A booming oil and gas industry in Carlsbad and throughout southeastern New Mexico has sent home prices soaring and homes selling quickly amid a continuing influx of workers moving to the city.
This year alone, 442 homes have sold in Carlsbad as of Nov. 28, according to data provided by the New Mexico Realtors Association at an average price of $268,854.
The average price of homes in the area could grow in the final months of the year, as there were 127 active listings on the same date that averaged $306,432, records show.
Valen Martinez, president of the association’s Carlsbad chapter, also a real estate agent with local agency Means Real Estate, said prices haven’t dropped since she started working in Carlsbad in 2016.
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“There have been years where it’s been consistent, but I’ve never seen it go down,” she said of the average cost of a home in Carlsbad. “Carlsbad’s market is still in high demand for homes. We still need houses.”
Martinez said the lack of availability has been driven by a growth in the city’s population in recent years as fossil fuel production has grown in the region to lead the nation in crude oil.
Carlsbad is located on the western side of the Permian Basin, which shares New Mexico with West Texas, in the Delaware Subbasin.
It is one of the busiest parts of the Permian, the US’s most active oil field, which is forecast to produce about 5.5 million barrels of oil in December, according to the US Energy Information Administration (EIA) – nearly half of the country’s total output.
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New Mexico is the nation’s second largest producer of oil after Texas, and most of that production is centered in the southeast corner around small towns like Carlsbad and Hobbs.
That can mean homes sell quickly, Martinez said, often staying on the market for a few weeks at most.
“We’re pretty busy because of our oil and gas and what goes in and out of Carlsbad,” she said. “I think that’s pretty typical of any oil and gas town. Hobbs is similar.”
Still, the higher prices brought by Carlsbad’s seller’s market may drive some prospective homeowners north to Artesia or Roswell, Martinez said, where the expense may be more manageable.
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But she said she’s seen people looking for homes in increasing numbers as the COVID-19 pandemic subsided this year.
“I see more people wanting to get into homes,” Martinez said. “With COVID, everyone had a lot of time to think. A man’s goal is to buy a house. I think it will start to make a real difference.”
And to sell buyers on Carlsbad, Martinez said she compares today’s Cavern City to the one she grew up in years before it grew into what she called an “emerging city.”
Eddy County, of which Carlsbad is the county seat, saw the most growth of all of New Mexico’s 33 counties in the 2020 census, up 15.8 percent in population since the previous census in 2010.
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Real estate analysts say it’s safe to assume that “coffin” home buying is here to stay.
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Carlsbad itself grew by about 23 percent, from 26,251 residents in 2010 to 32,238 people in 2020, according to the Census.
It’s not just oilfield workers.
Martinez said she has sold homes to workers in numerous industries as public service needs such as first responders and teachers have grown with the city.
“I was born and raised here. Now that we’ve grown so much, I think it’s a real up-and-coming city,” Martinez said. “It could become a Midland-Odessa. I see a lot of everything. I try to market to as many groups as possible.”
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Aside from the availability of homes, she said higher interest rates this year are also creating an obstacle to home buying.
Rates for a 30-year mortgage were at about 7 percent in November, up 4 percentage points from a year ago, records show, reducing buyers’ purchasing power.
That trend likely won’t reverse within the next six months, Martinez said, and could even get worse.
“I have a forecast that it might go up for the next six months,” she said. “Hopefully it will start to go down after that.”
Interest rates are a sticking point for realtors nationwide, says Damon Maddox, president of the New Mexico Association of Realtors, and owner of Maddox and Company Realtors in Albuquerque.
“What’s driving the market to slow down is rising interest rates. Inflation just hurts everybody,” Maddox said.
Costs also increased nationwide, he said, to an average expense of about $318,000 as of October, compared with $285,000 for the same month last year.
“People are interested in buying houses. It’s just harder for local New Mexicans to come up with the added cost,” Maddox said. “Things are still moving, but they’re just slowing down a little bit. Prices are higher, and there is less inventory. As inventory increases, prices will decrease.”
Adrian Hedden can be reached at 575-628-5516, firstname.lastname@example.org or @AdrianHedden on Twitter.