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SEPTEMBER 2022 DESERT REAL ESTATE MARKET UPDATE

The current residential real estate market is mindboggling , but not in the same way it was last year or in 2008. This time it’s about supply and demand and mortgage interest rates.

Let’s say you want to buy a home at this time and you’ve seen that prices have dropped somewhat. Maybe you’ll be tempted to wait. After all, why buy a house today if you believe you’ll be able to pay less in a few months?

The problem with this logic is that you can’t predict when prices will hit bottom. Wait too long and you’ll end up trying to buy when prices are rising and competition is increasing. You just can’t time the market. If you wait for prices to dramatically fall but they never do, you may discover the hard way that the house that you loved, but passed on, is more expensive.

The wait for home prices to plunge could be thwarted by sellers’ unwillingness to give up what they’ve gained – which is inflated home prices. Through refinancing or well-timed purchases, 92% of homeowners with mortgages have rates below 5% and half have rates below 3.5%.

 A lot of those homeowners will keep their low mortgage rates and vow to never leave. What’s the incentive to sell your home when you’re locked into a 2.6 or 2.7% mortgage rate, and purchase another home at 7% or higher?

 When owners keep their homes off the market, they reduce the number that are available to buy. A limited supply could restrain a drop in prices as buyers compete for meager offerings.

 Some sellers and buyers a could have a dilemma.

 How is all this affecting our local market here in the desert? Here are the latest statistics.

PRICES:

The median price of a detached home in the Coachella Valley has declined over the last two months. It’s currently at $670,000, which is up 15% year over year. Most of this decline is seasonal but it also represents the general corrective turn that is occurring in home prices.

The median price for attached homes in September was at $465,000, which is down slightly from the previous month but up 24% year over year. Gains now range from 34.1% in Indian Wells to 12.2% in the Bermuda Dunes. In the attached home market, two cities continue to have gains over 40% – Desert Hot Springs and Indio.

SALES:

The three-month average of sales in September was 581 units a month, which is 32% below last year. In the three years before the pandemic, September sales averaged 784 units, so current sales are objectively running about 25% below normal.

Every city except Coachella had lower sales in September compared to a year ago. Sales in the city of Coachella are 42% higher. The largest percentage declines were in the cities of Rancho Mirage, La Quinta and Cathedral City, where sales are lower by 43%, 42% and 42% respectively.

INVENTORY & “MONTHS OF SALES” RATIOS:

On October 1st, Valley inventory stood at 1,807 units, which is 214 units higher than last month and 924 more than last year.

This monthly increase is opposite to almost every other California region, where inventory generally contracted last month. Some of this increase is seasonal and if the seasonal pattern continues, as we expect, inventory might possibly reach 2,500 units by February.

 On October 1st, the Valley’s “months of sales” ratio was 2.2 months, which like inventory is higher than last month. The ratio remains considerably below 3.0 to 3.5 months, which is normal for late summer.

DIM:

At the end of September, the median number of “days in the market” throughout the Valley was 32 days, which is now eight days more than last year.  It may rapidly increase back to 50 or 60 days, which is historically “normal” for the region. The city of Indian Wells has the lowest median selling time for detached homes at 24 days, followed by Rancho Mirage at 27 days. In the attached market, Desert Hot Springs has the shortest selling time at 23 days, followed by Cathedral City at 25 days.

PRICE DISCOUNTS/PREMIUMS:

At the end of September, 27.7% of sales occurred above list price compared to 50.2% a year ago. The ratio will probably be back to historic norms of around 10% near the end of the year.

Only four cities have selling premiums for detached homes, with the cities of Coachella and Desert Hot Springs having the highest premiums at .6% and .3% respectively. No city currently has a selling premium for attached homes.

 

 

 

 

 

 

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Deceleration does not mean Depreciation

If you follow the news you may be reading headlines right now that give the impression that home prices are going to take a dive. The reality is that this isn’t completely accurate, and headlines don’t provide a full picture into what’s going on. If you have questions about the market and current trends I’m here to help shed some light. Leave me a comment and let’s start the conversation! #thehelpfulagent #home #houseexpert #listreports #house #housingmarket #realestatetrends #icanhelp #themoreyouknow #realestateagent #realestate #househunting