Private Water Fly Fishing » Santa Fe

Santa Fe Fly Fishing Guide wins trip to compete in the World Fly Fishing Championships for 2011

Dale Heinemann — Fri, 10 Jun 2011 22:41:21 +0000

Congratulations to Norm Maktima (far left in photo), Norm fished his way on to the USA National Fly Fishing Team in May and will compete in Italy later this year. Norm is one of my favorite guides at High Desert Angler here in Santa Fe

Here is one of my photos of Norm guiding one of our Green Berets from Afghanistan

At Tres Lagunas on the Pecos River

Dale Heinemann, Director

dale@privatewaterflyfishing.com

505-920-3464

Wall Street Journal says, “Time to Buy Real Estate”

Dale Heinemann — Sat, 04 Jun 2011 13:30:05 +0000

Whether you believe this article or not, it does pose a number of plausable potential contributions to an improvement in the housing market:

WEEKEND INVESTOR -The Wall Street Journal

JUNE 4, 2011

Why It’s Time To Buy

The Clouds Haven’t Quite Parted, But the Long-Term Case for Home Ownership Is Looking Stronger

By RUTH SIMON and JESSICA SILVER-GREENBERG

Back in June 2006, when the housing market peaked, the prospect of a five-year national housing bust seemed unimaginable to most people. And yet here we are, with the latest Standard & Poor’s Case-Shiller index showing that prices hit new bear-market lows, falling back to 2002 levels nationally and to 1990s levels in some battered regions.

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody’s Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer’s market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

Such conditions might not last long. Moody’s Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn’t likely to get much worse. Meanwhile, demographic indicators such as “household formation”—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

Lending

As rates hover near historic lows, experts expect banks to ease borrowing standards over time.

Psychology

If prices stabilize, it could tip the balance away from fear and pull more buyers back into the market.

Affordability

In several markets, it’s becoming cheaper to own than to rent.

Demographics

The rate of “household formation” is expected to climb in coming years.

Employment

The strength of the housing recovery depends on job growth.

View Full Image

Associated PressDallas

The upshot: “While we might not see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound,” says Anthony Sanders, a real-estate finance professor at George Mason University.

The short-term outlook isn’t encouraging. Job growth remains weak, foreclosure sales are making up more of the market, and economists are predicting that home prices will fall more in the coming months.

But the long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.

So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.

Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn’t battered by foreclosures, you may be close to a bottom already.

“The regular marketplace is hanging tough,” says CoreLogic chief economist Mark Fleming.

Here is a look at five key factors that will govern local markets over the next several years:

Demographics

Household formation fell during the economic downturn as a weak economy led some people to stay in school, double up with roommates or move in with family members. According to Moody’s Analytics, the number of new households renting or owning a home dropped to 578,000 in 2008 from nearly 2 million in 2005, just before the peak of the housing boom.

But household formation increased to nearly 950,000 last year, says Moody’s, and should average 1.2 million over the next decade.

That, combined with increased obsolescence and higher demand for second homes, should begin sopping up excess inventory in much of the country over the next two years, Moody’s says.

“Whatever the excess supply of housing is, it is shrinking pretty fast,” says Thomas Lawler, an independent housing economist.

Some of the uptick in household formation is likely to come from the leading edge of the echo baby boomers, who have been waiting for the economy to recover before striking out on their own, says William Frey, a demographer with the Brookings Institution. That is likely to fuel an increase in demand for both rental apartments and starter homes.

The portion of people moving across the country has fallen to the lowest level since World War II, he adds. That is a sign that many people have put their lives on hold because of the weak economy.

“When things do pick up, there will be this pent-up demand for everything involved with starting a household,” Mr. Frey says.

Of course, when prices in healthier regions begin to rise, many would-be sellers who have sat on the sidelines could begin putting homes on the market, muting the price gains at first, says Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School. Even so, she expects home prices to stabilize and begin to strengthen over the next two or three years.

There also are some powerful demographic cross-currents worth considering. The first baby boomers turned 65 in January, an age when demand for new homes falls and many begin to think about downsizing. “The baby-boom generation pushed prices up as they got older,” says Dowell Myers, a professor of urban planning and demography at the University of Southern California. But in the coming years, “boomers will start flooding the market on the supply side” with larger homes, while fueling new demand for smaller properties with more services and amenities.

Affordability

Rising home prices made renting cheaper than buying in many parts of the country. But that dynamic has begun to change: Housing affordability, as measured by the ratio of median home prices to median household incomes, has fallen below pre-housing bubble levels in just over two-thirds of the country, according to an analysis of more than 380 metro areas by Moody’s Analytics.

Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won’t be the case for long. Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., according to Moody’s Analytics. In other markets, including Dallas, Las Vegas and Sacramento, Cailf., the equation is likely to soon turn in favor of homeownership if current trends persist, the firm says.

In Ann Arbor, Mich., where home prices fell 11.2% between 2007 and 2010, according to Fiserv Case-Shiller, housing affordability has risen well above historical levels, according to Moody’s Analytics.

