Grim Scenario for Home Buyers in New Mexico: Recent Report Paints a Disheartening Image
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In the state of New Mexico, housing inequality persists along racial and ethnic lines, with Hispanic residents making up about 48% of the state's population but only around 33% of homeowners. This disparity is just one of the challenges faced by first-time buyers in the state, who are struggling to navigate a steeply priced housing market.
According to Reilly White, a professor of finance at the University of New Mexico, first-time homebuyers, who tend to be younger, are suffering the most. Dan Coleman, director of the New Mexico Association of Realtors, estimates that the number of homes on the market has shrunk by around two-thirds due to affordability issues. This scarcity, combined with investor-driven housing speculation pushing home prices beyond local affordability, is making it increasingly difficult for first-time buyers to secure a home.
Investor and second-home buyer activity in many New Mexico towns has caused home values to spike rapidly, often far beyond historical trends. This phenomenon, known as speculative investor frenzies, makes once-affordable communities unaffordable for first-time buyers. Furthermore, mortgage interest rates remain elevated, significantly increasing monthly payments and deterring both first-time and repeat buyers.
Rising student loan delinquencies have negatively impacted the credit scores of many potential buyers, with an estimated 2.4 million borrowers nationwide disqualified from mortgage eligibility, including in New Mexico. High mortgage rates and these credit constraints further exacerbate the problem.
The gap between stagnant wages and rising home prices reduces affordability. Even with assistance programs, the initial costs like down payments remain substantial hurdles. However, New Mexico offers some assistance programs such as the MFA HOMENow and DownPaymentAdvantage programs, which provide forgivable loans or grants for down payments aimed at low-to-moderate income first-time buyers.
Despite these challenges, the current trend is to build more expensive homes instead of affordable ones for working-class families. Mike Loftin, CEO of Homewise, stated this fact, highlighting the need for policy changes to address the housing affordability issue. Robyn Powell, director of policy and planning at the state's Mortgage Finance Authority, attributes the housing affordability issue to a lack of building enough homes over the past decade.
Black and Native American households are also underrepresented among homeowners in New Mexico. Only 13.5% of renters in New Mexico can afford to buy a home at the median price, according to a new report from the New Mexico Mortgage Finance Authority. The median age of a first-time homebuyer in the U.S. last year was 38, the highest number recorded since the National Association of Realtors began collecting data in 1981.
Homeownership is associated with better health and higher life expectancies, according to research. However, the high costs and challenges faced by first-time buyers in New Mexico may be impacting not only their financial future but also their overall well-being. Reilly White suggests that the real solution for the housing crisis may require bold, coordinated action and policy change.
References: 1. https://www.abqjournal.com/1354732/speculative-investors-pushing-up-home-prices-in-nm.html 2. https://www.nmhfa.org/buying-a-home/downpayment-assistance/ 3. https://www.cnbc.com/2022/03/30/student-loan-delinquencies-hit-record-high-amid-pandemic.html
News about the housing market in New Mexico indicates that first-time buyers are facing numerous challenges due to steep prices, investor-driven housing speculation, and a limited housing supply. This situation, particularly affecting younger homebuyers, has resulted in a rise in mortgage interest rates and student loan delinquencies, further impacting their financial and health outcomes. In the realm of finance and business, policy changes and increased construction of affordable homes are suggested to alleviate the housing affordability crisis and improve the life expectancies of homeowners.
