to work
convincing consumers in America that we are here to help realize their dream home. Until then, we
are going to try to sell homes, including yours.

The 2007 real estate story in Santa Fe includes a measurable slowdown compared to previous
years. Some price ranges have held steady in units sold, while other ranges have seen meaningful
decreases. And yes, it is now officially a buyer’s market. For the first time in this writer’s experience,
the lower price ranges (below $500,000) have seen the largest decline in units sold compared to
previous periods. An odd result is that the average price keeps climbing because fewer low priced
homes are selling. The upper end of our market (generally above $1 million) has seen no measurable
decrease in units sold. In the middle, it is down slightly. While we have long term confidence in the
real estate market in Santa Fe, the immediate picture is still cloudy. If you are a seller today, you are
eyeing the winter months as a time to regroup and maybe reassess pricing. Yet many homes will sell
between now and spring 2008, and yours may very well be one of them. If you are in the market to
buy right now, you might be tempted to hesitate, yet the market adjustments are well underway and
those waiting until spring might run up against the typical spring optimism that seller’s brandish. A
buyer who sits on the sidelines could easily time the market incorrectly.

So, what do we expect? While no one can or will say definitively, we believe, based on longterm
views of our area, that Santa Fe should be a strong real estate market again soon. If you are a
long time resident and homeowner, the advantages you have gained far outweigh the slowdown we are
currently experiencing. A few years from now we will probably have almost forgotten this market,
while ten years hence we might be back into another cycle. It is always best to be a long-term owner
who can settle in and build equity over time rather than trying to time the market cycles, hoping to buy
low and sell high. It is never just about money anyway. When you choose to buy a home in Santa Fe,
you are choosing a highly desirable address and access to a unique lifestyle. Previous newsletters have
stated the positive aspects of spending time in Santa Fe: international art center, cultural melting pot,
perfect climate, etc. If you have forgotten or simply haven’t heard, call us. Why not have a shelter to
call home here (and invite your extended family to spend the holidays)?

The following charts have headings showing their content. All statistics are taken from
Sotheby’s International Realty and Santa Fe Association of Realtors sources and are considered
reliable, although they have not been verified and are not guaranteed. While we are as aware as anyone
of the downward trend, we see a solid foundation of transactions and limits to collateral damage from
recent credit concerns.






We are extremely fortunate to be in this market at this time and cannot imagine anywhere we
would rather be doing business. Our mastery of the fundamentals of real estate sales is your gain, if
we are allowed to work with you on your next transaction. If the shopping urge has hit, be sure to stop
by www.sothebyshomes.com/ for a glimpse of the fantastic Santa Fe real estate available right now.
Our sister offices all over this great land, plus London, also have spectacular property for sale. Our
professional sales team can connect you with just about any market you desire to inquire about.
Optimistically yours,

Alan Ball
Managing Broker
Branch Manager

Darci Burson
Qualifying Broker
Vice President

Statistics and numbers in this newsletter are obtained from the Santa Fe Association of Realtors Multiple Listing Service and from Sotheby’s
International Realty sources. They are deemed reliable but are not guaranteed.