That is good news for home buyers such as Steven Upton, a 42-year-old photographer, who in June will close on four-bedroom brick house on 10 acres in an upscale community in Ann Arbor. Mr. Upton paid $400,000 for the home, which previously listed for $600,000. “It’s a tremendous deal,” he says.

Before buying a house, it is wise to compare rental prices for similar properties. To be ultraconservative, wait until the monthly outlays, including taxes and insurance, are equal. You also could factor in the tax savings of owning, which would make buying more attractive even if the gross monthly outlay is slightly higher.

Employment

The strength of the housing market depends largely on the economy. Rising incomes and increased employment tend to give more would-be buyers confidence and buying power. For now, job growth remains sluggish: On Friday the Labor Department reported that just 54,000 jobs were created in May, far below expectations.

But signs of how a stronger job market could fuel housing demand are evident in the Dallas metro area, which added 83,100 new jobs in the 12 months ending in April—the largest gain in the nation, according to the Bureau of Labor Statistics. Dallas never had a big housing boom or bust and has benefited from trade with Mexico, a strong telecommunications sector and a central location.

The opportunities for a job with more responsibility drew Duane and Linda Elmer to Dallas from Des Moines, Iowa, where Mr. Elmer was a banker for nine years. The couple has agreed to pay $415,000 for a four-bedroom, four-bath house with a Jacuzzi and pool. Their Des Moines home, purchased nine years ago for $410,000, is on the market for $390,000. “We are willing to take the loss for the opportunity to live in a more diverse community and to take a job with greater breadth of responsibilities,” Mr. Elmer says.

Borrowers like the Elmers who are relocating for job opportunities are a big driver of home sales in nearby Plano, Texas, says Harry Ridge, a real-estate agent. He says such sales accounted for 20% of his business last year.

A similar influx of job seekers is fueling housing demand in the Washington area, where 25,700 new jobs were added in the 12 months since April 2010. Washington was the only one of the 20 cities tracked by Standard & Poor’s and Case-Shiller that saw home prices rise both on a month-to-month and year-over-year basis.

Credit

Mortgage financing remains plentiful for borrowers with good credit scores and solid employment histories. But for borrowers who don’t fit traditional lending standards, getting a loan can still be nearly impossible. In the first quarter, about 10% of banks tightened standards for nontraditional loans, according to the Federal Reserve. Meanwhile, higher down-payment standards are locking some would-be buyers out of the market. Just 35% of renters have the minimum 3.5% down payment needed for an FHA loan on the median-priced home in their market, according to a recent survey by Zelman Associates.

Credit is likely to remain tight for at least the next six months, says Clifford Rossi, a former Citigroup Inc. consumer-lending executive who teaches at the University of Maryland.

But conditions should improve over time, he says: “There’s no question that it will gradually get easier.”

That will be welcome news to borrowers like Greg Silver. The 50-year-old real-estate developer would like to buy a second home, but hasn’t been able to secure a jumbo mortgage because his income consists of capital gains from sales of the properties he develops. Mr. Silver closed three sales in the past 12 months, netting him a total of more than $25 million, but didn’t record any capital gains in 2008 and 2009. Sure, he could use some of that cash to buy a home outright, but he would prefer to mortgage it, get the tax deduction and keep his cash free for business purposes.

“It’s a little devastating,” says Mr. Silver, who is living in Greenwich, Conn.

Psychology

The long-term case for buying over renting remains in force. Yet nowadays, “People are simply scared,” says Aaron Galvin, chief executive of Luxury Living Chicago, which finds rental apartments for wealthy clients.

Mr. Galvin says he has seen a 30% increase in business in the last year, driven by would-be home buyers who can afford to purchase a property but are choosing not to do so.

The portion of Americans who believe homeownership is a safe investment dropped to 66% in the first quarter from 83% in 2006, according to Fannie Mae, the government-controlled mortgage company.

But it isn’t clear whether the fear will result in a prolonged change in attitudes, as during the Great Depression, or have little long-term impact, as was the case for the housing bust that shook California and the Northeast in the late 1980s and early 1990s. Eighty-seven percent of people surveyed by Fannie Mae said they preferred owning to renting, though access to schools, control over one’s environment and other quality-of-life issues now are seen as the key benefits of homeownership, with building wealth and other financial factors viewed as less important. In addition, 67% of renters surveyed by Zelman Associates said they planned to buy a home in the next five years.

Jeffrey Connor may be a bellwether for the future of the housing market. The 40-year-old finance director at a corporate law firm says he thought briefly about buying a house when he moved to Chicago from Washington in October. But he opted instead to rent a luxury two-story apartment in downtown Chicago for $3,559 a month. Mr. Connor says it will take substantial job growth and a sharp drop in foreclosures to convince him to buy.

“The market is clearly soft,” he says, “especially when we consider it good news that the unemployment rate is hovering around 9% instead of 10%.” Mr. Connor says he isn’t worried about missing out on today’s low interest rates and will consider buying once unemployment falls to 6%.

