Santa Fe Real Estate 2025: Luxury Boom, New Builds, and an Affordability Crunch

Home Prices Still Climbing (Slowly): Santa Fe’s median single-family home price in mid-2025 is around $717,000, up about 4% year-over-year sfar.com sfar.com. Condo/townhome prices rose ~7% to a $492,000 median sfar.com. Price growth has cooled from double-digit surges in 2021–22, but values remain near record highs.
Inventory Rebounding: The number of homes for sale jumped roughly 30% versus last year sfar.com. Santa Fe has about 5 months of housing supply (up from ~4 months a year ago) – signaling a market moving toward balance sfar.com. Properties also linger longer, with 50–65 days on market on average (up 24–57% year-on-year) sfar.com. Buyers have more choice and bargaining power than during the pandemic frenzy.
Luxury & Second-Home Demand Soars: Santa Fe ranks among the top U.S. luxury markets, with vacation/second homes making up 9% of property sales – triple the national share sfgate.com. High-end listings average around $2.7 million sfgate.com. Wealthy out-of-state buyers (drawn by the climate, art scene, and tax-friendly NM laws) continue to fuel demand for multimillion-dollar estates.
Affordability Crunch for Locals: Santa Fe’s median household income ($78K ksfr.org) falls far short of what’s needed to buy a median home ($110K income required ksfr.org). In working-class Southside neighborhoods, a home now requires ~$117K income versus ~$65K actual median income santaferealestate.com. High prices + 7% mortgage rates have worsened the affordability gap, pushing many workers out of the buyer market ksfr.org santaferealestate.com.
Building Boom on the South Side: Hundreds of new housing units are underway. Large apartment complexes (240–330 units each) are being built near the new Presbyterian Medical Center and south of Santa Fe Place Mall constructionreporter.com constructionreporter.com. Master-planned communities like Las Soleras and Rancho Viejo are adding single-family homes, townhomes, senior housing, and mixed-use projects. A major Midtown District redevelopment is in early phases, aiming to deliver affordable housing, studios, and commercial space on a 64-acre former campus santafenm.gov santafenm.gov.
Economy & Policy Tailwinds: Santa Fe’s job market is strong (unemployment ~4%). Growth at Los Alamos National Lab and a tourism rebound have brought new residents and housing demand. In response, officials enacted stricter short-term rental rules to curb investor-owned Airbnbs eating into supply sfreporter.com sfreporter.com. The City and State are investing in affordable housing (e.g. Cresta Ranch’s 240 subsidized apartments broke ground in 2025 ncsha.org ncsha.org) and exploring zoning changes to encourage more homes under $500K santaferealestate.com.

Residential Market Trends: Single-Family, Condo & Multi-Family

Santa Fe’s residential real estate market in 2025 shows a mix of cooling trends and resilient demand across housing types:

Single-Family Homes

Single-family homes make up the bulk of Santa Fe’s sales and have seen moderate price appreciation through 2025. As of Q2 2025, the median single-family sale price (city + county combined) was about $717,000, a 4% annual increase sfar.com. Within the City of Santa Fe alone, the median house costs roughly $612,500 (mid-2025), up slightly (~+0.7% YoY) sfar.com. By contrast, Santa Fe County (areas outside city limits) saw a higher median around $849,000 – about +4.8% YoY sfar.com. This reflects the pricey luxury homes and acreage properties in the county pushing the average up.

Sales volumes are essentially flat compared to last year – about 366 single-family closings in Q2 2025 versus 363 a year prior sfar.com. Notably, city sales have dipped (~–11% YoY in Q2) while county sales jumped nearly +19% sfar.com sfar.com. This suggests some buyers are looking outside the city proper, potentially for more inventory or larger lots. Overall demand remains solid but not frenzied – Santa Fe is seeing normalizing sales activity after the red-hot pandemic market.

Homes are taking longer to sell on average. In mid-2025 the typical days on market for single-family listings is around 50–60 days, up from ~40–45 days last year sfar.com. One reason is the rise in supply: new listings increased 14% year-over-year sfar.com, giving buyers more choices. Active inventory of single-family homes is up about 29% vs. 2024 sfar.com. Consequently, months of supply has grown to roughly 5.1 months (from 4.2 before) – edging closer to a balanced market (6 months) sfar.com. Example: In family-friendly Southside neighborhoods (ZIP 87507), the number of homes for sale surged 80% in a year, leading to increased competition and more price cuts santaferealestate.com.

Despite more inventory, prices are holding firm or rising modestly in most segments. Many sellers have been slow to drop prices significantly, and well-maintained or well-priced homes still move quickly (often receiving offers within a few weeks). However, buyers are increasingly price-sensitive. Around 20% of listings in both affordable and high-end areas had to reduce asking prices in 2025 santaferealestate.com. Sellers can no longer count on bidding wars for any price – realistic pricing and home prep are key in this new phase of the market.

Condos & Townhomes

Santa Fe’s condo and townhome sector also experienced softening sales but rising prices in 2025. Closed sales of condos/townhouses fell about –13% year-over-year in Q2 (99 units vs. 114 the prior year) sfar.com. Fewer condo buyers may be a result of higher interest rates and fewer investors, or simply a tight supply of desirable units.

Paradoxically, the median condo/townhome price climbed to roughly $492,000, up +7.4% from the previous year sfar.com. This indicates that despite fewer transactions, the units that are selling tend to be higher-end or new luxury condos pushing up the median. Within the city, median condo prices are a bit lower (~$480K) while county areas (e.g. some outskirts or resort condos) saw medians around $755K sfar.com.

Condo inventory has expanded as well – active listings up about 30% and months’ supply at 4.4 months (vs ~3.7 before) sfar.com. Buyers of townhomes and condos are taking their time: the average DOM for condos jumped to 66 days in Q2 (from 42 days, +57% YoY) sfar.com. With more units on the market, especially new-built condos, sellers face more competition. We’re seeing some price adjustments in this segment too. Even so, demand remains for well-located condos (for downsizing retirees or as second homes) – these still fetch multiple offers if priced right.

