When the Desert Calls

National Perspectives
May 27, 2007

By BARBARA E. HERNANDEZ


ALAINA DeMARTINI decided to trade the San Francisco chill and fog for palm trees and bright stars in an open sky. So last year, she and her husband, David, a retired electrician, moved to the house in Palm Springs, Calif., that they bought as a second home five years ago.

The couple had made monthly trips to their desert home, a 1,900-square-foot 1963 Alexander house with a wall of windows facing the San Jacinto Mountains. They traveled to the two-bedroom, two-bath house, which they bought for $200,000, by flying into Palm Springs International Airport or driving for eight hours.

“Eventually we were asking, ‘Why are we going back?’ ” said Ms. DeMartini, a former loan agent.

Although Palm Springs has long been considered a second-home haven, home buyers are increasingly turning to it for their primary residence, real estate brokers say.

Negin Shams, a broker at the Shams Group in Palm Desert, 14 miles east of Palm Springs, said the change had been gradual but had gained speed in the last decade. Ms. Shams said that primary-home buyers had grown from 10 percent to about a third of her business in recent years, and that they included an influx of young buyers from the neighboring Los Angeles and Orange Counties, with most of them finding work in the growing financial services sector.

One reason for the move is the lower cost of housing. In March, according to DataQuick, a company in La Jolla, Calif., that provides real estate research and data, the median home price for Palm Springs was $407,000, versus $540,000 in Los Angeles County and $630,000 in Orange County.

In addition, empty nesters from Southern California, the Pacific Northwest and the Midwest who buy vacation homes in the Palm Springs area often end up living permanently there within five years. “They are prebuying their retirement homes,” said John Raymond, director of community and economic development for Palm Springs.

While actual figures are difficult to gather, Mr. Raymond said, the reality is that Palm Springs is increasingly two experiences — the full-time and the part-time.

Palm Springs lures many people with its aura of luxury, cultivated by vacationing celebrities and by a vigilant building preservation committee that promotes the area as a mecca for modernist homes. It is also known for its tolerance and its gay and lesbian events that make it a mainstay of top-10 lists of gay vacation spots.

According to Bob Marra, the president of Wheeler’s Market Intelligence, a local marketing research firm, the population of Palm Springs and the surrounding Coachella Valley grew to about 412,000 permanent residents in 2006, a nearly 30 percent increase since 2000. By contrast, the state’s Department of Finance reported that the population of California had grown 9.8 percent from 2000 to 2006.

Developers have noticed the trend. Several new projects cater to full-time and part-time residents, among them Port Lawrence by the Rael Development Corporation. The project has 118 downtown lofts that offer living and work space; studios start in the $600,000s, with penthouse lofts priced at $1.3 million.

The project, in the early stages of construction, has had a lot of interest, said Maggie Feldman, a Rael spokeswoman, but she declined to say how many units had been reserved with $10,000 deposits. The project is scheduled to be completed next year.

Mike McCulloch, 50, a city councilman, said he had lived in Palm Springs since 1962, when the city “went dark” in the hottest months. “In the summer everything closed; you had very limited choices if you were a full-time resident,” he said. “That changed in the 1970s when we saw the revolution of the condominium.”

Condos made second homes more affordable, and others moved to become full-time residents, he said.

Many projects are designed for older people who want a “turnkey experience,” Mr. McCulloch added, explaining that increasingly they are full-time residents. “Those are for people who don’t have to worry about mowing the lawn or painting the fence,” he said.

Ms. Shams said families seeking primary homes tend to prefer single-family houses with private backyards and no homeowner’s association dues. “Families want costs kept down,” she said. “The winter people want gated communities and golf courses. They want something they can lock up and leave with no worries.”

Escena Palm Springs by Lennar Communities is being marketed to appeal to both. Escena has 1,450 units planned on 355 acres in East Palm Springs, an area previously known for its wind-whipped sand dunes.

The development is seeking to attract singles, gays and lesbians and first-time home buyers, while also aiming its high-end homes on the golf course at retired captains of industry, said Dan Cady, director of marketing for Lennar Communities.

Models are now available for viewing, and Lennar and Standard Pacific Homes are taking deposits on homes, which range in size from 1,961 to 3,824 square feet and start in the $600,000s. Houses built by Standard Pacific opened in January, while Lennar’s homes opened on May 19.

Another project breaking ground is the gated Avalon Palm Springs by the SunCal Companies, which will offer 752 single-family homes and 399 multifamily units on 309 acres near the entrance of Palm Springs. The homes, which have not yet been priced, are expected to be built in 2008, said Joe Aguirre, a spokesman for SunCal.

William Feingold bought a Palm Springs condo in 2000 as a way to escape from his Los Angeles workweek. Soon, he said, he found himself staying longer and longer. Finally, he decided to stay permanently and gave up his job as an apartment manager.

He bought his 1,250-square-foot, two-bedroom unit for $110,000, and says it is now worth about $325,000. But he didn’t buy it as an investment. “I was never crazy about Los Angeles,” said Mr. Feingold, 57, now a semiretired stockbroker and a local radio personality. “As soon as I saw the mountains, I knew.”

The San Jacinto Mountains tower above Palm Springs, often only feet away from a pastel-colored quilt of condos and midcentury modern homes. Other mountain ranges — the Santa Rosa, the San Bernardino and the Little San Bernardino Mountains — surround the valley, creating deep canyons and spectacular waterfalls.