Other buyers are showing less willingness to wait for the absolute perfect time to buy. Doug Yearly, chief executive of luxury builder Toll Brothers Inc., told investors in May that “some of our clients, after waiting so long, are starting to move off the fence and into the market, motivated by attractive pricing, low interest rates and, most important, the desire to take the next step in their lives. The family with elementary-school kids and a puppy when the housing debacle began five years ago now has middle-school kids and the dog weighs 80 pounds.”

Santa Fe, NM One of America’s Great Art Destinations

Dale Heinemann — Wed, 02 Feb 2011 19:15:58 +0000

For a high-desert town of just over a hundred thousand people, Santa Fe has become a major player in the art world.

It’s a well-known fact that Santa Fe has developed a reputation among artists and collectors as a creative mecca. But here’s something you might not be aware of: Santa Fe’s galleries and art dealers have outsold almost every other city in the world (save for New York) over the past couple of decades. The City Different, as it is called, may specialize in landscapes and Western art (and Native American art), but in the past ten years it has become renowned for its contemporary works as well. “Santa Fe is tri-artistic,” says Charlotte Jackson, owner of Charlotte Jackson Fine Art, which recently relocated from its downtown spot to the more contemporary-heavy Railyard district. “It’s Western, it’s native, it’s contemporary.” It’s also a city where one in five residents is involved in the arts industry, where there are as many galleries as there are restaurants (more than two hundred), and where there’s as much culture as there is history (it’s the oldest capital in the United States, having just celebrated its quadricentennial).

Santa Fe boasts five major art markets to appeal to both first-time gallerygoers and the longtime serious collectors–from the International Folk Art Market and SOFA WEST: Santa Fe, both in July to the annual Indian Market in August–and five major museums, including the Georgia O’Keeffe Museum, the Museum of International Folk Art, and SITE Santa Fe. “There’s often a prestige to buying art here,” says Ylise Kessler, director of contemporary art William Siegal Gallery, in the Railyard district, which specializes in pre-Columbian and contemporary art.

Historically the area where it all began is Canyon Road. This two-mile-long, east-west avenue (unpaved until 1964), located only a half-dozen blocks off the city’s central plaza, had been used to carry water and lumber from the nearby Sangre de Cristo Mountains into town for centuries: first by Pueblo tribes, then in the early 1600s by the area’s Spanish settlers, then in the mid-1800s by U.S. Army soldiers. In the 1880s artists began to show up, too, most of whom had ventured west not so much for the exotic subject matter and beautiful scenery as for the seven-thousand-foot-high dry climate–a tonic for people with respiratory ailments.

By the 1920s artists had moved into most of the area’s adobe homes (some of which were built as far back as the 1700s and are still there today), using them as their studios. The area remained that way–quaint, artistic, almost rural–until the early 1980s. That’s when the bohemian atmosphere gave way and galleries replaced artists’ studios, restaurants sprang up in the place of grocery stores, and howling coyotes and Western landscapes became all the rage. “A lot of people purchase art as part of their overall vacation experience–it creates a ‘memory’ they can take home with them,” says Mary Bonney, owner of William and Joseph Gallery, on Canyon Road. “And with landscape art, it goes back to capturing the essence of Santa Fe in a painting they can bring home.”

Joe Anna Arnett, a landscape painter who lives in Santa Fe with her husband, landscape artist James Asher, agrees. “It’s possible to feel like you’re visiting somewhere far, far away when you first see the mountains, the unique setting, the architecture,” she says. “The big skies and the open landscape around Santa Fe may be things that put buyers in the mood to be open to landscape paintings.”

While Canyon Road itself has become almost synonymous with Western art, it’s no longer chockablock with galleries offering only landscape paintings or canvases of cowboys and Indians (even that once-iconic coyote has become nearly extinct). And since the 1995 opening of the nonprofit contemporary-art space SITE Santa Fe (host of six internationally recognized biennials), the town’s contemporary scene has exploded. The Railyard district, where SITE is located, and downtown Santa Fe now feature plenty of spaces with exemplary contemporary art. “There’s always been an interest in the unique and inspirational art of the Southwest,” says Kathrine Erickson, directorof the very contemporary Evoke Gallery, located downtown, which represents artists like Sharon Allicotti, Lynn Boggess, and Matthew Cornell. “But Santa Fe has become a repeat destination for many art collectors because of the diversity, and the continuous evolution and growth of the art scene toward a more international audience.”

In truth, though, in Santa Fe those first works by the painters up on Canyon Road were as shocking and contemporary in their day as anything hanging in today’s self-styled contemporary galleries. And in fact, there’s room for all of it–Western art, landscapes, native art, and contemporary art.

Devon Jackson is the editor in chief of Santa Fean magazine.

New Mexico Economy Expanding according to Fed

Dale Heinemann — Thu, 13 Jan 2011 19:47:55 +0000

Fed’s Beige Book sees continued expansion in New Mexico economy

New Mexico Business Weekly

Date: Thursday, January 13, 2011, 11:12am MST

Manufacturing, Retailing & Restaurants

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The economy in northern New Mexico and six neighboring states “continued to expand in late November and December, despite slower construction activity,” the U.S. Federal Reserve reported Wednesday in its latest “Beige Book” survey of the region’s business executives.

