Albuquerque Pelicans: Slimy Investor Real Estate Question For You

[motion]

Thinking of moving into the Albuquerque market. I have several family members who live in the area. I think I see something interesting happening that I'd like to take advantage of. Feel free to call me all the four letter words you'd like to... just hoping to get some realistic feedback from you.

From what I understand the price difference between homes in NorthEast Albuquerque and Rio Rancho was around $40k a year ago, but now is around $100k (NE being more expensive). This is due to the fact that NE is running out of land to build on. My reasoning would suggest that Rio Rancho is a bargain right now (new 2,000 sq ft homes for sub $200k), and that demand will start to shift to Rio Rancho from the east side. Over time, the prices in Rio Rancho will rise at a faster rate than NE, closing the gap.

Anyone familiar with the market care to weigh in?

Hey, I'm just trying to make a few bucks so I can get an early RS

[Porsche-O-Phile]

Why feel bad about it? If you think that's what it's going to do, do it. What's wrong with capitalizing on the market trends? I'd consider that to be smart investing rather than all the bozos now that are buying at the height of a bubble that are going to lose their shirts. Do it.

[stomachmonkey]

Could take a while to happen. Looks like a long term strategy to me.

Any thing else contribute to NE's desireability besides limited land availabilty?

School system, proximity to mass transit, industry contributing to the tax base, general perception of the area itself (prestige factor).

Scott

[Dantilla]

Another important question-

Where do YOU want to live?

[fintstone]

Far NE Albuquerque is currently considered by many to be quite a bit more desireable and prestigious for several reasons:
Houses are generally larger and custom in the far NE. The far NE area is bordered on one side by the mountains (can't be developed) and by undeveloped indian reservation on the other. In the farthest part of the corner..all lots are a "short acre" (@.8 acre) or more. The lots gradually get smaller as you move south or west. The roads are more than sufficient to support the traffic at close to 55 mph without even using the freeway (I25) to commute. There is no industrial or shopping in the area so the traffic is only autos and there is no possible significant growth in traffic/people. There are only a few of the large empty lots in the area and a few very small fill-in tracts available for building.
To reach Rio Rancho from Albuquerque, there are only a couple of fairly small roads/bridges crossing the Rio Grande so the traffic is terrible and adds 30 minutes to an hour to the commute at rush hour.
Historically, property in Rio Rancho has been dirt cheap because it is basically "waste land" and there are hundreds of miles of it available (no natural boundries. Lots of folks lost money on their new homes in RR a few years ago because builders were still selling the same house (new) as they paid for their house several years earlier. Most folks prefered the new homes where they coulsd select colors/materials/ect if the price was close. Plus the builders offer incentives..low interest, upgrades, etc and no wear and tear like the resale homes.
Historically the best rated schools in the state academically and typically in most sports are in the far NE Heights. Probably the newest/best physical campus/school funding is in Rio Rancho due to support from the Intell Plant. Intell is the biggest private industry in the Abq area and best paying...but it is mostly manufacturing and . The NE Heights proivide great access to the really big group of really high salaries is the Sandia National Labs/AF Research Lab/AFOTEC/Kirtland AFB Complex in Abq where there are hundreds of scientists making more thn 100k per year. Average household income is 3 to 4 times that of the typical Albuquerque family.
As the RR area continues to grow, there may well be changes to increase value. Better routes to get there and growth in restrauants, jobs, etc may help. The nicest mall in town is close by and the footprint has attracted some nice restrauants, businesses, etc.
While my neighborhood in the far northeast Heights is not the most expensive (about $350k), the prices have grown quite well compared to other homes in Albuquerque due to demand. There are usually only one or two for sale at any one time and many sell within a day if the price is reasonable.
I personally cannot see why the Las Vegas type price growth cannot spread to Albuquerque. The scenery, weather and landscape are similar...but typically Abq is about 10 degrees cooler in summer and has much less traffic/crowds. There are not a bunch of party-crazy tourists, but the Indian tribes run some very nice casinos. Real estate prices are only half to 2/3rds the prices in Vegas and perfect for retirees. Seems like those CA folks that are crazy to invest in SW property will eventually find their way there.

[motion]

Dantilla - These would be investments. I'll still live here in SoCal.

Fintstone - that is excellent info. Thanks for taking the time to write it all down. So, sounds like the main negative to RR is the commute and small lot sizes? I've also heard that the soil is more expansive on the west side of the river. Any thoughts there? Is that really a deterrant to housing values?

You're right - I think money will start shifting from Vegas/Phoenix to Albuquerque. And, most of it will probably come from Cali. I just want to be ahead of the curve. The market and builder environment there are favorable to investors like me right now.

My folks live in RR and they're telling me that things are starting to heat up. If the Californians discover the ALB market, things are going to get screwy real fast.

[fintstone]

I have also heard that the soil is worse farther west. The lots are not all necessarily smaller..the current builders in the west are just building subdivisions and are not doing much custom work. The price point is critical due to the low wages and no real housing shortage. There is plenty of land available. Prices have started climbing due to the improving economy and low interest rates. It is not that I don't think there is money in RR...there is. I just don't see the price realtionship between RR and the far NE changing. But, both are likely to go up if interest rates remain favorable and the economy stays good. There really is not much room left to speculate on homes in the NE so that may mean that the only real opportunity for new development is in RR (NW) or one of the closer, smaller towns in the south or SW of Abq. I am currently trying to decide if I should sell my home in abq and invest the tax free equity in the vegas market this summer (I am working there now) where I will be living/working..or to rent it out hoping for more appreciation...but have much less to buy with in a more expensive market. I already have three other rentals (all homes that I have lived in and then rented when transferred). The problem is that they are starting to make money (on paper) as they get fully depreciated and the mortgages are paid off. The taxes are killing me.
The vegas/abq similarity is not a difficult connection to make. Drive around in Abq and you see a quieter, cleaner, less congested, lower crime rate duplicate of Vegas. The current limiting factor is the low wages in Abq...much like it was in Vegas. The far NE Heights is certainly sufficient to accomodate the current group of high wage earners. Currently they come in in ones and twos and move to the areas where their similar salaried coworkers are (Far NE). The difference, like in Vegas, will be if speculators come in, or folks who have cash from equity in a more expensive area. I remember when I bought my house several years ago..I was actually tring to buy the house across the street that was listed for $310K. It was probably worth about $280K. The owner had to sell in two weeks and by the last day, I had him talked down to accepting my offer of $248k (if no better offer). On the final day, a guy from CA drove up and said.."Your asking price is $310k???I'll give you $312K. First time I ever heard of bidding more than the listed price. he could have taken it for $248k. The next week, I bought a similar house across the street for $235k. It is a crazy world.