BY STEPHANIE NAKHLEH
for the Los Alamos Reporter
Note: This is the second in a series of articles about the housing crunch in Los Alamos. For the first, see: ‘It’s Housing Driven’: LANL, Hiring and Local Housing
Real-estate agents are “optimistic by nature,” says Ryan Maupin, but when you talk to them about housing in Los Alamos, a distinctly guarded note creeps in.
“We’re in a huge national housing shortage, people talk about the housing market crashing but we’re still 5 million units short of what we need in the entire country,” said Maupin, associate broker at RE/MAX First. We met via Zoom in mid-January to talk about the housing situation in Los Alamos.
“We have this huge imbalance; we don’t have enough housing and people can’t afford the housing we do have.” In Los Alamos, it’s even worse, he added. “We used to say that the $500,000 houses were the expensive ones in town. That used to be the top 5 percent of sales. Now it’s $860,000.”
In fact, half a million dollars is the price of the average home in Los Alamos, he said, and that number is steadily rising. It will rise until the average employee at Los Alamos National Laboratory will no longer be able to afford it, he predicted; and, as he demonstrated with pages of data-filled charts (click here to get an automatic download of Maupin’s presentation), that “average” number is likely to top out at $750,000—though over many years, not in the near-term. “I do think we’ll get to over $600k in the coming years,” he said. If mortgage rates drop, housing prices may rise even further than they are now as consumers qualify for more expensive homes.
To support his prediction of a high-price average point, Maupin pointed to the small number of homes languishing on the market in Los Alamos. “Only 10 homes are on the market right now in Los Alamos, a third of a month’s supply,” he said, referring to the numbers in mid-January. “Out of those 10, three are in Mirador [the new subdivision in White Rock, north of NM 4]. Those are all in the $800k range, and have been on market for 87 days; so, for months. They aren’t selling, they’re just sitting there.”
High Prices, Thin Profit Margins
Even on LANL salaries, there is only so much house a person can afford. Yet if developers cut the sales price to meet what people can pay, said Maupin, they likely would take a loss. “Even at these prices, they are squeezing out every little bit of cost savings they can. People like to point to corporations, to businesspeople, as bad guys. But at this point, the profitability even at these prices—I don’t know what their profit is, but it seems to me their margins aren’t nearly as high as the public might think.”
Cities all over the nation face a similar crisis. However, a number of unique factors are behind our particular housing shortage.
“Housing is a challenge in all of northern New Mexico,” said Jyl DeHaven, qualifying broker for Exit Realty in Los Alamos. “There are a couple of reasons for this: who owns the land, construction costs in a low-populated state, water availability for the region, perception of this region from outside the state, affordable-housing capability, and the ‘catch-up’ realities around housing needs.”
While it seems to the untrained eye that available land is everywhere, most of the land in northern New Mexico is owned by either the local, state, or federal government, or the region’s tribal reservations. That land is generally not developable, DeHaven said, which drives up the cost of what little land is left for housing.
Narrowing in on Los Alamos, an additional stressor comes from Los Alamos National Laboratory’s growth spurt (covered in the first article in this series). “With low inventory and record-breaking Lab budgets—meaning an extra thousand people coming in over projections—the demand is going to continue to far outstrip the supply,” said Maupin.
The usual solution, when demand outstrips supply, is to increase the supply: Los Alamos needs to build more houses. But bad news continues when we look at the options for new construction, said Maupin. “The way the numbers are right now it’s really hard to make new housing work.” Material and labor costs have soared since Covid, meaning, “It’s going to cost you $400 a square foot to build, or you can buy existing housing stock for, let’s say, $260 a square foot,” he said.
In other words, even with supply so restricted that existing housing stock is historically pricey, new housing is even pricier. Add high mortgage rates to the equation, and “all the people who want to change their housing are feeling pretty stuck. Everyone’s feeling pretty stuck,” said Maupin.