In particular, Fed officials noted “strong consumer spending over the holidays” that “lifted retail sales and expectations for future spending.”

The report covers the Fed’s 10th District, which includes northern New Mexico and some or all of six neighboring states. The nation is divided into 12 Fed districts.

The 10th District is based in Kansas City. Each district released its own Beige Book Wednesday covering a six-week period.

The Beige Book is based on interviews with a sample of business executives representing key industries in each district. The reports are anecdotal and do not contain statistics, but they are widely followed and help the Fed to set national economic policy.

The 10th District report said that the region’s “manufacturing activity improved amid a rise in new orders and stronger durable goods production, and some plant managers planned to increase capital spending and hire more workers.”

It said that residential and commercial construction “remained weak, though commercial real estate sales edged up and vacancy rates dipped slightly.”

The region’s bankers, meanwhile, “reported stable banking conditions with some improvements in loan quality.”

The energy activity “expanded further, and incomes improved for the agricultural sector,” the Beige Book said.

The report said that several of the business leaders it interviewed “expected to increase employment.”

With raw materials prices “continuing to climb, more manufacturers expected to pass through higher input costs to finished goods prices; however, most retailers did not plan to raise selling prices in the coming months,” the report said.

The Fed’s 10th District includes northern New Mexico, Colorado, Kansas, Nebraska, Oklahoma and Wyoming as well as western Missouri.

Nationwide, the Fed said that “economic activity continued to expand moderately from November through December” in almost all Fed districts.

Formally known as the “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” the Beige Book is published eight times a year. The nickname refers to the color of its cover.

Mark Harden of the Denver Business Journal, an affiliated publication, compiled this report.

Come Visit Santa Fe in February for Winter Fiesta

Dale Heinemann — Wed, 12 Jan 2011 22:33:08 +0000

Santa Fe plans to party with all kinds of specials

By Max Harrold, The Gazette January 12, 2011 2:42 PM

Stand features a wide variety of local vegatables at the Farmer’s Market in Santa Fe, New Mexico.

Photograph by: Robert Reid Hepler, McClathy-Tribune

Santa Fe Winter Fiesta

The Santa Fe Convention and Visitors Bureau is offering discounts during the city’s first annual Santa Fe Winter Fiesta, Feb. 18 to 27. Special events and evening parties are planned for each day of the festival, and businesses in the capital of New Mexico are offering savings. A $20 Fiesta Lanyard provides savings at restaurants, hotels and cultural institutions. It also can help you get discounted artwork, lodging, lift tickets (Ski Santa Fe just outside the city has a base elevation of 3,154 metres), meals, purchases at museum shops and free entrance into many of the nightly Fiesta parties. You can get it through ticketssantafe.com.

The Fiesta kicks off Friday, Feb. 18, with an evening-long Live 505 Bar Crawl with no cover charge for lanyard holders and specials at participating restaurants and bars. GPS Snowshoe Scavenger Hunts follow Feb. 19 to 21, a Moonlight Cross-Country Ski trip in the amazing Valles Caldera will be held Feb. 19, and a Guided Native American Cultural Tour to Puye Cliffs is set for Feb. 22. The Fiesta wraps up with the 14th Annual Artfeast, Feb. 25 to 27. The event includes the Edible Art Tour on Feb. 25, Fashion Luncheons, Art of Home Tours, a Gentleman’s Lunch and an Artists’ Champagne Brunch & Auction. Other Winter Fiesta specials including discounted hotel packages are still being developed. Round-trip flights from Montreal to Santa Fe are available for $565 including taxes. For more information, visit www.santafewinterfiesta.com.

For information about visiting Santa Fe and to order a free Santa Fe Visitors Guide, call the Santa Fe Convention and Visitors Bureau at 800-777-2489 or visit www.santafe.org.

New Mexico Water Resources to have new Administrator

Dale Heinemann — Wed, 05 Jan 2011 18:40:30 +0000

Incoming state engineer will face a changing role

Staci Matlock | The New Mexican
Posted: Monday, January 03, 2011
State Engineer John D’Antonio once likened his job of administering New Mexico’s water resources to navigating a field of land mines.

“You want to make enough progress that you keep momentum going forward without going so far that you step on a land mine, like a lawsuit, that stops everything,” D’Antonio said a couple of years ago.

D’Antonio has hit more than one legal land mine during his tenure refereeing over New Mexico’s water, a natural resource critical to the state’s economic and ecological well-being.

Newly inaugurated Gov. Susana Martinez has yet to name a new state engineer.

Martinez’s search committee is chaired by Albuquerque developer and contractor Jack Westman. Search committee members include former environment secretary Peter Maggiore of Los Alamos; Albuquerque lawyer Colin Hunter; Taos County rancher Erminio Martinez; John Jones, chief operating officer for Entranosa Water and Wastewater Association in Albuquerque; and Corrales lawyer Deborah Peacock.

