In recent weeks, several of our buyers have found a great property at a great price, then they tell us "We are going to wait for prices to come down even further."My advice to buyers who are sitting on the fence: "Get off the fence. You're in danger of getting a picket stuck in a very uncomfortable place."
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Palm Springs (Coachella Valley) monthly home sales jumped 16.4 percent in October from September, a positive sign for the dragging real estate market but not enough to indicate the slump is over. Though officials are optimistic, the valley's home sales are 30.1percent lower than this point last year. But that's better than the statewide sales figures, which have dropped 40.2 percent compared to October 2006.The exact number of homes sold in October was not available late Tuesday, according to the monthly information released by the California Association of Realtors."You can't call it a trend, but if it's moving, it's moving in the right direction," said Greg Berkemer, executive vice president of the California Desert Association of Realtors."That's the most encouraging news."The Realtors association's October data also show:The median price of a Coachella Valley home is $323,440 - a 6.5 percent drop since September and a 5.1 percent decline since this time last year.While the median price is used as a benchmark for tracking homes, it can be misleading when several high-end, multimillion-dollar homes sell in a single month.The Coachella Valley continues to be affordable by California's standards, where the statewide median price is $497,110.While roughly 24 percent of Californians can afford the median priced home in their communities, 33 percent of valley residents can afford homes here.At the "height of the market," the local figure was as low as 11percent, Berkemer said.Nearly 9,200 Coachella Valley homes were on the market in October and 9,593 were on the market last month, according to the local figures.That's about a 1,000 more homes than were for sale in November 2006.A typical home on the market - three bedrooms, two baths, spanning 1,766 square feet - is listed at $379,000 and has been on the market 81 days."This market is not fully recovered," Berkemer said."September was a poor sales month. We're moving into our season. Hopefully that will help."
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Several of our readers and clients have commented about or questioned the high number of homes currently available in the Coachella Valley.
When most buyers new to the area think of Palm Springs, they think of only the City of Palm Springs. Our real estate market and our Multiple Listing Service (MLS) include a HUGE geographical area, extending from 29 Palms/Joshua Tree to Idyllwild to La Quinta and all the way down the valley to the Salton Sea and Coachella.
There are some other factors to consider when looking at the unsold inventory.
The 5 major contributors to the increased inventory:
1. The market slowdown itself causes homes to remain listed on the MLS longer;
2. Developers are now listing their remaining unsold inventory in the MLS;
3. Homeowners who previously were trying to sell their own homes are now listed with Realtors and at prices adjusted to reflect the current market and now back in the MLS;
4. Homes built or purchased for speculation (not to live in by the 1st owner) are now listed by Realtors and listed in the MLS;
5. Homeowners with loans that they can no longer afford and who are unable to refinance have listed their homes with Realtors and now in the MLS.
Here are some of the positive signs for the desert:
· Sales in October rose by 16.4% over last month – strongest gain in So. Calif.
· Year over year drop in sales was 30.1% -- smallest drop is So. Calif.
· Year over year price drop was 5.1% -- statewide the price drop was 9.9%
. Current affordability rate for desert is 33% -- at the height of the market it was 11- 13% range
Although these signs are encouraging, some Sellers still remain in a market where only the serious minded belong; successful seller’s homes must show well, and be priced to reflect their neighborhood – not necessarily the median price reduction.
For Buyers, when you find the home and area you want, this may be the best time to act.
** Although we know now when the market began to change there was so much activity in the pipeline that we were into 2006 before it revealed itself. Accordingly, we will be out of this current market as well before it is documented.
In recent weeks, several of our buyers have found a great property at a great price, then, after talking to their brother-in-law or their son who works at Best buy, they tell us "We are going to wait for prices to come down even further."
The next week, that same great home at a great price has sold. Our client insists that there will be others at even better prices.
Other, more realistic clients see that prices have come down significantly here in the Coachella Valley and realize that the Real Estate market is cyclical. They know that even if prices do come down a little more, they will eventually come back up. They are not trying to make a quick buck, they are looking for either a primary or second home that they can live in and enjoy for more than three or four years. They know that the tax advantages of owning a home for those three or four years will still be significant.
They know what we know: Whatever you buy today will be a GREAT deal in three to five years.
Those who sit on the sidelines and wait for the bottom of the market may be left just waiting.
The problem with waiting for the bottom is that we only know where the bottom was in hindsight. We never know in real-time that we have hit the bottom of the market.
Greed is what got us into this mess. Greed will keep otherwise good buyers out of the market while they wait for a chance to be greedy and "steal" a property.
The Coachella Valley is a market significantly different from others in the state and country. We have a HUGE resort property market. A greater percentage of the homes here are second homes owned by relatively high-income and financially stable owners. These are people who are in a position to wait out any downturn in the real estate market and not at any risk of foreclosure.
The appreciation in the area has been not only due to the overall housing boom seen throughout the country, but also driven greatly by the tremendous growth we see occurring here. The population in the Coachella Valley is expected to DOUBLE its 2006 number by 2012.
Buyers who can afford to pay cash now or who qualify for a conventional fixed-rate mortgage or 30 year fixed with a ten year interest only period are in a good position to buy a great home at a great price.
My advice to buyers who are sitting on the fence: "Get off the fence. You're in danger of getting a picket stuck in a very uncomfortable place."
Gary Drake
The Thomas and Drake Group
December 5, 2007 The Desert Sun
Valley Realtors cheer progress of slumping market
Erica Solvig
Coachella Valley monthly home sales jumped 16.4 percent in October from September, a positive sign for the dragging real estate market but not enough to indicate the slump is over. Though officials are optimistic, the valley's home sales are 30.1percent lower than this point last year. But that's better than the statewide sales figures, which have dropped 40.2 percent compared to October 2006.
The exact number of homes sold in October was not available late Tuesday, according to the monthly information released by the California Association of Realtors.
"You can't call it a trend, but if it's moving, it's moving in the right direction," said Greg Berkemer, executive vice president of the California Desert Association of Realtors.
"That's the most encouraging news."
The Realtors association's October data also show:
The median price of a Coachella Valley home is $323,440 - a 6.5 percent drop since September and a 5.1 percent decline since this time last year.
While the median price is used as a benchmark for tracking homes, it can be misleading when several high-end, multimillion-dollar homes sell in a single month.
The Coachella Valley continues to be affordable by California's standards, where the statewide median price is $497,110.
While roughly 24 percent of Californians can afford the median priced home in their communities, 33 percent of valley residents can afford homes here.
At the "height of the market," the local figure was as low as 11percent, Berkemer said.
Nearly 9,200 Coachella Valley homes were on the market in October and 9,593 were on the market last month, according to the local figures.
That's about a 1,000 more homes than were for sale in November 2006.
A typical home on the market - three bedrooms, two baths, spanning 1,766 square feet - is listed at $379,000 and has been on the market 81 days.
"This market is not fully recovered," Berkemer said.
"September was a poor sales month. We're moving into our season. Hopefully that will help."