Some Good News
It’s not all bad news, said DeHaven. In fact, “The good news list is far longer than the bad news list,” starting with the new housing developments already underway—far more than the town has seen in at least a decade. New single-family-home developments include the Mirador subdivision, Arkansas Place at the site of the old Black Hole, and the Arbolada development next to Broadview on North Mesa. Additionally, several multi-family developments have recently been completed or are expected to be completed soon: The senior and low-income apartments on DP Road and the Hill apartments near Los Alamos Medical Center.
DeHaven also sees good news in the form of more development on the horizon. Developers, she said, are becoming more interested in Los Alamos, not less. “I’ve brought easily a dozen developers and real estate brokers in from around the state and out of state, and they’re stunned. They’re like, why didn’t I know about this place?”
The attractions for developers are self-evident, she added. “Where else can you live with virtually no crime, no homelessness, great schools, 20 minutes from work, the employer is vibrant and almost inflation proof and stabilized?” she asked. “LANL is not the car industry, we’re not going to wake up one day and see 150,000 unemployed people.”
Maupin is not so sure. “I don’t foresee a future in which we have hundreds of new homes,” he said. “Most of the developments under discussion are on the order of 60 to 100 homes each.” However, he did inject a ray of hope: “I do think it is likely that more multi-family housing options will be built at the site of the old Hilltop House and Meri-Mac Shopping Center,” he said.
The Developer Perspective
I called Christine McDonald, a real-estate agent with Santa Fe Properties, to ask her to weigh in from a Santa Fe perspective, since whatever happens at LANL affects the entire region. To my surprise, McDonald turns out to be a developer as well—in fact, the developer behind the Hill apartments. She was able to address some of the developer speculation from the inside.
“The Hill is 149 units, it’s rentals, and it will come online for occupancy in September,” she said. “The first buildings will be done in April this year.” Working in Los Alamos has been quite a challenge, she added. “This piece of land has taken years to get here. A lot of the land in Los Alamos has contamination, so you have to go through the process of removing the contaminated soil. Also, most of the land up there is owned by the Lab or by the school system, so there’s no property for developers to easily build on. It’s a huge, complex process up there.”
Furthermore, the Hill apartments is a US Housing and Urban Development project, which adds a number of bureaucratic layers to the picture, she said. (I plan to talk to McDonald more in a later piece about HUD and other affordable-housing processes in the region.)
Los Alamos may have its challenges, said McDonald, but the county government is not one of them. “They are trying everything they can to help facilitate additional housing. They are a great partner to work with as a developer. It’s just that there’s no land.”
At least in regard to land, Santa Fe is a bit better, she added, with more wiggle-room—especially on the south side. “We’re also developing a [multi-family] project on South Meadows and 599. Probably 70 percent of our tenants work up at the Lab, because it’s right on 599 and off you go. It’s not a five-minute commute but if you’ve lived anywhere else in the country, you don’t get anywhere in five minutes. When I lived in Minneapolis, I commuted an hour to my job and I was still in Minneapolis.”
Santa Fe is building a lot, “Especially on the south side,” acknowledged Jessica Hoffer, a Los Alamos Realtor who also works through Exit Realty. I sat together with her and DeHaven at the end of January in the Exit offices downtown. “Now, from what I’m running into, [LANL] people want to be on the north side of Santa Fe. In fact, I’ve been more in the Santa Fe market than ever because of the lack of inventory in Los Alamos.”
“The Whole World Is Relying on Us to Succeed”
Both Hoffer and DeHaven see Los Alamos at an inflection point that is bigger than most people realize, with more at stake than just housing. “LANL is a good neighbor,” said DeHaven. “We have to hold on to these people. The money they spend, the energy they bring, the education
they bring. They’re doing an important job. It’s important to support this. Failure is not an option up here. It would be catastrophic. The whole world is relying on us to succeed.”
“Our whole office is like this,” agreed Hoffer. “For us it’s not just about the statistics and how much houses are going for. This is long term, this is critical. We’re all trying to do our part to help fix this.”
While waiting for developers to solve the bulk of the problem, there are things Los Alamos residents can do individually to help mitigate the housing crisis, they said. “Don’t go buy pieces of property and sit on them hoping to make more money,” said DeHaven. “Nobody is going to argue you won’t make money. But the needs are so strong in this community. We all need to row in same direction. We have tons of vacant property.”
