| Albuquerque, New Mexico
Albuquerque’s three-county metropolitan area appeals to a growing
population of entrepreneurs and retirees. It is the largest metropolitan
area in New Mexico with a current estimated population of 730,250. The
Albuquerque area added 123,000 residents between 1990 and 2000, an annual
average growth rate of 1.9 percent. Population growth was particularly
strong in the first half of the 1990s and peaked at an increase of 3
percent in 1994. More recent annual gains have dropped to the 1- to
2-percent range, a decline largely attributable to employment losses.
Albuquerque’s overall employment growth remained positive during
the 12 months ending in September 2002 but the addition of 1,400 jobs
represented only a modest 0.4-percent gain. Several diverse factors
shaped Albuquerque’s economy in 2002. The completion of the Intel
and "Big I" interstate construction projects at the beginning
of the year resulted in a loss of 3,000 to 4,000 construction jobs.
However, continued gains in call center and casino employment offset
many of the construction job losses.
Government-related employment accounts for nearly 20 percent of the
nonagricultural jobs in the Albuquerque area, which has helped stabilize
the local economy. Kirkland Air Force Base and Sandia National Laboratories,
along with the University of New Mexico, are the major government-related
employers in the area. The economy has also gotten a boost from the
expansions at a number of Indian-owned casinos including large convention
centers and hotels with resort amenities, which have stimulated growth
in tourism.
During the mid- and late 1990s, housing demand supported production
of an average of 4,800 single-family homes per year; annual totals did
not stray significantly from this average. In contrast multifamily production
peaked at nearly 2,000 units in 1995 but plummeted to slightly more
than 100 units by 2000. Multifamily starts picked up in 2001 and 2002,
but the pace of construction in this sector remains well below that
of the mid-1990s.
Home sales prices vary considerably among Albuquerque neighborhoods.
Median sales prices range from less than $100,000 in the southwest metropolitan
area to more than $500,000 in the Far Northeast Heights area. This large,
attractive residential area in the foothills of the Sandia Mountains
is one of Albuquerque’s most expensive neighborhoods. South of
the Albuquerque International Sunport and the military base, the proposed
Mesa Del Sol master-planned community will offer affordable housing
to several thousand families. West Mesa, near the large suburban area
of Rio Rancho, is the most rapidly growing area of the city due to the
variety of recently built homes available at affordable prices for entry-level
homebuyers. More expensive horse ranches and large historic estates
are found in the bosque, an area bordered by the Rio Grande River.
Single-family sales reached a record high in 2001 when 8,000 homes
were sold compared with 6,700 in 2000. The average sales price also
continued to rise. In 2000 the average sales price of a single-family
home was $130,000. By April 2002 the average sales price had risen to
more than $162,000. At any given time, approximately 4,500 to 5,000
homes are listed for sale in the Albuquerque area. Attached patio homes/townhomes
and condominiums comprise approximately 10 percent of all listings and
sales. The average sales price of an existing condominium remained near
$100,000 in 2001 and 2002. Apartment-to-condominium conversions can
be found for less than $50,000. Low interest rates, first-time homebuyer
programs, and a wide variety of entry-level and affordable homeownership
opportunities are supporting the strong demand for sales housing. Through
September 2002 permits were issued for more than 4,475 new single-family
units. A significant number of renter households moving to homeownership
has dampened demand for rentals, and the market responded by cutting
back on new projects.
Even with a slumping economy, high-end rental properties have been
readily absorbed, but lower end apartments are struggling. Some high-end
projects offer two-bedroom units for more than $1,300 a month. The average
rent on a two-bedroom unit rose to just over $700 at the end of third
quarter 2002. The Albuquerque rental market emerged from a 5-year slump
in 2001. A surge in rental production during the period from 1994 to
1997 pushed the vacancy rate above 8 percent in 1996 and into double
digits by 1998. The subsequent major cutback in rental production in
the late 1990s facilitated gradual improvement in the rental market,
returning the occupancy rate to 94.3 percent at the end of September
2002. This overall average masks considerable variation in occupancy
depending on the age of the property. Occupancy rates in newer units
are generally more than 95 percent, but older properties are having
problems maintaining occupancy rates in the mid- to high 80-percent
range. The lower occupancy rate in older properties is primarily due
to competition from newer affordable tax-credit properties. Five multifamily
projects with a total of 1,085 units are under construction, and an
additional 1,116 units are planned. This level of activity will test
the housing market unless job growth picks up dramatically in the next
12 months.
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