Multi-Family Homes

Santa Fe has a relatively small market for 2–4 unit multi-family properties (duplexes, triplexes) and these saw minimal activity in 2025. In fact, SFAR data showed zero duplex/triplex sales in Q2 2025 (down from just 2 a year prior) sfar.com. Small multi-units rarely hit the MLS here – many are older adobe duplexes or investor sales handled off-market. When they do appear, cap rates have been compressed by high prices, so investor interest has cooled slightly with higher financing costs.

On the other hand, new apartment construction is booming (see the Construction Pipeline section). Large multi-family complexes are going up, though these are typically held by developers/investors rather than sold individually. The growth of these rental projects reflects strong demand for rentals and the city’s push to address the housing shortage, rather than a for-sale multi-unit market. Overall, Santa Fe’s residential scene in 2025 is characterized by stabilizing trends – inventory and days on market rising toward normal levels, price growth leveling off – yet still a robust market by historical standards.

Commercial Property Developments & Market Dynamics

Santa Fe’s commercial real estate sector in 2025 is active, driven by new developments on the south side and steady demand in the downtown core. While not a big-box or high-rise market, Santa Fe is seeing targeted growth in key commercial areas:

Healthcare & Offices: The Presbyterian Santa Fe Medical Center (opened a few years ago in Las Soleras) has spurred surrounding development. Medical office buildings and supporting retail have sprung up nearby sedberrynm.com. A multi-use project on a 57-acre site on Beckner Road will add not only housing but also commercial space to serve the growing Southside population yahoo.com. Office space demand in Santa Fe is mixed – government offices (state agencies, labs) and local businesses provide a stable tenant base, but remote work trends have left some traditional office suites looking for occupants. Overall office vacancy in Santa Fe remains relatively low (<10%) compared to national averages, due to limited supply and many small users. New flex office and coworking spaces are also emerging to cater to remote workers relocating from bigger cities.
Retail & Hospitality: Santa Fe’s retail market benefits from the city’s role as a tourist and arts hub. Downtown Santa Fe (the Plaza area and Canyon Road arts district) continues to enjoy high foot traffic and low retail vacancy thanks to tourism. Boutique shops, galleries, and restaurants report strong sales as travel rebounded in 2023–2025. On the south side, retail construction is following rooftops – for example, the Entrada Contenta project along Cerrillos Road is developing a 21-acre commercial center to serve new housing in that corridor jenkinsgavin.com. The Santa Fe Place Mall on the southwest side has been undergoing redevelopment planning jenkinsgavin.com – potentially adding entertainment or residential uses to revitalize the aging mall property. Santa Fe’s hospitality sector (hotels, resorts) is also expanding moderately: a few new boutique hotels opened or are planned, capitalizing on Santa Fe’s recent accolade as a #1 travel destination in the U.S. santaferealestate.com.
Industrial & Warehouse: Santa Fe has a small industrial base, but extremely low vacancy (often <2% for industrial space reanm.com) indicates pent-up demand. Most industrial properties are light manufacturing, art studios, or warehouse/distribution for local supply. A notable project is the expansion of Bicycle Technologies International (BTI) – a 142,500 sqft office/warehouse facility in the Community College District jenkinsgavin.com, reflecting growth in e-commerce and local production. Given limited zoned land, industrial rents have been rising (~3% annually pre-2023 reanm.com). The city is exploring its own real estate assets and business parks to support small manufacturers and film/media industries (especially with the Midtown innovation district on the horizon).

Overall, Santa Fe’s commercial real estate is healthy and evolving. New mixed-use developments are blending commercial with residential (for example, ground-floor retail with apartments above in projects like Las Soleras and the upcoming Midtown District). The city’s emphasis on maintaining its historic aesthetic and human scale means most commercial growth is mid-rise and spread out, not high-density towers. But demand for space – whether for a new restaurant catering to tourists or a tech office serving Los Alamos Lab contractors – remains solid. Commercial rents and property values have been creeping up, though at a more modest pace than residential. Investors remain interested, particularly in niche areas like self-storage, galleries, and hospitality, which align with Santa Fe’s demographics and visitor economy.

Luxury Real Estate & Second-Home Demand

Santa Fe punches above its weight as a luxury real estate market. In 2025, it’s one of the hottest high-end markets in the Southwest, attracting affluent buyers from across the country. Recent rankings even placed Santa Fe #2 nationally in the Wall Street Journal/Realtor.com luxury market index (only behind St. Louis) casasdecollins.com – a somewhat surprising fact that underscores how sought-after Santa Fe has become for luxury homes.

Who are these buyers? Many are second-home seekers or relocating retirees/professionals drawn by Santa Fe’s unique mix of culture, climate, and relative value. Wealthy individuals from California, Texas, Florida, and the East Coast see Santa Fe as a bargain compared to Aspen or coastal California. The median luxury listing price (top 10% of the market) in Santa Fe is about $2.7 million, which is modest next to Aspen or Palm Beach but buys a substantial estate here sfgate.com. Santa Fe’s high-end homes often feature famed Pueblo Revival architecture, mountain views, and high-end finishes that appeal to upscale buyers.

Vacation homes are a big component: about 9.2% of all home purchases in Santa Fe are vacation/second homes, far above the ~3% U.S. average sfgate.com. This indicates an elevated share of part-time residents and investors in luxury properties. Gated communities like Las Campanas (87506) are brimming with second homes – large custom houses, often $1–3M+, owned by out-of-state families as vacation retreats. Santa Fe’s allure (300+ days of sun, vibrant arts and culinary scene, outdoor recreation) keeps this second-home market vibrant. There are also tax advantages: New Mexico’s low property taxes and no state tax on Social Security benefits make Santa Fe especially attractive for wealthy retirees looking to establish residency sfgate.com.

Market trends at the top: The luxury segment remained active in 2025, but not overheated. High-end buyers have plenty of cash – many deals are all-cash or with big down payments, so interest rates are less of a factor. One report noted that for Santa Fe homes priced above $3 million, median prices actually dipped ~8% recently, yet sales volume (number of transactions) jumped over 20% casasdecollins.com. In other words, more luxury homes are selling, but ultra-high-end sellers have become a bit more flexible on price. This could be a slight post-boom correction, or simply more inventory coming on (some luxury owners cashing out). Even so, properties in prime areas (e.g. Historic Eastside, Tesuque, and view properties in the hills) continue to command premium prices and often sell faster than mid-market homes santaferealestate.com. In 87501 (downtown/Eastside), for instance, days on market decreased ~7% YoY as affluent buyers snapped up quality listings santaferealestate.com.