Sen. Peter Wirth, D-Santa Fe, said the primary duty of the state engineer is administering water rights, complying with federal river interstate compacts “and continuing to push forward on adjudications.”

Adjudication is the legal process by which a court declares water rights. New Mexico prioritizes water rights on who used water first, also known as “first in time, first in right.” Less than a third of the water rights in the state have been adjudicated. The most senior water rights, in general, belong to tribes and farmers, while towns and utilities have the most junior rights.

“I do think the state engineer’s job is changing because state is changing,” said Wirth, an advisory member on the Senate Water and Natural Resources Committee for the last seven years. “Our population is growing, and we’re experiencing more extreme climate change, so that makes this job that much tougher because we’re dealing with a finite resource.”

“What a lot of people don’t realize is that municipalities are new players at the table,” Wirth said. “They have junior water rights. So under a system of priority administration, when there’s not enough water, junior water rights get shut off first.”

Some people think D’Antonio has overstepped his legal bounds as state engineer. His office is facing two challenges in the state Supreme Court — one over his attempt to regulate water distribution in dry years, and the other over permits issued for private domestic wells.

D’Antonio once said that without better rules for administering water in the state during drought, there’s little but “chaos.”

Wirth said the state engineer has historically been an active player in New Mexico’s economic development. “What’s challenging is it was often done with water rights that weren’t fully adjudicated,” he said. “It is a balance between economic development and water resources.”

Intel in Rio Rancho, for example, wouldn’t exist without water, and the company tried recently to cut a new deal with the state to meet its obligations for water rights.

Cities such as Albuquerque and Santa Fe cannot grow without water.

They compete with tribes and farmers for senior water rights in the state.

New Mexico has to meet those needs and still deliver water promised to Texas from the Pecos River and Rio Grande under interstate stream compacts.

Paula Garcia, executive director of the New Mexico Acequia Association, which advocates for many of the senior water-rights holders in the state, said it was “imperative that the next state engineer be sympathetic to irrigation in New Mexico.”

“One could say that water policy is socio-economic policy,” Garcia wrote via e-mail. “The role of state engineer is not merely to quantify and allocate water from a purely technical point of view. He is also the chief regulator that determines the extent that water is a marketable commodity.”

Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com.

2010 Santa Fe Economic Review

Dale Heinemann — Tue, 04 Jan 2011 20:43:20 +0000

Cafe Paris was one of the victims of the economy in 2010; others included A La Mesa and the Railyard Restaurant. – Luis Sánchez Saturno/The New Mexican

Charter Bank of Santa Fe was purchased by Texas-based Beal Financial Corp. The bank ran into loan problems. Charter was no the only Santa Fe bank to find trouble in 2010. – Clyde Mueller/The New Mexican

The new Luxx Hotel on Marcy Street was one of two hotels that opened in Santa Fe in 2010. The city’s hotel/motel occupancy rates improved slightly in the year. – Luis Sánchez Saturno/The New Mexican

Santa Fe’s small manufacturing sector got a boost in May when Caterpillar Emissions Solutions, a subsidiary of Caterpillar Corp., bought Clean Air Systems, a manufacturer of emission-control devices started in 1993 by Michael and Louise Roach. – Katharine Egli/The New Mexican

Bob Quick | The New Mexican
Posted: Tuesday, January 04, 2011 – 1/4/11

Business news made headlines in 2010, mainly because of the weak economy and persistent unemployment, which was the biggest business story of them all, especially if you lost your job and tried looking for another.

In Santa Fe, the October Labor Market Review indicated that the local unemployment rate was 7 percent, compared with 6.9 percent a year ago. The highest unemployment rate in Santa Fe in 2010 was 7.4 percent in March.

Through October, there was a loss of 100 jobs in Santa Fe in 2010.

For that same time period, three industries gained jobs. They were education and health services, government, and miscellaneous other services.

Losses of 100 jobs each were reported by professional and business services, wholesale trade and construction.

“The Santa Fe job market has been weak for over two years but is improving,” according to the state Labor Market Review.

But Larry Waldman, an economist formerly with The University of New Mexico’s Bureau of Business and Economic Research, said recovery will take years.

Retail

Vacancies popped up downtown and in shopping centers around town. Closures included Simply Santa Fe on the Plaza, which was owned by Armand Ortega. Negotiations are said to be under way for a new tenant.

Also closing were several restaurants, including A La Mesa, Railyard Restaurant and Cafe Paris. One downtown businessman said he’d heard more restaurants will close in this first quarter of 2011.

El Nido also shut its doors but promises to reopen soon. The Pink Adobe shuttered its doors after filing for bankruptcy but then, happily, was taken over by the Hoback family, which had started the Pink and vowed to keep it open for good.

Also, Whole Hog Cafe is moving from Cerrillos Road to Guadalupe Street.

