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◀︎return to newslistExperts: Increase in Santa Fe-area median income is double-edged sword

June 6, 2022 – 

When attorney Dev Khalsa was a student at St. John’s College more than 15 years ago, he said the “Santa Fe shuffle” consisted of holding down multiple part-time jobs to make ends meet.

Khalsa now considers it a dance between addresses — a constant hunt for more affordable housing in a city where it’s almost nonexistent.

“I have not had one single traditional lease since 2018, meaning a commitment of a year and all of that,” said Khalsa, a candidate for Magistrate Court judge. “I have had to supplement … I have had to just find what I can find.

“I haven’t been able to find things I can afford with any kind of regularity,” he added. “It has been really wild, to be honest with you.”

The dance comes at complex and uncertain time in Santa Fe’s affordable housing crisis, punctuated by an often innocuous but important statistic.

Santa Fe’s area median income, the national measure used to determine housing affordability, increased by 10 percent this year.

The jump, observers say, is a double-edged sword — a benefit to some homebuyers and renters hoping to access certain government mortgage and rental assistance programs but also an unmistakable indicator of a worsening housing market that already has been stressed for years.

City Affordable Housing Director Alexandra Ladd said according to her research and feedback she has received, actual wages — which area median income often reflects — likely aren’t the driver behind the increase in the statistic’s rise. Instead, she said, it’s likely affected by newcomers whose incomes are significantly higher than those of people already here.

“There is a common agreement that higher income is not reflecting higher well-being,” Ladd said. “It just means there are fewer lower-income people in the city.”

The net effect is most profoundly felt in housing, where in the first quarter of 2022, Santa Fe County’s median home price surpassed $622,000 — an 11 percent jump from the same quarter the previous year, according to statistics from the Santa Fe Association of Realtors.

Sobered by that number, affordable housing advocates see cascading problems lurking within the median income statistic, fretting it could mean the city runs the risk of losing moderate-income residents who simply cannot compete in the home buying market.

“I think overall, it is a sign of something bad,” said Daniel Werwath, executive director of the Santa Fe Housing Trust. “It’s actually sort of a sign of very, very, very unhealthy things happening in our market.”

Area median income?

Every year, the U.S. Department of Housing and Urban Development issues the statistic for every metropolitan jurisdiction in the United States based on census data. The calculation is then used to help set affordable housing prices — generally no more than one-third of a family’s monthly income — and eligibility standards for certain government programs, such as Community Block Development Grants and Section 8 vouchers.

According to the figures released last month, the AMI for a single person in the area is now $56,450; for a family of four, $80,600. That is up from $51,150 for a single person and $73,000 for a four-person household in 2021.

Ladd said the increase could be a boon for renters and homebuyers hoping to access assistance programs, adding the city usually has more issues when federal income gauge decreases and shrinks the number of people who could be eligible for assistance.

Among the programs affected by an increased area median income are properties supported through low-income housing tax credits; a tax incentive to construct or rehab affordable rentals for those who are usually restricted to 60 percent AMI or below. The city’s Affordable Housing Trust Fund also offers a 120 percent median income subsidy program to address home purchasing, repair and other rental assistance.

Nevertheless, Mike Loftin, CEO of nonprofit Homewise, said the growth in Santa Fe’s median income number portends a troubling shift in the community’s foundations.



“Are people bailing and being replaced with people with higher incomes?” he asked.

Werwath said that while wages have increased on average, the new AMI figure likely is driven by transplants arriving during the coronavirus pandemic — the so-called Zoom Boom that allowed people to work remotely while relocating to safer, or cheaper, landing spots. Real estate experts in the city said the superheated rise in the city’s median home price likely is driven from out-of-state buyers where home values are even higher than they are here.

Meanwhile, residents making more modest incomes continue to be priced out of the area, with some heading to more affordable — or available — markets like Rio Rancho and Albuquerque.

“That has been true, unfortunately, for all the increases over the last decade,” Werwath said. “The increases have not really been reflective of wage growth. There is a little bit of wage growth, some wages have gone up, but really what is going on is higher-wage folks are moving in, while the others who can’t afford to live here move out.”

Laura Gallegos, a senior commercial real estate loan coordinator at WaFd bank, said her branch has always worked with a number of people from Texas, Colorado, California and other states looking to build their forever homes in the Santa Fe area. She said she noticed a slight uptick during the pandemic as remote work became more popular.

“I’m not sure if that was due to the influx of people coming from other places,” she said. “But we have just continued to stay busy. I think last year was one of our busiest years.”

Werwath said the increase only highlighted a need to build more housing across a variety of income levels but added there are many factors affecting builders’ ability to produce affordable homes. Among them: supply costs that are 50 to 70 percent higher than normal and stringent zoning requirements.

“I’ve never in 20 years of this work felt so much headwinds to solutions,” Werwath said. “This is like nothing we have seen.”

Werwath said the city is taking some positive steps, including funding growth management studies and a decision to update the city general plan. The city also pledged to fund the Affordable Housing Trust Fund at $3 million in its current fiscal year budget but has yet to determine a recurring source to keep the vital pot of money filled.

Santa Fe also has almost 6,000 units in development, according to data provided by the city’s Land Use Office. The majority of that growth has been on the south side, where more than half of those units are being constructed.

But of those 6,000, just 689 are priced at an “affordable level.”

Ladd noted the city’s higher area median income actually decreases the amount of money developers have to pay to the city’s Affordable Housing Trust Fund, which is used for items such as down payment and rental assistance.

“That is sort of the disadvantage,” Ladd said. “This is how we generate a big chunk of our revenue. Now we can’t afford to help as many people.”

Loftin, whose organization funded a study in January that found 2 out of 5 area workers live outside Santa Fe County, said both the city and county generally have a strong mix of assistance programs, depending on where a homebuyer or renter falls on the economic spectrum. But he said he would like to see a stronger effort to get people to stay.

He said it’s not uncommon for local people to approach Homewise for help in purchasing a home in Albuquerque or Rio Rancho.

“On all points, it is kind of a no-brainer,” he said. “You have to provide housing for your workforce or you are on a downward spiral.”

He said more radical steps need to be taken to address the overall housing problem in the region.

“Santa Fe,” he said, “is leaving normal people behind.”

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