Notable luxury trends: Santa Fe also sees demand for unique luxury segments – ranch and equestrian estates in the County, large historic adobe compounds near downtown, and new contemporary homes in luxury subdivisions. There is an increasing presence of luxury home builders doing speculative builds in the $1M+ range, confident that buyers will emerge. The ultra-luxury market (say $5M and up) is small but has had some headline sales (a few celebrity-owned estates traded hands recently). For luxury sellers, Santa Fe remains a seller’s market, though with less frenzy: about one in five high-end listings underwent a price reduction in 2025, yet well-priced estates still find buyers willing to pay top dollar santaferealestate.com santaferealestate.com.

In summary, the upper end of Santa Fe’s market is booming relative to most of the country. The city’s global reputation as an arts and wellness haven, plus the “bang for buck” luxury value here, keeps second-home and luxury demand resilient. This does, however, put pressure on local housing (since many high-end homes sit vacant part of the year) and contributes to Santa Fe’s affordability challenges noted below.

Investment Properties & Rental Market Trends

With high home prices, the Santa Fe rental market has grown increasingly important – both for investors seeking income properties and residents needing rentals. Key trends in 2025:

Rental Market Tightness

Santa Fe’s rental housing has been historically tight, and while new apartments are coming online, vacancy rates remain low. The city’s rental vacancy is around 5% overall point2homes.com – a slight easing from the ultra-tight <3% vacancies seen pre-2020, but still below the national average. In the affordable rental segment (workforce housing), vacancy is often near 0% as soon as units become available santafenm.gov. This sustained demand has driven rents sharply upward over the past few years.

Rents: The median apartment rent in Santa Fe is about $1,850 as of mid-2025 point2homes.com point2homes.com. Rents jumped roughly 40–50% from 2019 to 2024, mirroring home price increases. For example, the median rent was ~$1,200 in 2018; by late 2023 it hit ~$1,800 sourcenm.com. In 2025 rent growth has leveled off somewhat – asking rents are up only ~1–2% year-over-year (with a slight seasonal dip in early 2024) santafebeautifulhomes.com. Essentially, rents have plateaued at a high level: a typical 2-bedroom apartment is ~$1,800–$2,000/month, and single-family homes rent for $2,500+ in many cases. This puts a heavy burden on local renters (recall the median renter household income is only ~$49K point2homes.com, making a $1,800 rent about 44% of income).

High rents and low vacancies have spurred investor interest in Santa Fe. However, the investor profile here is often different from large metros: it’s a mix of small local landlords and out-of-town buyers purchasing short-term rentals or a few rental homes. The traditional buy-to-rent strategy yields modest cap rates given the high prices (e.g. a $600K home might rent for $3K/month, a ~4-5% gross yield). Still, with appreciation potential and Santa Fe’s stable rental demand, many see long-term value.

Short-Term Rentals (STRs) and Regulations

One popular investment strategy has been vacation rentals (Airbnb/VRBO), given Santa Fe’s tourist appeal. A well-located casita or condo can fetch strong nightly rates during peak seasons. However, the proliferation of STRs raised housing supply concerns, prompting regulatory action. The City of Santa Fe caps non-owner-occupied STR permits at 1,000 units citywide in residential zones avalara.com bnbcalc.com. As of 2025, that cap has essentially been reached, limiting new entrants. Additionally, Santa Fe County approved new rules (effective Feb 2024) that limit STRs to 3–7% of housing in various unincorporated neighborhoods sfreporter.com sfreporter.com. The county had even placed a moratorium on new permits while drafting these rules sfreporter.com. These policies aim to strike a balance: allowing some vacation rentals (an important part of the tourism economy) while preventing whole neighborhoods from turning into hotels. For investors, it means the STR route in Santa Fe now has higher barriers to entry (permit requirements, neighbor caps, etc.). Some existing STR owners are also feeling pressure from community pushback and enforcement of occupancy and parking rules hometeamluxuryrentals.com.

Long-Term Rental Investments

For those focusing on long-term rentals, Santa Fe offers steady if unspectacular returns. The upside is low vacancy and tenants who often stay long-term (Santa Fe has many government and professional workers who rent). The challenge is acquiring property at a reasonable basis. Some investors have turned to outlying areas – e.g. Rio Arriba County or outer Santa Fe County – where purchase prices are lower, or to small multifamily properties (duplex/triplex) when they can find them.

Encouragingly, new rental supply is coming which could slightly loosen the market. Over 1,000 new apartment units are in the pipeline (detailed in the next section). This includes both market-rate communities (like the 330-unit and 240-unit complexes by national developers constructionreporter.com constructionreporter.com) and affordable housing projects (e.g. the 240-unit Cresta Ranch aimed at low-income families ncsha.org). These developments will provide more options for renters and could temper runaway rent increases. However, with population growth and lab hiring, demand is likely to keep up, meaning Santa Fe will remain a landlord’s market in the near future.

In summary, Santa Fe’s rental and investment market in 2025 is defined by high demand and constrained supply. Investors need to navigate new rules (for STRs) and high acquisition costs, but the fundamentals – a desirable location with limited housing – make it an attractive long-term play. For the community, the hope is that additional rental units and policy measures will gradually improve affordability and availability in the coming years.

