The New Homebuyer in New Mexico: Who’s Buying, Where, and Why

Buying a first home in New Mexico hasn’t been easy in recent years. From 2018 to 2023, rising prices, tight inventory, and sudden economic shifts made the journey more complicated—especially for newcomers to the market. The COVID-19 pandemic only added more twists, altering what people wanted in a home and where they were willing to look. Some buyers chased affordability in smaller towns, while others stretched their budgets to stay close to work or family. Behind every purchase was a careful balancing act—between dreams, debt, and what the market would allow.

New Mexico’s Housing Market Overview

Overall, New Mexico’s housing market became less affordable for first-time buyers from 2018 to 2023. Home prices rose much faster than incomes. In 2018, the median home price in New Mexico was around $200,000, but by 2022 it had jumped to about $306,000 – an increase of 53%. In the same period, the median household income in the state only grew by 22%. By 2023, the median price for a single-family detached home reached roughly $345,000 statewide.

At the same time, the number of homes for sale in New Mexico dropped to historic lows, creating intense competition. In 2018, there were nearly 38,800 active home listings statewide. By 2021, available listings had plunged to around 10,100 as houses were snatched up quickly. This meant first-time buyers often had very few choices and had to act fast. Many homes received multiple offers, and bidding wars became common in 2020–2022. Nationwide data showed 28% of first-time buyers paid over the list price to win a home.

By 2023, conditions started to shift. The number of homes for sale in New Mexico ticked up slightly – about 14,400 listings in 2023, which is more than the rock-bottom inventory of the prior two years. Home sales also slowed: roughly 9,600 homes sold in 2023, down 18% from over 11,500 sales in 2022. This cooldown was partly due to rising interest rates and buyer fatigue after the price run-ups.

Regional Differences Across New Mexico

Urban Markets: Albuquerque and Santa Fe

While the entire state saw rising prices, different regions of New Mexico experienced the housing market in unique ways. Albuquerque, the largest city, generally offered more inventory and somewhat more affordable options. As of 2023, the median sale price in the greater Albuquerque area was in the low-$300,000s. First-time buyers in Albuquerque often purchase older single-family houses in established neighborhoods or starter homes in suburbs like Rio Rancho and Los Lunas.

Santa Fe, on the other hand, is one of the priciest markets in New Mexico. The median home price in Santa Fe was around the mid-$500,000s by 2023, significantly higher than the state median. As a result, first-time buyers in Santa Fe have had to get creative. Many have been “buying small” – opting for townhomes, condos, or other attached homes – because detached houses are often out of reach for a starter budget.

Rural and Tribal Areas

In rural areas of New Mexico, home prices are generally lower, but there are other challenges. Small towns may have homes under $200,000, which is attractive to young buyers. However, these areas often have limited job opportunities and fewer homes on the market.

One notable aspect of rural New Mexico is the high prevalence of manufactured homes. Manufactured housing is a common path to affordable homeownership in many rural counties. Over 30% of the housing stock in 11 New Mexico counties consists of manufactured homes. Many first-time buyers in rural New Mexico choose manufactured homes placed on a piece of land as their first home, since they are less expensive than site-built houses.

New Mexico is also home to several tribal lands. Data on first-time home purchases specifically on tribal trust land is limited, but these areas have unique housing dynamics. Often, homes on tribal land are built through tribal housing programs or are passed down within families. Private real estate sales are less common because the land is held in trust.

What Types of Homes Are First-Time Buyers Purchasing?

The types of properties first-time buyers chose reflect both personal preferences and what they could afford. Throughout New Mexico, the vast majority of first-time buyers aimed for traditional single-family detached houses. Nationally, about 77% of recent home buyers purchase single-family detached homes. In cities like Albuquerque and Las Cruces, many starter houses are around 1,500–1,800 square feet, often with three bedrooms and two bathrooms.

However, not all first-time buyers in New Mexico buy single-family houses. Townhomes and condos made up a noticeable share of first-time purchases, especially in higher-cost urban markets. Statewide, attached homes (townhouses/rowhouses) and condominiums each accounted for roughly 6–7% of homes bought by recent buyers. In Santa Fe, many young or first-time buyers choose condos or townhomes, which usually have smaller footprints but come with lower price tags.