“We also have these empty homes that are held in trust, all over the place,” added Hoffer.
“People are waiting to get more money—or they’ve forgotten they own it,” said DeHaven. “The easiest thing is a letter from the county. They have the tax rolls, they’ve got the addresses. Ask them, ‘Is there an opportunity? Do you have an interest? What are you looking to do? We’re here.’ It would be an informational moment. I can bet a there are handful of properties where people would go, ‘Oh my god that was my dad’s house, I completely forgot about that,’ because it was paid off for decades. Or people thought, ‘We always thought we’d move back to Los Alamos when we retired.’ And they just never did.”
“It Would Take Sacrifice”
Moving vacant homes and abandoned properties back into the market is one obvious step, they agreed, as is renting out spare bedrooms in individual homes, or building casitas in the backyard so that interns, post-docs, teachers, firefighters, and waitstaff have an affordable place to live. But Los Alamos County must step in to help, because this process is complicated and can be confusing.
“What would help is getting clarity in what you can and can’t do in terms of renting out part of your home, or a second home, or a casita,” said Hoffer. “Because here we are saying we don’t have affordable housing, but now an opportunity opens up. Now a price range opens up to someone who couldn’t have lived here prior.”
“What if the county put on their website what you can and cannot do in terms of adding a revenue stream of income property?” suggested DeHaven. She said pointing people to the development code isn’t enough. “People don’t want to have to read a 140-page document. The county should pull out what are hot priorities for people. We need and want the county to be a resource, not a roadblock, if owners are looking to do that.”
Maupin is hesitant. “I think there would be pushback from neighbors in Los Alamos if that became a common occurrence,” he said, when discussing adding density to existing neighborhoods though casitas and other incremental rental opportunities. “I’ve seen residents in Pajarito Acres get upset when their neighbors rent out a guest house. If the practice starts occurring on much smaller properties, we are likely to see conflicts emerge.”
Hoffer and DeHaven are confident the people of the town will work together. “Jyl and I were talking about what it would take to get the housing where we need it: it would take sacrifice,” said Hoffer. “People in town would have to sacrifice. We saw people getting frustrated with the roads being closed, but we also want the roads to be fixed, so we deal with it. It’s the same thing. It’s got to be a community-type feel, this is for the long term.” Sacrifice, Hoffer clarified, “means having to go higher and denser, making better use of land that we have.”
Going Up
“Higher and denser” shifts the worry-arrow in a new direction, from the evolution of residential neighborhoods to the changes coming to downtown Los Alamos—changes that allow at least the option of infill, of new buildings for retail and multi-family housing. “I hear a lot of conversations around fear, ‘they’re going to build a 20-story building somewhere,’ that sort of thing,” said DeHaven. “LACDC [Los Alamos Commerce and Development Corporation, a nonprofit corporation that includes the Chamber of Commerce and Los Alamos Main Street] could help that by coming in with a ‘state of the county’ report monthly. They could say, ‘Yeah, we’ve heard [these rumors], we’re not going to do zoning changes to allow 12-story buildings, that will never happen, but yes we have to push them to seven stories. And guess what, that seventh story is the magic sauce right now.’ They could help by communicating.”
As have many cities in the face of housing crises, Los Alamos has recently made some planning and zoning changes that could alter the math for some developers, DeHaven said. “With the passing of the master plans, the Chapter 16 code rewrite, and White Rock downtown master plan, which have been finalized, developers now have tools on how to grow. The community has spoken.”
The changes include allowing taller buildings in the “Downtown Los Alamos” zone, which runs roughly from Oppenheimer Drive on the west to Smith’s on the east. Any extra height helps, DeHaven said. “A lot of these projects aren’t financially profitable until that top floor. One floor. I can think of three projects right now where that extra floor is the only reason this project got going. I can’t say which ones because they aren’t ready for prime time. But the extra floor is what got the developer to sit back down at the table and say, ‘Okay I can figure this out. Now the numbers make sense.’” Many people don’t understand how consequential such arcane-seeming rules can be, she added. “Same with the density footprint, the setbacks: every foot you force [a developer] back affects their return on investment.”