Neighborhood Highlights and Growth Corridors

Santa Fe’s real estate landscape varies significantly by neighborhood – from historic adobe homes near the Plaza to new subdivisions on the city’s fringes. Here are key neighborhood-specific trends and growth areas in 2025:

Historic Eastside (87501): Overview: Santa Fe’s most prestigious in-town neighborhood, including the Plaza area and Canyon Road. Trend: Continued high demand. Median listing around ~$962K (slightly down –1.3% YoY) casasdecollins.com, but this area still commands top dollar for its charm and walkability. Homes here actually sold faster this year (DOM down ~7% YoY) santaferealestate.com. Many buyers are wealthy second-home owners or retirees. Despite a few price cuts on overpriced listings, inventory remains sparse. Eastside properties (often historic adobes) retain a “blue-chip” status in Santa Fe’s market.
Southside (87507 – e.g. Agua Fría, Airport Rd area): Overview: A fast-growing, more affordable suburban area south/southwest of downtown. Trend: Rapid growth but slowing sales. Median listings $528K (up modest +1.6% YoY) casasdecollins.com. This area has seen an influx of new construction – from entry-level single-family homes to apartments. Active listings ballooned (+80%) as builders and sellers put more homes on the market santaferealestate.com. As a result, buyers have more choice and are taking longer – DOM jumped ~45% santaferealestate.com. Southside is the bellwether for Santa Fe’s workforce housing; when interest rates rose, this segment felt it most. About 20% of Southside listings had price reductions in 2025 santaferealestate.com. Still, it’s a focal point of growth: new schools, retail centers, and the bulk of new housing (like the Tierra Contenta expansion) are here. Long-term, this corridor along Cerrillos Road toward I-25 will continue densifying.
Northwest/Las Campanas (87506): Overview: Outskirts northwest of city, including luxury enclaves Las Campanas and Tesuque. Trend: Luxury market strong but a touch softer. Median listing around $2.0M in 87506 (+8.5% YoY) casasdecollins.com – this is Santa Fe’s priciest ZIP thanks to Las Campanas golf estates and scenic ranch properties. Homes here saw DOM increase ~+26% santaferealestate.com, suggesting even high-end buyers are a bit choosier now. Nonetheless, sales volume in this area has been high (many luxury deals closing). Tesuque village remains sought-after for its exclusivity. And Las Campanas continues to add custom homes and amenities, drawing affluent retirees. Slight softening might mean luxury sellers having to negotiate a bit more than before, but overall demand remains very robust.
Midtown & Surroundings (87505, 87508): Overview: Central Santa Fe outside the downtown core, including older suburban neighborhoods and the large Midtown campus area. Trend: Transition and opportunity. ZIP 87505 (Midtown/South-Central) actually saw a notable listing price drop (~–10.6% YoY) to ~$750K median casasdecollins.com. This might reflect that some higher-end sales shifted elsewhere, or an adjustment after previous run-ups. Midtown, specifically the former College of Santa Fe campus, is slated for major redevelopment (mixed-use arts, education, and housing) santafenm.gov santafenm.gov. This could be a future growth engine: expect new affordable housing, apartments, and live/work spaces to gradually come in 2026+ which will revitalize the center of town. Meanwhile, established Midtown neighborhoods (like Casa Solana, South Capitol) remain popular for their central location; inventory there is tight and prices stable.
Eldorado & Highway 285 Corridor: Overview: A large planned community 15 miles southeast of Santa Fe (Eldorado), plus nearby rural developments. Trend: High activity and moderate price gains. Eldorado had a big jump in sales (Q2 sales +48% YoY) as more families and remote workers seek its relative affordability and space sfar.com. Median price ~$695K (up ~4.5%) sfar.com – a bargain compared to city prices, for a house on 1–2 acres. Eldorado’s inventory has increased with new resale listings, but demand keeps up (commute ~20 min to town is acceptable for many). South along Highway 285, smaller subdivisions and custom homes on acreage attract those looking for a rural lifestyle; these areas are growing slowly, constrained by water availability and distance.
Growth Corridors (599 & 14): Other peripheral areas like Highway 14 (Turquoise Trail) to the south and NM 599 bypass corridor to the west are seeing pockets of development. Along Highway 14, a new 188-unit Rodeo Village apartment complex is in the works near the I-25 junction jenkinsgavin.com, adding density. The 599 corridor (near La Tierra and the new county offices) has some new subdivisions and the ongoing Las Soleras development to its south. La Cienega area (southwest county) remains mostly rural but could face growth pressure next.

In essence, Santa Fe’s “growth story” is south and west – where land is available – while the premium markets remain north and east (closer to the Plaza or in the scenic hills). Neighborhoods like the Southside will continue adding inventory (and hopefully more affordable units), whereas places like the Eastside will continue to be constrained and pricey. The city’s challenge is to ensure infrastructure and services keep up in the booming areas, and to strategically encourage development (through rezoning or incentives) in places like Midtown and Southside to address housing needs. Each neighborhood has its own character, but all are influenced by Santa Fe’s overall supply-demand imbalance and the desirability of the area.

Pricing Trends, Market Forecasts & Affordability Outlook

Santa Fe’s home prices have risen dramatically in recent years, and 2025 marks a potential turning point toward slower growth. Let’s break down the pricing trends and what various forecasts say, as well as the critical issue of affordability:

Recent Pricing Trends

After two years of double-digit appreciation (2020–2021) and strong gains in 2022, Santa Fe’s price growth decelerated through 2023 into 2025. By the first quarter of 2025, median prices were still up around 11% year-over-year sfar.com, but by Q2 the annual gain slowed to just +4% (single-family) sfar.com. Some price indices even show slight declines – for example, Zillow’s Home Value Index for Santa Fe was down 0.7% year-over-year as of mid-2025 zillow.com zillow.com. This discrepancy can arise from methodology, but the consensus is clear: the era of 15–20% annual price jumps is over for now.

The median sale price across all Santa Fe residential properties (houses + condos) in mid-2025 sits around $650–$700K zillow.com. The median list price is higher (~$750K zillow.com), reflecting that many sellers aim high but often negotiate down (indeed, ~65% of sales end up below list price) zillow.com. The market is approaching equilibrium – buyers are less frantic, and sellers are moderating expectations. Importantly, Santa Fe did not see a drastic price correction in 2023–24 like some overheated markets did. Instead, prices have mostly plateaued at a high level, with minor oscillations.

Key pricing trend highlights:

Entry-level homes (sub-$500K) remain scarce, so they still often get multiple offers, keeping their prices firm or rising slightly.
Mid-tier homes ($500K–$800K) have seen the most flattening, especially as interest rates squeeze buyers. This segment might see essentially 0–2% growth this year.
High-end homes ($1M+), as noted, saw some price softening (a few % off peak values), but strong demand prevents any major drop. Many luxury sellers would rather withdraw from market than sell at a big discount.
Price reductions are more common now – roughly one in five listings had a price cut before selling, a sign that initial asking prices overshot what buyers would pay santaferealestate.com. This is a return to normal pricing strategy versus the name-your-price days of 2021.