Manufactured homes have been a significant property type for first-time buyers in certain parts of New Mexico. Statewide surveys indicate that about 6% of recent homebuyers purchased a manufactured or mobile home, but in New Mexico, that percentage might be higher due to the state’s rural makeup.

A very small fraction of first-time buyers bought multi-family properties like duplexes or triplexes (around 3% nationally). These buyers might be using a strategy known as “house hacking” – living in one unit and renting out the others to help pay the mortgage.

Home Sizes and Features

The size of homes that first-time buyers purchased tended to be on the smaller side of average – but still offering enough space for future needs. The typical home purchased in recent years was about 1,900 square feet with three bedrooms and two bathrooms. First-time buyers often bought houses a bit smaller than this overall average, since starter homes are usually modest. Many first homes in New Mexico are in the range of 1,200 to 1,600 square feet.

Home age and condition were also factors in what first-timers chose. In many cases, first-time buyers bought homes that were not new and may have needed minor renovations or updates. The average home a first-time buyer purchased was around 29 years old (built in the early 1990s), showing that many were purchasing older stock rather than brand-new builds.

Features that first-time buyers looked for evolved slightly from 2018 to 2023, especially due to the pandemic. By the early 2020s, many buyers valued an extra room or flexible space for a home office. Outdoor space became a premium during COVID-19 lockdowns, so a private backyard or at least a patio was highly desirable. Energy efficiency and low maintenance features (like xeriscaped yards requiring little water) were also pluses.

The Upsizing Trend

Most first-time buyers in New Mexico during 2018–2023 were upsizing in space and upgrading their housing stability when they bought a home. Many young buyers moved out of apartments or their parents’ homes to purchase their first house. Going from a small two-bedroom apartment to owning a three-bedroom house with a yard certainly feels like upsizing.

During the pandemic, some renters realized they wanted more space (for a home office, for children to play, or simply to not share walls with neighbors). Those who could afford to buy did so, often moving from a cramped rental into a larger owner-occupied home.

However, first-time buyers did have to compromise at times. High prices forced some buyers to choose a smaller home than they initially wanted or to buy a townhouse instead of a detached house. In expensive markets like Santa Fe, a couple might have rented a 1,000 sq. ft. apartment and dreamed of a 2,000 sq. ft. house, but ended up buying a 1,200 sq. ft. townhome due to cost.

Another strategy for some first-timers was to buy a house with extra space or units to generate income. For instance, a buyer might “upsize” to a duplex, living in one half and renting the other half out. In New Mexico, properties with a rentable casita (especially in places like Albuquerque’s UNM area or Santa Fe) were highly sought after for this reason.

Price Trends and Affordability Challenges

One of the biggest stories for first-time buyers in New Mexico from 2018 to 2023 was the rapid rise in home prices and the resulting affordability crunch. As noted earlier, New Mexico’s median home prices increased over 50% in just five years. For context, from 2008 to 2018 the increase was much more modest.

For first-time buyers, this meant the goalpost for entry kept moving further away. A house that might have sold for $180,000 in 2018 could easily cost $270,000 or more by 2023. First-time buyers generally don’t have equity from a previous home sale to help them, so they felt the impact of these price increases strongly.

The required down payment and closing costs rose in dollar terms. By 2022–2023, typical down payments for first-time buyers averaged around 6%–8% of the purchase price. Many first-timers had to rely on down payment assistance programs or family help to meet the upfront costs.

Mortgage payments also soared with prices. In 2018, if you bought a $200,000 house with a low interest rate, your monthly payment might have been manageable. By 2023, a $300,000 house at higher interest rates could easily have a monthly payment hundreds of dollars more.

Inventory Shortages and Competition

A critical factor driving the difficulties for first-time buyers was the inventory shortage – the lack of enough homes for sale. From 2018 to 2023, housing supply in New Mexico went from merely tight to severely constrained, then slowly improving toward the end of the period.

