Even though New Mexico’s housing production in recent years has kept pace with modest population growth, the state’s demographic trends and high interest rates nationwide contribute to a dormant housing market that one analyst says leaves low-income households in a “twilight zone.”
Roger Valdez, director of the New Mexico Center for Housing Economics, based that assessment on new data from Housing New Mexico, the state’s mortgage finance authority, which recently updated its comprehensive statewide Housing Strategy report for the first time since 2022.
The report’s authors detailed their findings in a public presentation Tuesday, including how New Mexico’s aging population and other demographic trends will impact the state’s expected housing needs across the income spectrum.
According to the presentation, even though statewide housing production — 33,0000 units between 2020 and 2024 — has kept pace with modest population growth of roughly 12,000 people in that period, the demand for housing is increasing.
That’s because demographic trends show household sizes are shrinking, meaning that fewer people are living together, according to the presentation, and therefore adding to statewide demand for the number of units. The statewide number of households increased nearly twice as fast as the population growth between 2010 and 2023, according to Avilia Buena, director of Root Policy Research, the consulting firm that did the study, during the presentation Tuesday.
Also, people aged 65 and older, a portion of New Mexico’s population projected to increase from roughly 13% of the statewide population now to up to 23% by 2035, are staying in their homes.
“That means that we have a large and growing group of households that is not vacating housing,” Buena said Tuesday. “And that keeps demand elevating and keeps existing homes off the market for younger buyers and renters.”
Valdez, who listened in on the virtual presentation Tuesday, told Source NM high interest rates — currently about 6.5% for a 30-year mortgage — are one reason older people are staying in their homes. Meanwhile, construction costs continue to rise for new housing, reducing the profitability of new construction for low-income New Mexicans.
“They can’t afford to move anywhere else, so there’s a kind of a glut, and then it’s just sort of too expensive to build anything new,” he said. “So we’re living in this weird twilight zone … but at the margins, there’s still people suffering.”
The report found that the state will need 58,000 new housing units to meet projected household growth, with shortages concentrated in Bernalillo, Doña Ana, Sandoval and Santa Fe counties. That figure includes roughly 24,000 apartments and homes for those who make less than the statewide median household income of roughly $64,000.
Valdez said solutions include reducing property taxes on low income, multi-family housing; deregulating zoning requirements across the state; and expanding sales tax reductions for businesses that provide labor or construction to affordable housing developments.
“The bad news is that we’re not growing, prices are still high, rents are still out of reach for many people that are struggling,” he said. “But the good news is we have this is an opportune time for us to really do a lot of innovative things with housing finance.”