Market Forecasts for Coming Years

Looking ahead, most analysts predict modest price movements for Santa Fe in 2025–2026. A collection of national forecasts pegs U.S. home price growth at around +1.5% to +2% for 2025 frontgaterealestate.com. Santa Fe might outperform that slightly due to its supply constraints and popularity, but likely not by much. In fact, some data suggests Santa Fe could see a very slight price decline or flat performance in the short term. Redfin, for instance, has hinted that nationally, prices could dip around 1% by end of 2025 facebook.com – Santa Fe could follow that trend or stay flat.

Local realtors are generally optimistic but cautious. The Santa Fe Association of Realtors’ leadership noted uncertainty for the latter half of 2025 due to interest rates and economic volatility ksfr.org. The expectation is not a “crash,” but rather a continued market correction toward balance. Bottom line: most forecasts see Santa Fe home values in 2025–2026 either holding steady or rising slightly (say 0–5% per year). No major drop is anticipated unless there’s a big external shock, because inventory is still limited relative to demand.

One reason prices are likely to hold is Santa Fe’s ongoing desirability and demographics – affluent buyers are waiting in the wings for any dip. Additionally, construction costs and labor shortages make new homes expensive, providing a price floor for existing homes. That said, if mortgage rates remain elevated (~7%), buyer purchasing power is reduced, which will cap price growth. We may see essentially stagnant real prices (home values rising roughly at the rate of inflation or slightly below).

Affordability and Housing Costs

Santa Fe’s affordability crisis is perhaps the biggest concern going forward. The city has become increasingly unaffordable for its local workforce:

The median household income in Santa Fe is about $78,000 ksfr.org (and much lower for renters ~$49K point2homes.com). But a median single-family home (~$570K in the city) requires ~$110,000 income to purchase comfortably ksfr.org. This gap is enormous. By standard metrics, Santa Fe’s affordability index has deteriorated – the SFAR’s Housing Affordability Index fell to ~37 in 2025 (meaning the median household has only ~37% of the income needed for the median home) ksfr.org.
In concrete terms, housing costs (mortgage or rent) often exceed 40-50% of local incomes, far above the recommended 30%. For example, an $600K home with 20% down at current rates would have PITI payments around $4,000/month – utterly out of reach for most local families.
Santa Fe’s rental affordability is also strained. A $1,800/month rent is ~28% of a $78K income – borderline manageable for the median household, but for many it’s higher. Over 50% of renters in Santa Fe are cost-burdened (paying more than 30% of income on housing).

This affordability crunch has real impacts: essential workers and young families are finding it difficult to settle in Santa Fe. The local school district and businesses report trouble recruiting because housing is so costly. There is also an exodus of some residents to surrounding areas or out of state in search of cheaper housing.

Policymakers are taking note. Efforts to address affordability include:

Encouraging lower-cost development: The city is pushing for more homes under $500,000 by easing zoning for higher density and supporting modular or smaller homes santaferealestate.com. There’s discussion of updating the inclusionary zoning requirements and speeding up permitting for affordable projects.
Affordable housing projects: The state, through Housing New Mexico (MFA), is funding projects like Cresta Ranch (240 affordable apartments) ncsha.org. Nonprofits like Homewise and Housing Trust Santa Fe are helping first-time buyers with down payment assistance and building subsidized homes (though these are often lotteries with limited slots).
Rent assistance and vouchers: Santa Fe has increased funding for rental assistance programs to help low-income renters, and is utilizing state housing trust funds to preserve affordable rental units.

Despite these efforts, the reality is that Santa Fe’s affordability will likely worsen if home prices remain high or keep rising even slightly. Unless incomes rise dramatically (which is unlikely in the short term) or significantly more housing is built, the gap may persist. The silver lining is that the recent cooldown in prices and increased inventory are the first signs of relief. If, for instance, home prices stayed flat for a few years while incomes creep up, the affordability index could improve somewhat.

Forecast for affordability: unfortunately, Santa Fe is expected to remain one of the least affordable small cities in the Mountain West. We may see more creative housing solutions – such as ADUs (granny flats) becoming common, cooperative housing models, or employers (like hospitals or the Lab) investing in workforce housing. The coming years will test Santa Fe’s ability to balance its popularity with livability for all income levels.

In summary, price-wise Santa Fe is likely entering a period of stability – a welcome change from the runaway prices – but affordability remains at crisis levels. Any future gains will need to be measured against local incomes and cost of living, a metric where Santa Fe currently falls short. The hope is that a combination of market forces (more inventory, slower price growth) and policy measures can gradually restore some equilibrium for the local housing market.

Inventory and Construction Pipeline Analysis

A critical factor in Santa Fe’s housing outlook is the supply side – how many homes are available now and what’s coming down the pipeline. In 2025, inventory has expanded from record lows, and a significant construction wave (especially in multifamily) is underway:

Current Inventory Snapshot

After years of extremely tight supply, Santa Fe’s housing inventory is finally rebounding. By mid-2025:

Homes for sale: There were about 930 active listings in the Santa Fe area as of July 2025 zillow.com. This is a marked increase from the pandemic years when active listings sometimes fell under 300. New listings in 2025 have outpaced sales, leading to inventory build-up. For single-family homes, inventory was up ~29% YoY, and for condos up ~30% YoY sfar.com.
Months of Supply: As noted earlier, single-family supply is around 5.1 months (up from ~4.2) sfar.com, and condo supply ~4.4 months sfar.com. These levels, while higher, are still slightly below a “balanced” 6 months. So Santa Fe is moving from a severe seller’s market toward a more neutral market.
Segmentation: The increase in supply is not uniform. Southside neighborhoods saw huge jumps (80% more homes for sale) santaferealestate.com, whereas in some luxury segments inventory remains quite limited (Las Campanas always has some spec homes, but desirable finished homes are few). The City of Santa Fe had a total of ~196 single-family sales in Q2 against ~600 active listings – suggesting about 3 quarters’ worth of supply in the city sfar.com zillow.com. The County had ~170 sales against roughly 330 active rural listings – also roughly half a year’s supply sfar.com.
Land listings: Inventory of residential land (lots) is smaller and has also increased. However, high land costs and infrastructure needs mean lot sales are slow (land sales were down –23% YoY) sfar.com. There’s plenty of land around Santa Fe, but much is not development-ready due to water, zoning, or ownership by government/tribal entities.