In downtown Santa Fe, the Nancy Brown Custom Jeweler shop closed, and other jewelry shops experienced problems with the steadily rising price of gold. A higher price of gold for jewelers, of course, means a higher price for buyers.

Among the new galleries on Canyon Road is Vivo Contemporary.

Southwest Cash and Carry, a wholesale grocers supply store, also closed, but could reopen in Santa Fe in a different location.

Stores opening in 2010, included a second Sunflower Farmers Market, several cupcake bakers and two frozen yogurt businesses. And don’t forget the gelato shop at DeVargas Center.

Also opening was Monte’s of Santa Fe, a cigar, pipe and tobacco store near downtown.

Sienna’s Furniture on Cerrillos Road celebrated its first anniversary in 2010.

In the works for local retail are the new Super Walmart and a renovation of Santa Fe Place that could result in another name change for the shopping center formerly known as Villa Linda Mall.

Given the strength of the recession and the need to economize, it was no surprise that some new thrift stores opened in 2010. Among them were Back to the Rack and The Good Stuff.

Banking

Several Santa Fe banks ran into problems in 2010 and found themselves either being taken over by the feds or following orders from Washington, D.C.

Among them was Charter Bank of Santa Fe, which in January was purchased by Texas-based Beal Financial Corp. for an undisclosed amount after the bank ran into problems with its commercial and residential loans.

The new Charter Bank assumed all deposits of the former Charter Bank.

Beal’s $10 billion in assets were apparently what allowed it to take over Charter when no New Mexico bank could.

A few months later, federal regulators determined that New Mexico’s oldest bank, First National Bank of Santa Fe, had to reduce its commercial real-estate lending as part of an agreement with regulators.

First National Bank President and CEO Gregory Ellena said at the time of the feds’ intervention in the bank that the bank was profitable and well capitalized.

At about the same time, Los Alamos National Bank, the region’s largest, signed a similar agreement.

The Los Alamos National Bank plan called for the bank to come up with a new staffing plan for loans and to name a new senior lending officer.

First State Bancorporation, the parent company of First Community Bank, reported difficulties with non-performing real-estate loans and entered into talks with some investors. But the bank remained independent at year’s end.

Smith’s

Smith’s and its employees union started negotiating a new contract in May, but it wasn’t until October that they made a deal.

The agreement covers 2,000 New Mexican workers in 26 grocery stores and 11 fuel centers. The four-year contract was unanimously approved by workers.

A union representative said he was happy about reaching an agreement “in these hard economic times. Our employees will enjoy the best benefits around over the next four years.”

The president of Smith’s said the deal provided workers “one of the best total compensation packages in our industry.”

The union, United Food and Commercial Workers Local 1564, also reached an agreement with Albertsons workers.

Real estate

Santa Fe real-estate sales were mixed in 2010, with the number of sales rising for the most part as prices dropped.

In the city in the second quarter, the median sales price dropped from $307,500 to $288,000, according to the Santa Fe Association of Realtors. Prices in the county also fell, from $450,000 to $411,250.

In the third quarter, sales in the city of Santa Fe increased a little as the median sales price rose about 11 percent to $318,000.

The price in the county, meanwhile, fell to $389,000, according to the Realtors group.

Foreclosure issues played a part in local real-estate sales, but no satisfactory information about Santa Fe foreclosures was available.

Alan Ball, a local title company executive, said in his real-estate blog that Santa Fe real estate at the end of 2010 was “only slightly better off” than it was in the summer of 2009 — the depth of the downturn in the market.

American Eagle

The airline disappointed local travelers when on Aug. 23 it reduced the number of flights between Santa Fe and Dallas/Fort Worth to two round trips per day.

The discontinued flights were 2760, which left Santa Fe at 8:15 a.m., and 2761, which left DFW at 7:40 p.m.

Jim Montman, Santa Fe airport manager, protested the move, saying that the early flight to DFW “was our most popular flight” because it allowed for timely connections in Dallas to the East Coast.

The late flight from Dallas eliminated the ability for travelers to get to Santa Fe in the evening, he added.

American Eagle said it plans to resume the dropped flights April 5.

American Eagle still has two daily round-trip flights to and from Santa Fe and Dallas and another flight to and from Santa Fe and Los Angeles.

Minimum wage

Santa Fe’s minimum wage — $9.85 an hour — looks like it will stay the same this year as it did last year.

A city employee familiar with the wage issue said, “It doesn’t look like it’s going anywhere.” The final decision will come in mid-January.

The city’s mandated minimum pay is linked to a government measure of price inflation. If inflation remains low, as it is now, the wage floor is likely to remain unchanged.

Even though the wage has been in effect since June 24, 2004, some business owners still don’t like it.

“I had to go from $15 to $17 per car wash,” said Squeaky CleanCar Wash owner Jay Ritter. “It also cut down on my volume.”

Manufacturing

Santa Fe’s small manufacturing sector — with only about 800 workers — made the front page in May when the giant Caterpillar Emissions Solutions, a subsidiary of Caterpillar Corp., bought Clean Air Systems, a manufacturer of emission-control devices.

