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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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January 2022 Desert Real Estate Market Update

The median price for a detached home in the Coachella Valley ended the year at $615,000, which represents a yearly gain of 18.3%. Attached homes ended the year at $403,000, representing an increase of 22.5%.

Breaking down the percentage gains by cities for detached homes and attached homes:

Rancho Mirage 36.6% and 34%
Palm Springs 36% and 30.4%
Indian Wells 34% and 30.6%
Palm Desert 30% and 36.4%
La Quinta 28% and 47.5%
Indio 29.7% and 31.6%

The largest price increase of attached homes was 60.4% in Desert Hot Springs, followed by 42.3% in Bermuda Dunes.

The median number of days in the market throughout the Valley was 26 days. And, there are plenty of properties that sold above asking price within days of listing.

The price increases for sellers are wonderful but it makes if difficult for homebuyers to find homes that meet their wants and needs.

So, who are the buyers?

We still have the retirees and the snow birds, including those in Canada. In the past 2 years there’s been a stunning influx of new homeowners who have fled the dense and depressed cities around the country who want open, spacious and active places like our Valley. The pandemic made many in-office work scenarios impossible, creating a large swath of employees who could work from home. This new work force is younger and many are from California cities. The second-home and investment buyer is still looking out here. Even through various market ups and down, typical for resort communities, real estate investment remains one of the safest places to build wealth.

After a massive jump in home prices since the pandemic, pricing is expected to cool off somewhat, given low inventory and rising mortgage rates. This doesn’t mean there won’t be another increase, it just means home prices may be a bit more modest.

In closing, I’ll again say that if you’re a seller, now is a great time to sell. And buyers, for now, expect to see fewer homes and more interest from other buyers in your selections.