In short, buyers now have more choices than they’ve had in years, though selection is still tight in certain price brackets. If inventory continues to gradually increase (as more sellers cash out and new homes hit the market), Santa Fe could finally escape the ultra-low supply condition.

Construction Pipeline

Santa Fe is experiencing a mini building boom, particularly in multi-family and subdivisions on the south side. Major projects in the pipeline include:

Large Apartment Complexes: Multiple multi-family communities are under construction or in advanced planning:
- A 330-unit apartment complex on Beckner Road (near Presbyterian Hospital) by Abacus Capital, expected to start construction by spring 2026 constructionreporter.com constructionreporter.com. This is one of the largest ever in Santa Fe and will be market-rate “luxury” apartments (often referred to as the Solwyn project).
- The Turquesa Apartments – a 240-unit complex south of Santa Fe Place Mall (Wagon Rd) – also by Abacus, which broke ground and is underway constructionreporter.com.
- Cresta Ranch Apartments – 240 units of affordable family housing on the south side, broke ground May 2025 ncsha.org. These will serve households at 60% AMI and below, providing much-needed low-income housing.
- Other names like Arcadia Apartments (332 units) and Cielo Luxury Living (252 units) have appeared in plans images1.showcase.com, likely referring to some of the above or adjacent projects in the Las Soleras area. In total, Santa Fe has on the order of 1,000+ new apartment units in various stages, an unprecedented expansion of the rental stock.
Single-Family Developments: On the single-family front, production home builders are active:
- Las Soleras (southwest Santa Fe by I-25): Pulte Homes is building out this master-plan with hundreds of homes and townhomes in phases sedberrynm.com. It also includes a new hospital, senior living (140-unit assisted living facility catamountinc.com), and planned commercial hubs images1.showcase.com.
- Tierra Contenta (southwest/Santa Fe County): This long-running affordable housing subdivision continues with new phases. It’s the primary source of new entry-level houses (some under $400K with subsidies). Dozens of homes are constructed yearly, with more land recently approved for development.
- Rancho Viejo & Oshara Village (south of city): Rancho Viejo is adding new homes in its sprawling community near the Community College, focusing on mid-priced family homes. Oshara Village, a smaller new urbanist community, is also building out remaining lots.
- County and Custom Homes: In county areas like Tesuque, La Cienega, and along Hwy 14, custom builders are constructing luxury homes on scattered lots. Also, Las Campanas continues to see new custom builds as that high-end community isn’t fully built-out yet. However, these are typically one-off builds, not large tract development.
Midtown District Redevelopment: While actual vertical construction may be a couple years out, 2025 is a pivotal year for the Midtown project. The city has issued RFPs for mixed-use and affordable housing developers to take on parts of the 64-acre site santafenm.gov. By late 2025, the city hopes to be in negotiations for specific projects – potentially hundreds of housing units (including affordable apartments, live/work lofts, etc.) and cultural/commercial space over the next decade. If it progresses, the Midtown site could yield a significant chunk of new housing in the late 2020s, easing pressure elsewhere.
Infrastructure and Permitting: The city is also investing in infrastructure to support new construction. Road improvements (e.g. the Guadalupe Street redesign downtown kob.com, Southside street expansions), water system upgrades, and possibly expanding sewer capacity on the south side are all in the works. Santa Fe is ensuring that as subdivisions like Las Soleras and others grow, the roads, utilities, and public facilities can handle it. Permitting times have been a bottleneck in the past, but the city reports faster approvals in 2024–25 for high-priority housing projects.

Given all this, how many units might Santa Fe add in coming years? Some estimates: if all current projects complete, Santa Fe could see on the order of 1,500–2,000 new housing units by 2027 (a mix of rentals and for-sale). For context, Santa Fe City has about 35,000 housing units today – so that’s a roughly 5% increase in stock, which is significant. It likely won’t be enough to fully close the supply gap, but it’s a substantial uptick after years of underbuilding.

Inventory outlook: In the immediate term (2025–26), expect listing inventory to keep inching up. More owners are likely to list homes now that the red-hot peak has passed – especially investors or second-home owners who might cash out. Combined with new homes hitting the market, this should improve choice for buyers. We might see months of supply reach a balanced 6 months in the next year, which would be a dramatic change from 1–2 months supply in 2021.

However, Santa Fe’s strict terrain (mountains, pueblo lands) and water limitations mean it cannot sprawl endlessly. Long-term supply will remain limited relative to open-market demand. The construction pipeline is addressing some of the shortfall, but unless that pace continues consistently, there’s a risk that once these projects fill up, the fundamental scarcity will persist.

In summary, Santa Fe is building more now than it has in decades, focusing on the south side and infill projects, which should slightly ease the imbalance. Monitoring how quickly these new units are absorbed will be crucial – early indications suggest demand is strong enough that they will be rented/sold quickly. This new supply, along with growing inventory of existing homes, is a hopeful sign that Santa Fe’s real estate market is moving toward healthier equilibrium after years of extreme tightness.

Demographic & Economic Influences on the Market

Santa Fe’s real estate trends don’t exist in a vacuum – they’re shaped by the region’s demographics and economic currents. Several key influences in 2025:

Population and Demographics

Santa Fe’s population (city ~88,000; metro ~150,000) is growing slowly. The growth rate is modest – New Mexico as a whole grew only ~0.1% annually in recent years ibisworld.com, and Santa Fe is likely only slightly above that. However, migration patterns are noteworthy:

In-migration of retirees and remote workers: Santa Fe continues to attract people from out of state. The typical newcomers are often retirees or semi-retirees (50s-70s age) and some remote professionals (40s+) who move for lifestyle reasons. Santa Fe’s median age is around 45, reflecting an older skew. This influx supports the luxury and second-home market and increases demand for housing, but these folks usually have higher incomes or home equity.
Youth and families: The younger population has been relatively flat or even declining slightly as many local young adults move away for better job opportunities or cheaper housing. School enrollment in Santa Fe has been stable to down. This dynamic contributes to fewer first-time homebuyers locally, making the market more dependent on incoming buyers.
Hispanic and Native communities: Santa Fe has a rich Hispanic heritage (roughly 55% of the county identifies as Hispanic) and several Native American pueblos nearby. These communities are integral to the workforce and culture. Unfortunately, they are also among those hit hardest by affordability issues. Some families with deep local roots find themselves unable to buy homes in the city their ancestors founded. There’s a consequent trend of multi-generational households and migrations to more affordable towns (like Rio Rancho or Las Vegas, NM).
Household size: Santa Fe has many 1-2 person households (due to retirees and empty nesters). The average household size is around 2.3, and renter households even smaller at ~1.96 point2homes.com. This drives demand for smaller homes, condos, and apartments – a shift from the past when larger family homes predominated.