Clean Air was started in 1993 by Michael and Louise Roach and employed about 30 people at the time it was purchased.

Caterpillar said it planned to expand and hire more people because the company expected an increase in business.

Another local business that changed hands in 2010 was Santa Fe Southern Railway, the short-line railroad that runs between Santa Fe and Lamy.

It was bought out by the Australian company STI-GLOBAL. STI provides solutions to rail-safety issues in Europe, Australia and the U.S.

Purchase prices were not available for either transaction.

Tourism

Santa Fe welcomed two new hotels, Hyatt Place on one side of town and Luxx Boutique Hotel on the other.

The city’s hotel/motel occupancy rates were slightly better in 2010 than in 2009.

Another hotel, the Santa Claran, opened on Santa Clara Pueblo land near Española. The property has
124 rooms and suites.

Contact Bob Quick at 986-3011 or bobquick@sfnewmexican.com.

Mid October Brown Trout Fishing in Northern New Mexico

Dale Heinemann — Thu, 14 Oct 2010 23:29:02 +0000

New Economic Survey for City of Santa Fe (We’re doing better than most places in the country!)

Dale Heinemann — Tue, 21 Sep 2010 22:45:49 +0000

Here is an interesting current analysis of the economy of Santa Fe, New Mexico. This is the summary report by Fitch Rating Service for a new issue of Municipal Bonds being issued by the City of Santa Fe:

“Santa Fe serves as the county seat and state capital and is located in north central New Mexico. The local economy is anchored by the large state government presence; other important sectors include tourism and recreation, retail trade, healthcare, and some industry. In addition, the recent completion of the commuter rail link between Santa Fe and Albuquerque enhances employment and tourism opportunities for the region. Historically, Santa Fe unemployment rates have been below those of both the state and nation. However, the city has not been immune to the current economic downturn, as evidenced by rising unemployment rates; as of July 2010, the city’s unemployment rate stood at 6.7%, still well below the state (8.9%) and nation (9.7%). Population growth continues and wealth indices for the city are above the state. Property wealth is also evident in the city’s high market value per capita ratio, which is nearly $150,000, despite the large amount of tax-exempt values. After years of healthy annual gains in taxable assessed valuation (TAV), growth slowed in fiscal 2010 to 1.6%, with preliminary information for fiscal 2011 indicating another modest increase. Independent housing information points to below average mortgage delinquencies and foreclosures, and property tax collections continue to be solid.

Typical of municipalities in New Mexico, the city’s general fund is heavily dependent on state and local GRTs for general fund support. In fiscal 2009, combined GRTs accounted for approximately 80% of revenues. Property taxes, on the hand, represented less than 4% of operating support. GRT collections were below budget in fiscal 2009, coming in at $52.5 million, or 9.6% lower than audited fiscal 2008 collections. In an effort to counter declining GRTs and other revenues in fiscal 2009, the city instituted various cost cutting measures. Nevertheless, general fund reserves were reduced by nearly $6 million in fiscal 2009. Despite the drawdown, general fund reserves remain favorable, with a total balance of approximately $21 million, or a sizable 26.9% of expenditures and transfers out. With the exception of a modest amount reserved for inventory, the majority of fund balance is designated for general fund purposes, including a state-mandated one month reserve.

In fiscal 2010, the city imposed expenditure reductions, including the implementation of furlough days as GRT collections continued to underperform. Despite an estimated 6.6% decline in GRTs from fiscal 2009 totals, preliminary general fun financial results for fiscal 2010 indicate that the city will likely do better than the $2.7 million drawdown budgeted. The fiscal 2011 budget is balanced (a $60,000 operating surplus is budgeted) and does not include any furloughs, layoffs, or cost of living increases. General fund GRTs are budgeted for a 4.8% decline from the 2010 budgeted amount, although officials report that GRTs in three of the last four months have exceeded prior year collections during the same time period, indicating some stabilization. The city maintains some revenue raising flexibility with the availability of an additional one-quarter percent on the municipal GRT rate as well as substantial property tax margin. Reportedly, the city maintains the second lowest property tax rate in the state, behind Albuquerque. However, given the current economic climate, raising the GRT or property tax rate may prove to be politically challenging. The continuance of solid reserves remains integral to maintaining credit quality.

The city is an infrequent issuer of GO bonds; prior to the current authorization, the city last issued GO bonds nearly three decades ago. Principal amortization on the GO bonds is average. The majority of the city’s outstanding bonds and New Mexico Finance Authority loans are ultimately secured by general and dedicated GRTs, which elevates tax supported debt ratios. While no additional GO bond elections are currently planned, the city is considering replacing some future GRT issuances with GO bonds, pending voter support (given recent GRT collection trends).”

Real Estate Premium Near Record to U.S. Bonds Signals Time to Buy Property

Dale Heinemann — Wed, 01 Sep 2010 14:21:37 +0000

By Hui-yong Yu - Aug 31, 2010 10:01 PM MT

U.S. commercial real estate yields are near the highest level relative to Treasury bonds on record, a signal to some investors it’s time to buy property.

Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, based on an index calculated by the National Council of Real Estate Investment Fiduciaries. That was 429 basis points, or 4.29 percentage points, higher than the yield on 10-year government bonds as of June 30, according to data compiled by Bloomberg. It’s about 475 basis points higher than Treasury yields as of yesterday.

That spread is near the record 539 basis points in the first quarter of 2009, when the U.S. was mired in the worst of the financial crisis and property prices sank. Risk-averse investors are seeking the highest-quality office towers, hotels and apartments as the gap widens, according to Nori Gerardo Lietz, partner and chief strategist for private real estate at Partners Group AG in San Francisco.

“The data indicate that real estate is poised for a rebound,” said Gerardo Lietz, who advises pension funds on property investments.

Some buyers already are acquiring buildings at lower cap rates, which move inversely to price. In June, a group of South Korean pension fund investors bought the 33-story Wells Fargo Building in San Francisco for $333 million from Principal Financial Group Inc. in one of the largest transactions in the second quarter, according to Real Capital Analytics Inc., a property research firm. The office tower sold at a cap rate of about 7 percent, said Goodwin Gaw, the developer who helped broker on the deal.

New York Rates

In Manhattan, RXR Realty LLC bought a stake in 340 Madison Ave., a 22-story office building, at a cap rate of 6 percent, according to New York-based Real Capital. Cap rates are calculated by dividing net operating income by purchase price, so the lower the rate, the higher the value of the property, and vice versa.

The NCREIF index measures 6,066 U.S. properties with a market value of $234.5 billion. The spread over Treasury yields was calculated using transaction cap rates, which are based on actual sales — 48 in the second quarter — and are usually more reliable than appraised values, according to Chicago-based NCREIF. The organization’s measure, which it began publishing in 1982, represents current yield before any price appreciation.

Comparing Yields

Investors compare property yields with Treasuries to determine how much potential profit real estate offers relative to an investment that’s considered low-risk. The spread shrank to less than 80 basis points, the narrowest in 16 years, when commercial real estate prices peaked in 2007. Property values have dropped more than 40 percent since the October 2007 top of the market, according to Moody’s Investors Service.

The gap’s widening follows a plunge in bond yields after the global financial crisis spurred a flight to safety and the Federal Reserve slashed interest rates to a record low. Treasury bonds yesterday completed the biggest monthly rally since the end of 2008 amid signs economic growth is faltering, with the benchmark 10-year note yielding 2.47 percent.

“Property is attractively priced versus the fixed-income market,” said Ritson Ferguson, chief investment officer of ING Clarion Real Estate Securities in Radnor, Pennsylvania, which manages about $12 billion.

The wide spread carries a warning signal to some investors because the economy remains weak, hurting commercial rents and occupancy.

Being ‘Picky’

“It’s questionable how much growth you’re going to get,” said James S. Corl, managing director for distressed real estate investments at Siguler Guff & Co., a New York-based private- equity firm. “Yes, there is value in real estate but you’ve got to be very picky. If you pay up for existing leases, it’s very hard to manage your way out of that situation.”

For much of the past two decades, institutional real estate was valued at about a 9 percent cap rate, according to Jeffrey D. Fisher, a consultant to NCREIF and a real estate professor at Indiana University in Bloomington, Indiana. Cap rates on some commercial deals fell to less than 4 percent during the peak.

The rate declined in the second quarter as transactions began to increase, he said.

“What I’m seeing is a two-tiered market right now,” Fisher said. “For properties that have high occupancy, that’s where you really have seen the price appreciation and cap rates falling.” For buildings with low occupancy rates, “there is very little interest,” he said.

Sales Rebound

Commercial property sales in the Americas jumped 83 percent in the first half from a year earlier to $39.7 billion, Real Capital data show. The April-through-June total of $22.1 billion was the highest since 2008’s third quarter, when Lehman Brothers Holdings Inc. filed for bankruptcy protection and American International Group Inc. was bailed out by the U.S. government.

The first-half deals in the U.S. still trailed the average of the previous six years as owners kept properties off the market, according to Real Capital.

Corporate bond yields are a better comparison than Treasuries and also indicate that properties are undervalued, said Michael Knott, managing director at Green Street Advisors Inc., a Newport Beach, California-based company that specializes in analyzing real estate investment trusts. Bonds rated Baa by Moody’s are perceived as investments with moderate risk, similar to commercial real estate, said Knott.

The spread between NCREIF real estate cap rates and Baa- rated corporate bonds is more than 200 basis points, Knott said. The average during the past 25 years is about 140 basis points.

“Underlying real estate looks cheap to us relative to where moderate-risk corporate bond yields are priced,” Knott said in a telephone interview. The exception is publicly traded REITs, which trade at a premium to asset values, he said.

“Smart managers today are being very selective because they realize a lot more property has to clear the market,” said Corl of Siguler Guff. “The volume of deals is definitely going to go up.”

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net