Monday, December 20, 2004

Rio Rancho drives housing boom

By Nancy Salem

Tribune Reporter, The Albuquerque Tribune

For builders, Rio Rancho is where it's at.

The booming West Side city continues to leave the rest of the metro area in the dust in new home construction.

"Rio Rancho housing starts are ramping up," Jim Folkman, executive vice president of the Home Builders Association of Central New Mexico, said Friday. "It's a reflection of a trend we've seen developing the past year, where more and more homes are being directed and built in Rio Rancho. I think it will continue and accelerate over the next two to five years."

While the whole metro area is on pace for a fourth record year in new home construction, Rio Rancho's gains have been the most striking.

Through the third quarter of the year, the metro area had 5,779 housing starts, 7.2 percent ahead of the same nine months of 2003. Rio Rancho's starts were up 35.2 percent for the period, from 935 to 1,264.

And in October, the latest month for which records are available, Rio Rancho had 169 starts, up from 90 in October 2003 and 103 in September of this year. The city of Albuquerque fell from 457 starts in October 2003 to 417 this October and 419 in September.

Folkman said builders are turning to Rio Rancho because it's more cost-effective to build there.

"It takes longer to get through the development process in Albuquerque," he said. "And many production builders are fearful of the apparent no-growth sentiment in Albuquerque."

The Home Builders' third-quarter figures for the metro area, reported in its Metropolitan Housing Digest, show mixed results compared with last year in new home construction.

For the third quarter - July, August and September - the city of Albuquerque fell from 1,361 starts to 1,277, down 6.2 percent from the same period last year. Unincorporated Bernalillo County was up 10.5 percent, from 86 to 95. Rio Rancho was up 8.8 percent, from 353 to 384. Los Lunas was down 26.1 percent, from 23 to 17. And unincorporated Valencia County went from 47 to 58, up 23.4 percent. The metro area as a whole was down 0.4 percent, from 1,870 to 1,863 in the third quarter.

Through the first nine months of the year, unincorporated Valencia County had 134 starts, up 25.2 percent from 107 in the same period last year. Los Lunas was up 1.7 percent, from 58 to 59. The city of Albuquerque was down 0.8 percent, from 3,932 to 3,901. And unincorporated Bernalillo County dropped from 360 to 308, 14.4 percent.

The total metro area had 657 permits in October, up from 576 in September and 593 in October of last year.

"It seems October and November are shaping up to be good months," Folkman said. "It suggests we're on pace for another record year. We could end up with more than 7,000 starts, for the first time ever."

The dynamics haven't changed in the past few years.

"What we're seeing in the marketplace today and this year is a continuation of low interest rates and more homes being provided in the affordable range," Folkman said. "It's kind of interesting. We continue to be in the 12th year of a seven-year cycle."

He said housing ups and downs tend to run in seven-year cycles.

Folkman said more than 70 percent of new housing starts are centered in Rio Rancho and Albuquerque's Northwest and Southwest mesas.

The third-quarter figures show Northwest Albuquerque had 1,905 starts in the first nine months of the year, a 33 percent market share; Southwest Albuquerque had 1,106, a 19 percent share; and Rio Rancho had 1,264, a 22 percent share.

Northeast Albuquerque had an 11.5 percent share at 663; Southeast Albuquerque a 3.9 percent share at 227; the East Mountains a 1.7 percent share at 100; the remainder of Bernalillo County a 3.6 percent share at 208; Los Lunas a 1 percent share at 59; and unincorporated Valencia County a 2.3 percent share at 134.

Folkman expects the trend toward rising interest rates, set in motion earlier this year by the Federal Reserve, to slow the pace of new construction.

"One thing is for sure, though," he said. "Regardless of the number of starts, we'll see more home-building in Los Lunas and Rio Rancho and proportionately fewer in the city of Albuquerque."

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