Economy and Employment

Santa Fe’s economy in 2025 is solid, if not booming. The unemployment rate in the Santa Fe MSA is roughly 3.5–4.0%, one of the lowest in New Mexico dws.state.nm.us. Key economic factors:

Government and Public Sector: As the state capital, Santa Fe’s largest employer is government (state offices, city, county, and federal offices). This provides a stable employment base and steady demand for mid-level housing. Government job growth is usually flat, but employment is secure. These workers feel the housing crunch keenly because their salaries don’t match private sector highs, yet they are rooted here.
Los Alamos National Laboratory (LANL): Located ~35 miles away, LANL has been expanding. Over 1,000 new hires per year occurred in 2022–2024 kob.com, with growth expected to level off by 2025 but remain high losalamosreporter.com losalamosreporter.com. Many LANL employees live in Santa Fe (for more urban amenities) and commute. LANL’s hiring spree has been a major driver of housing demand, absorbing much of the high-end rental stock and pushing some homebuyers into Santa Fe (since Los Alamos itself has virtually no inventory). This has introduced more high-income households to the market, bidding up prices. The Lab has acknowledged that housing is a top challenge in recruiting, as new hires struggle to find homes losalamosreporter.com losalamosreporter.com. So LANL’s growth directly ties into Santa Fe’s need to build more housing.
Tourism and Creative Economy: Tourism is a pillar of Santa Fe’s economy. 2023 and 2024 saw record visitor numbers after pandemic lows, and 2025 is on track to continue that trend. This fuels jobs in hospitality, restaurants, art galleries, etc., which are typically lower-wage. The success of tourism (Santa Fe frequently tops travel magazine lists) indirectly pressures housing by increasing demand for STRs and second homes. The creative arts sector (artists, writers, etc.) also draws people to Santa Fe, but many struggle with housing costs on variable incomes.
Healthcare and Education: Santa Fe has a growing healthcare sector (two hospitals now, plus many clinics). The new Presbyterian Hospital created hundreds of jobs, and healthcare overall is one of the faster-growing employment sectors here. Education (St. John’s College, Institute of American Indian Arts, Santa Fe Community College, etc.) is stable, with some growth in niche areas like film programs which tie into the Midtown film studio redevelopment. These sectors contribute to steady demand for middle-class housing.
Income & Wealth: Santa Fe has a bifurcated income distribution – a mix of affluent households (many not derived from local wages but from wealth, investments, or remote incomes) and lower-income service workers. The median income ~$78K is near the national median, but far below what’s needed for local home prices ksfr.org. On the other hand, wealthy second-home owners and retirees often have significant assets. This wealth gap plays out in real estate, as the latter can buy $1M homes outright, outbidding local wage-earners. The economy’s structure (lots of low wage vs. some high wealth) thus fuels the housing affordability divide.

Other Influences

Interest Rates & Inflation: The broader economic environment – high inflation in 2022, and the subsequent rise in interest rates to fight it – has impacted Santa Fe. Mortgages near 7% mean a big hit to affordability for anyone financing. High construction costs (materials and labor inflation) also make new homes pricier and slow down some projects. If rates were to fall in coming years, it could unleash a new wave of buyers (and potentially price increases). Conversely, if a recession hits, Santa Fe might see softer demand in the mid-market but likely continued interest at the high end (as luxury buyers are less affected).
Cultural and Lifestyle Trends: The desire for space and quality of life, amplified by the pandemic, still benefits Santa Fe. Remote work has enabled more people to move here while keeping high-paying jobs elsewhere. Santa Fe’s infrastructure (broadband, etc.) is catching up to support them. Additionally, Santa Fe’s stance on issues like environmental sustainability (many solar-powered homes, green building codes) and its reputation for safety and community appeal to a demographic looking for a certain lifestyle, which continues to drive interest in real estate here.

In sum, Santa Fe’s real estate market is propped up by a stable and unique economic base (government, arts, tourism, science) and is increasingly influenced by external money and people. Demographically, the influx of older and wealthier residents boosts demand, while younger locals being priced out poses a long-term concern. The city’s challenge will be to manage growth in a way that keeps the economy inclusive – ensuring teachers, nurses, police, artists, and others can afford to live in the community they serve. Economic development efforts are being tied closely with housing initiatives for this reason.

Regulatory and Policy Developments Impacting Real Estate

Public policy and regulations in Santa Fe have a significant role in shaping the real estate market. In 2024–2025, a number of developments on this front are noteworthy:

Short-Term Rental Regulations

As discussed, Santa Fe City and County moved to tighten short-term rental (STR) rules:

The City’s STR Ordinance (amended 2020) limits non-owner occupied STR permits to 1,000 units citywide avalara.com. It also imposes rules like no more than one rental in a 7-day period (to stop hotel-like turnover) santafeskye.com and requires a local operator or contact. Enforcement has been stepped up in 2025 to ensure compliance and renew permits annually (fees ~$120 initial, $90 renewal) proper.insure. This policy directly impacts investment buyers – essentially capping the pure STR investor market. Existing STRs in popular areas (downtown, Railyard) have become quite valuable because of limited permits.
Santa Fe County STR Ordinance (effective Feb 2024) – the County Commission approved an ordinance that caps STR density in unincorporated neighborhoods to 3–7% of housing units (depending on area) sfreporter.com. It also ended a prior moratorium on new permits but in a restrictive way. Non-resident owners can now operate STRs only within those low caps. The ordinance aimed to protect communities like Eldorado, where residents were vocal about STR proliferation. This is a relatively stringent rule and might be one of the more aggressive county-level STR regs in the nation. There was some backlash (including a lawsuit that was being dismissed as the new rules took effect) sfreporter.com, but overall it shows the local government’s priority on housing for residents over tourists.