Why was inventory so low? Several reasons converged:

• Post-2008 construction slump: After the 2008 housing crash, home construction in New Mexico slowed to a crawl for several years. By 2018 builders had increased activity a bit, but then the pandemic hit.
• Homeowners staying put: Many existing homeowners chose not to sell during this period. In 2022–2023, a new phenomenon appeared: the mortgage rate “lock-in” effect. Homeowners who had refinanced or bought at very low interest rates (2-3%) did not want to move and give up those rates, since a new mortgage would cost them much more at 6-7%.
• High demand: The millennial generation was coming into prime homebuying age by the late 2010s and early 2020s. New Mexico also saw demand from people relocating from higher-cost states, especially during the pandemic when remote work allowed someone to move while keeping their job.

The effect of low inventory on first-time buyers was significant. Homes often sold within days of listing, and bidding wars were common. First-time buyers, who usually rely on mortgage financing and might have smaller down payments, frequently lost out to either all-cash buyers or buyers who could waive contingencies and bid higher.

Only in 2023 did the market begin to balance out a bit. With higher interest rates damping some buyer enthusiasm, homes started to stay on the market slightly longer and buyers regained a bit of negotiating power.

Impact of Interest Rates

Interest rates on home loans play a huge role in homebuying, and from 2018 to 2023 they swung dramatically. In 2018, mortgage interest rates were in the range of roughly 4%–5% for a 30-year fixed loan. Over the next couple of years, rates actually fell even further. By 2019, they dipped into the 3% range, and in 2020–2021, as the Federal Reserve cut rates to support the economy during the COVID-19 pandemic, mortgage rates hit record lows. Many first-time buyers in 2020 or early 2021 secured interest rates as low as ~3% or even below.

However, the situation reversed in 2022. As inflation picked up, the Federal Reserve began raising interest rates. By mid to late 2022, first-time buyers were looking at rates around 5-6%, and in 2023 rates were often between 6% and 7%. The increase was swift: going from ~3% to ~6-7% within a year’s time. A house that might have cost $1,200 a month in principal and interest at the old rate could cost $1,600 or more at the new rates – with no change in price.

As a result, when rates went up, some buyers had to pause their plans or lower their price range. By late 2022, some first-time buyers found they qualified for maybe $50,000 or $100,000 less than they would have at the start of that year, solely due to the rate change.

One interesting outcome of rising rates was that repeat buyers became scarce. People with existing homes and 3% loans were loath to trade up to a new home with a mortgage at double the rate. So they stayed put, which in turn meant first-time buyers made up a greater share of those actually in the market. Data from 2023 showed that nationally about one-third of home buyers were first-timers, up from only about one-quarter in 2021.

Remote Work and COVID-19 Influences

The COVID-19 pandemic had profound effects on housing preferences and opportunities, particularly through the advent of remote work and changing lifestyle priorities.

Starting in 2020, many workers began working from home as offices temporarily closed. This shift had important impacts:

• Geographic flexibility: Some first-time buyers no longer needed to live near a particular office. New Mexico became one destination for remote workers, thanks to its natural beauty, relatively affordable housing, and laid-back lifestyle. Areas like Santa Fe, Taos, or Albuquerque saw an influx of out-of-state remote workers buying homes.
• Desire for home office space: Remote work made having a suitable workspace at home a priority. First-time buyers began explicitly looking for that extra bedroom or a finished basement that could be turned into an office.
• Outdoor and recreational space: COVID-19 also heightened the value of outdoor space and home amenities. In New Mexico, first-time buyers showed increased interest in homes that offered a bit of land or at least outdoor living features.

Buyer Demographics and Profile

The typical first-time homebuyer in New Mexico evolved over this period, but in general, this group became slightly older and higher-income compared to prior years.

Age: The median age of first-time homebuyers hit record highs around 2021–2022. Nationally, this median age was about 33 in the late 2000s, but it climbed to 36 by 2022. For 2023, it ticked down just a bit to 35. In New Mexico, many buyers in their late 30s who perhaps had delayed homeownership finally managed to buy in these years.