“If developers can build ‘up,’ this would help increase the amount of housing units, given the limited land availability,” agreed Maupin. “Live-work spaces are quite popular in other markets, and I would welcome developments here.” “Live-work spaces” are buildings that offer both office and residential units, see here. “The key will be the rental rates, both on the commercial and residential side, to make the projects viable.” Maupin is not as bullish as DeHaven and Hoffer on the prospects of zoning changes making a dramatic dent in the Los Alamos housing situation. “I am not that optimistic that these projects will work at the current salary base of the Lab and the current construction costs,” he cautioned.
“It Puts People in a Fear Place”
All three Los Alamos real-estate agents acknowledge that many residents understandably have mixed feelings about LANL’s growth, and about the change to the town that inevitably comes with that growth. DeHaven and Hoffer in particular worry that anxiety about change may cause some people in town to go into a batten-down-the-hatches mode.
“If everyone holds onto their property to increase the value and fights against density and growth, that impacts LANL’s growth as well,” DeHaven pointed out. “Consequences could unfold. If LANL can’t meet its growth requirements, they will find alternative locations to do so, in my opinion. That decision would impact property values. If no one is moving in, property values decline. We are so far behind in housing—over 2,000 units, and landlocked—that all of these decisions have an impact.”
“We do have a population that is very hesitant to change, relatively speaking,” said Hoffer, who grew up in Los Alamos. “But I think there can be changes in density that [are less disruptive]. Density doesn’t mean skyscrapers going up all over Los Alamos. It means opening up the land that we do have. Making an opportunity for people who need to rent, who work in restaurants, those kinds of things. Being raised here, I understand the value of this small, safe, amazing community. I understand the fear of losing that sense, but I don’t think it has to be so extreme one way or the other.”
“Change is hard, it puts people in a fear place,” said DeHaven. “We all get that. We’re in a very volatile situation. Lots of new people are trying to come into this town. We have no land, no support labor, and we need it done 5 years ago. There is not going to be much fun and happiness about this for a period of time. It’s hard to do this.”
“This Community Comes Together”
It helps to focus on the positive, DeHaven added. “This is a town that most towns wish they could be. … Our goal is to find ways to leverage those assets so as to overcome the restrictions for maximum growth. We can do this. Housing has to happen. More people brings commerce, which adds the ability to attract those restaurants/entertainment/shopping that helps make a town strong.”
If new LANL hires are able to find housing in Los Alamos, the population may hit a density point where other development follows. “[There’s] a trigger point for most national vendors—restaurants, retail stores, whatever. If they can’t see 25,000 people in your city, you can’t get on their list,” she said.
“The very thing people complain about in this town is the lack of restaurants, things to do, shopping,” said Hoffer. “But in order to do that, we’ve got to start making some of these changes that people are so hesitant to make.”
Land limitations and other restraints require creative solutions, DeHaven said. “Bringing balance back to the supply and demand curve of housing, commercial, and retail buildings will help stabilize rents, and that does require more construction, more density. However, it’s like Jess said: this community comes together when needed and this moment in time of rapid growth is one of those times. We need to find ways to all row in the same direction. If I didn’t believe that the opportunities far outweigh the challenges, I wouldn’t be working so hard to bring growth up the hill. It takes a village.”
For his part, Maupin is optimistic about changing interest rates loosening up the market. “We just had some more good news that inflation continues to lessen, so the Fed will have less pressure to keep aggressively hiking the rates,” he said. “I think mortgage interest rates will reflect that. If we see it move, the housing market is going to be even crazier than it was over the last couple years. People who want to make a change in housing, all of that is going to break free.” He smiled. “It’s going to go wild.”
I want to hear from readers: what’s your housing story? Are you a renter? Are you a landlord? Did you recently buy a home? Are you a small-business owner struggling to find staff due to housing shortages? Are you someone looking to upgrade or downsize and if so, what factors are playing in? Do you have an “affordable housing” story—are you a renter who seeks that, are you an advocate working on that? What other angles should this series explore on the housing question? Reach out to me at sylvan.nak@gmail.com