Santa Fe, New Mexico Housing Trends and Price Projections for 2023

Northeast of Albuquerque sits the capital city of Santa Fe. The gorgeous city is recognized for its Pueblo-style homes, exciting history, and melding of modern and native cultures. Surrounded by high desert and forest lands, Santa Fe is a beautiful place to call home. Its combination of art, culture, and history has put Santa Fe on the map in the world of luxury real estate. As homes in the city have become increasingly sought after, they have become even more lucrative investments.

Santa Fe real estate has seen exciting developments in recent years, and this year has been no exception. As 2022 comes to a close, homebuyers, sellers, and real estate brokers are beginning to consider what the future could hold for the upcoming year. Read on for information about the current Santa Fe housing market and the 2023 housing market predictions.

The real estate market across the board was a whirlwind of competition and a red-hot seller’s market through 2020 and 2021, with low inventory, many buyers competing for the same properties, and many listing prices soaring well above the asking price. In 2022, these trends began to cool, largely due to rising mortgage rates, threats of inflation, and economic uncertainties nationwide. With many buyers hesitating to enter the housing market during this time, it is trending toward a more normal real estate market.

According to the Santa Fe Association of Realtors, through the third quarter of 2022, single-family home sales in Santa Fe fell to 226, which is down by 29.6% compared to 321 in the third quarter of 2021 (the county saw a similar decrease from 234 units to 181 units). During the same period, condo sales volume also fell from 176 to 129, and most residential land purchases were outside of the city.

In total, the third quarter of 2022 brought a 19.5% reduction in the total sales volume for the city of Santa Fe, from $232.3 million in the third quarter of 2021 down to $187.1 million in the third quarter of 2022. Compare that to the second quarter of 2021, when the housing boom was at its peak, and the statistics speak for themselves—the total sales volume in Santa Fe increased by a staggering 105.9% from the second quarter of 2020 to the second quarter of 2021.

 

There is good news for sellers, much of Santa Fe’s luxury properties continue to sell in the city’s Northeast and Southeast residential areas, with single-family median prices exceeding $1,000,000.00, while increasing by 12% (Northeast) and 25% (Southeast). Outside city limits, the Northwest saw 53 closed sales in Q3 2022 with a median sales price of over $1,400,000.00, the greatest such total in Santa Fe County.

No doubt Santa Fe is of interest to many buyers, and that demand bodes well for the city’s future growth and expansion. Santa Fe typically experiences a seller's market, as the area is highly sought-after. High demand and low supply are cemented by the many residents who stay long-term or hold properties as secondary residences.

2023 presents an opportunity for a market correction. High demand and more moderate price increases are a good start, and as supply catches up, the flow of home purchases will revitalize the market. With more homes on the market, sellers would have to price their homes competitively with no adverse effects on monthly sales or inventory. Likewise, buyers will have more Santa Fe homes to choose from, and they will feel less competition and pressure to make a split-second decision on a property.

Of course, Santa Fe’s magnetism is also its weakness: many locals love the city so much that they plan to call it home for the long haul. Buyers shouldn’t count on that dynamic to change. As an alternative, local real estate brokers are closely monitoring the progress of new construction in Santa Fe County. Santa Fe remains an intriguing luxury market with the potential for long-term investments to appreciate against the grain of rising interest rates.

Santa Fe is a one-of-a-kind city without much competition in New Mexico or, for that matter, the American Southwest. The bottleneck of demand for luxury properties in Santa Fe indicates a significant potential for the city and Santa Fe County. Anyone who pairs with a savvy local agent can capitalize on the Santa Fe real estate scene with the right investment strategy.

Navigating a complex market and its specific trends takes time, experience, and effort. In a city full of beautiful properties, it helps to have expert guidance by your side. Whether seeking luxury real estate, commercial, farm and ranch, or land property for sale in Santa Fe, contact skilled local real estate broker Robyn Tyra today to begin the search for your new property.