Income: The income of first-time buyers rose markedly. The median household income for first-time buyers nationally was around $70,000 in 2019, and it jumped to about $95,000 by 2022. For context, the statewide median household income in New Mexico is about $60,000, so first-time buyers on average earned significantly more than the typical New Mexican household.

Household makeup: First-time buyers are a diverse group in terms of household composition. In 2022, about half (50%) of first-time home buyers were married couples, which is a decrease from decades past (it was 75% in the mid-1980s). Single women have been a growing segment of first-time buyers – they accounted for roughly 19% of first-time buyers in recent years. Single men made up around 10%. Unmarried couples were about 18% of first-time buyers.

Most first-time buyer households in 2018–2023 were small households – either single buyers or couples often without kids yet. About 70% of recent buyers did not have a child under 18 at home.

Education and background: First-time buyers in this era tend to be well-educated. Many have a college degree or at least some college, which correlates with their higher incomes. The mix of professions among first-time buyers ranged from professionals to skilled trades and service workers. New Mexico’s first-time buyers included many military personnel as well, particularly around areas like Alamogordo (Holloman AFB) or Clovis (Cannon AFB).

Comparing 2018–2023 to 2008–2017: What’s Changed?

Comparing the 2018–2023 period to the previous decade highlights just how much the first-time homebuying landscape in New Mexico has shifted.

Home Prices and Affordability: The 2008–2012 years were marked by the housing crisis and Great Recession. Home prices in New Mexico actually fell or stayed flat in many areas during those years. For example, after the 2008 crash, many markets saw price declines of 10-20%. By contrast, 2018–2023, especially 2020–2022, saw rapid price increases.

Interest Rates: In 2008–2017, interest rates were mostly on a downward trend or stayed low. In 2018–2023, rates went from low to historical lows and then shot up dramatically.

Inventory and Market Conditions: The earlier period (especially 2008–2012) had an excess of homes for sale in many markets due to foreclosures. By contrast, 2018–2023, especially 2020–2022, was a severe seller’s market with record low inventory.

Buyer Demographics: The typical first-time buyer in 2008–2017 was generally younger. One clear change is the aging of first-time buyers – many millennials waited longer than their parents did to buy homes. Another shift is the normalization of unmarried buyers.

Conclusion

From 2018 to 2023, first-time homebuyers in New Mexico navigated a dynamic and often difficult housing market. They saw home prices climb to new heights while inventories of homes for sale hit historic lows. The profile of these buyers shifted toward older, higher-income households who had saved diligently.

Compared to the prior decade, the recent first-time buyers had to be more resilient and resourceful in the face of tighter affordability. Yet, despite the challenges, many New Mexicans did succeed in buying their first home during this period – whether by expanding their search to rural areas, making sacrifices like longer commutes, pooling finances with a partner, or using assistance programs.

As we leave 2023 behind, the trends suggest a gradual shift that might favor first-time buyers a bit more: increasing inventory, a possible leveling off of prices, and ongoing efforts to build more affordable housing. The lessons of 2018–2023, however, have made it clear that owning a home in New Mexico now requires more planning and patience than ever before.

References

• Median home prices in NM nearly double in 10 years | Greater Albuquerque Association of REALTORS® Blog
• First-Time Home Buyers Are Vanishing From the Market | Santa Fe Beautiful Homes | Sotheby’s Santa Fe, New Mexico
• Santa Fe Housing Market: House Prices & Trends | Redfin
• Buyers: Results from the Zillow Consumer Housing Trends Report 2023 | Zillow Research
• Quick Real Estate Statistics | National Association of REALTORS®
• NAR Finds Typical Home Buyer’s Annual Household Income Climbed to Record High of $107,000 | National Association of REALTORS®
• First-Time Homeownership Became Less Affordable Across Most of the United States in Recent Years | Kansas City Fed
• Economic, Housing and Mortgage Market Outlook – October 2024 | Freddie Mac
• First-Time Homebuyer Statistics | Self Financial