Impact: These STR regulations may slightly increase long-term rental supply (as some homes that might have been Airbnbs are rented traditionally or sold) and should deter speculative STR purchases. However, Santa Fe’s allure means some will still try to enter the STR market through loopholes (e.g., operating in non-residential zones which aren’t capped). It’s a space to watch, as enforcement will determine actual outcomes. The city will likely review the 1,000 cap periodically (currently, ~900 permits are active, near the cap).

Affordable Housing Policies

Santa Fe has long had an inclusionary zoning requirement called the “Santa Fe Homes Program,” which mandates that a percentage (often 15–20%) of new development be affordable or that a fee be paid. In 2025, the city is considering adjustments to this program to spur more units:

They may raise or restructure the affordable requirement for large developments, or conversely offer more incentives (fee waivers, faster permits) if a developer includes a higher share of affordable units. The goal is to encourage builders to actually build affordable homes rather than pay a fee-in-lieu.
The city supports non-profit housing developers like Habitat for Humanity and Santa Fe Housing Trust by donating city-owned land. For example, a few parcels on the Southside have been conveyed for affordable townhome projects. This policy of leveraging public land is likely to continue, especially if Midtown is partly used for affordable housing.
A new Five-Year Affordable Housing Strategic Plan was adopted (2023–2028) santafenm.gov, outlining goals like creating 1,000 affordable units, expanding rental assistance, and preserving mobile home parks. This plan could lead to zoning changes such as allowing casitas/ADUs citywide and reducing parking requirements to lower construction costs.

Zoning and Land Use

In 2025, Santa Fe is undergoing some land use code updates. Key ones include:

Accessory Dwelling Units (ADUs): The city is looking to streamline permits for ADUs (backyard casitas) as a gentle density solution. Already, ADUs are allowed in many areas, but bureaucracy and NIMBYism limited them. Easing these could add dozens of units and provide rental income for homeowners.
Higher Density Allowances: Particularly in transit corridors (Cerrillos Road, St. Francis Drive) and Midtown, the city is considering upzoning – allowing multi-story apartments or townhomes where only commercial or low-density was allowed. This ties into the Midtown LINC (Local Innovation Corridor) concept santafenm.gov, aiming for mixed-use, walkable development.
County Land Use: Santa Fe County similarly updated its Sustainable Land Development Code to allow more housing clustering in certain rural zones and to facilitate development in designated growth areas (like near La Cienega). They balance this with strict water requirements (since much of the county is off city water, wells are needed).

Infrastructure and Water Policy

Santa Fe’s ability to grow is constrained by water. The city has a robust water conservation program and developers must obtain water rights for new projects (or pay into the system). In 2025, water availability is okay thanks to prior planning (the Buckman Direct Diversion from the Rio Grande, for example). But any policy changes on water could impact real estate:

There’s talk at the state level of requiring proof of water for 100 years for subdivisions, which could hamper some county developments.
Santa Fe’s water bank policy (developers buy water credits from the city) has kept growth sustainable, but it adds cost. If water or utility hookup fees rise, it could slow building.

Additionally, the city has been investing in transportation (like new roads, bike lanes, perhaps considering expanded public transit) to ensure new housing doesn’t overwhelm traffic. The city’s new infrastructure bonds often indirectly support real estate by making new areas livable.

Taxation and Incentives

New Mexico does not have property tax limitations like California, and Santa Fe’s property tax rates are relatively low. However:

The state legislature in 2022 removed the veterans’ property tax exemption cap and provided some property tax relief, but nothing drastic that would alter housing decisions.
There are state incentives for affordable housing (e.g., the state housing trust fund, Low-Income Housing Tax Credits, etc.) which Santa Fe projects like Cresta Ranch have successfully tapped ncsha.org. Continuing or expanding these will be important. In 2024, New Mexico increased funding for the Housing Trust Fund, which should help launch more projects statewide (Santa Fe likely a beneficiary).
No rent control exists (state law preempts it), and none is proposed, but Santa Fe’s leaders focus on rent assistance instead.

In summary, Santa Fe’s policy environment is increasingly pro-housing intervention – recognizing the market alone won’t solve the crisis. Regulations on STRs are curbing the competition for housing from tourists. Affordable housing mandates and incentives are being strengthened to leverage any new development for public benefit. Zoning is being tweaked to allow more density where appropriate. These efforts, combined with prudent resource management, aim to steer Santa Fe’s real estate market toward one that can accommodate growth without losing the city’s soul or pricing out its people. The coming years will test how effective these policies are in practice, but the commitment from officials and community groups to address housing challenges is at an all-time high.

Sources:

Santa Fe Association of Realtors – Quarterly Indicators Q2 2025 (market stats) sfar.com sfar.com; Quarterly Statistics Q2 2025 (sales/price data) sfar.com sfar.com.
KSFR News – Interview with SFAR President (Q1 2025 market and affordability) ksfr.org ksfr.org.
Barker Realty 2025 Q2 Market Report – Santa Fe market analysis by area (Eastside vs Southside trends, pricing, inventory) santaferealestate.com santaferealestate.com.
Santa Fe New Mexican/SFGate – Luxury market report (Santa Fe #2 luxury index, 9.2% homes are vacation properties, $2.7M luxury median) sfgate.com sfgate.com.
RentCafe/Point2Homes – Santa Fe rental market statistics (median rent ~$1.85K, vacancy ~5%, renter incomes) point2homes.com point2homes.com.
Santa Fe Reporter – County STR Ordinance coverage (STR caps of 3–7% per area, community debate) sfreporter.com sfreporter.com.
NCSHA/Housing New Mexico – Press release on Cresta Ranch Apts (240-unit affordable housing groundbreaking in 2025) ncsha.org ncsha.org.
Construction Reporter – Update on Beckner Road 330-unit and Turquesa 240-unit apartments (new multifamily developments by Abacus in Santa Fe) constructionreporter.com constructionreporter.com.
City of Santa Fe – Midtown District plans (mixed-use redevelopment phases and housing RFPs in 2025) santafenm.gov santafenm.gov.