In addition, Mr. Feingold, who is gay, said he was surprised to learn how gay-friendly Palm Springs is. “You could be openly gay and be yourself,” he said.

Comfortable in his environment, he ran for mayor; he lost but became chairman of the city’s human rights commission. He then gave up on a career in local politics and became Bulldog Bill Feingold, a liberal radio talk show host known for his biting social commentary. “If it wasn’t for Palm Springs,” he said, “I would never at the age of 57 start my own radio show.”

For some, the desert can be an empty, forsaken place. But others enjoy one of the last scraps of wild California, where mountain lions and bighorn sheep live in the shadow of the granite-speckled mountains.

Ms. DeMartini, who relocated from San Francisco, also found its beauty exceptional. She joined the Palm Springs Modernism Committee to preserve historic buildings and is also working to keep area hillsides free from encroaching development.

Mr. McCulloch would like to see more communities and hotels built to bolster the economy. Palm Springs has lost much of its high-end shopping to nearby Palm Desert, he said. “You can’t fight growth; it’s inevitable,” Mr. McCulloch said. “You just try to manage it.”

May is usually when the season ends for many of the area’s second-home owners. In the past, stores and restaurants would close — but now many stay open for the year-round population. “I only know of a couple restaurants that close, but almost everyone stays open,” said Jimmy Patty, general manager of Sherman’s Deli and Bakery in downtown Palm Springs.

The permanent residents of Palm Springs usually survive the heat of the summer by arming themselves with water bottles and air-conditioning. Temperatures can rise to 120 degrees.

A full-time resident’s first summer in the desert turns infatuation into either love or divorce.

Ms. DeMartini fell in love. She enjoys floating in the pool at 11 p.m. and looking at the stars through the palm trees.

“I’m finding out more about what I want and what I think,” she said. “And I want less than I imagined. The desert is great for simplifying your life.”

Click Here to Link to This Article on The New York Times

Isn’t it Hot in the Desert?

The temperatures are rising and the snowbirds have all gone home. Those with faint hearts have made their vacation plans for somewhere cool.

Still, 40 families a day are moving to the Desert and homes don’t sell themselves.

Last summer, we held our listings open nearly every weekend. The record-hot summer days of 122 degrees were especially uncomfortable thanks to a monsoonal flow bringing uncommon moisture up from the Gulf of Mexico. Shorts, lightweight silk shirts, comfortable shoes and it was still hot.

Soaking with sweat, panting and pulling up open house signs, we saw a car suddenly stop, back up and motion for us to come over. She needed some information and couldn’t find an agent. We sighed, looked at each other and said with a forced smile ”Sure!”

People thought we were crazy, our competitors laughed and our co-workers scratched their heads.

We met many interesting people, most of them nice, who were either looking for homes and didn’t see very many open houses or who had been vacationing here for years and were just curious. I think we even met a few who wanted to soak up someone else’s free air conditioning.

Did we sell all the houses we held open? No. We did meet people who were looking for a Realtor and liked the fact that we worked no matter what. We also met three different couples who said they were just looking around getting ideas. We did find houses for all three of those couples.

We got a phone call on one of the very hottest days from an out-of-towner who found a $600,000 home online and needed more information. She couldn’t find the listing agent (whom we found out later was on a cruise for the summer) and just happened to call us. We got the information she needed. She didn’t buy that house; she bought a house for $850,000.

It’s the Desert. It’s hot for 3-4 months out of the year. For the remaining 8-9 months, this is the place where people from all around the world travel to for their vacations. We get to live in the desert year round; we get to play in the desert year round and we GET to work in the desert year round.

Buying or Selling a Home in the Desert…In the Summer…

What is Too Hot for a Cool Market?

One of the most frequently asked questions we have received lately from buyers is “if I wait until the weather gets hot, will I get a better deal?” Likewise, the most frequently asked question from sellers is “If I wait until after the summer, will I get a higher price?”

The answer in most cases is No and No. First a little background on the housing market in the Desert.

For quite some time, we saw record appreciation in home values. Prices were increasing at an unprecedented rate. Buyers drove the prices higher and higher through flipping and overbidding, property owners began to expect that such increases would never end and sellers chased the price curve up.

When the housing market began to level out, sellers continued to expect that their properties were increasing in value at the same pace as they had been just a few months earlier. Sellers continued to try to price their homes above the most recent comparable sale, and the offers did not come as expected. Very slowly, some sellers began lowering price and the eventually began to chase the price curve down. Their homes stayed on the market for 6 months, 9 months…a year, but they were stale. On the other hand, a few savvy sellers saw that prices were not going up, priced their properties lower than the last comparable sale, sold at a good price in a reasonable period of time and made out like bandits again.

We now are seeing many of the less motivated sellers remove their stale listings from the market, thereby cleaning out the deadwood and unreasonable listings. Those properties that continue to remain on the market or come on the market as new listings are a little more in line with what the market is actually doing. We have turned down a number of listings recently because the sellers just wanted more than what the current market conditions will allow. Now is the time to price a property right from day one (see the April 30 article “The Importance of Pricing Right From Day One” in the Newsletter at ThomasAndDrake.com).

For our buyers, we try to explain that there are ready and motivated sellers and there are those sellers who have listed their home, have no motivation to sell and will only sell if they get a certain price.

For our sellers, we try to explain the same thing. There are investors making ridiculous, low-ball offers on properties, hoping to hit on one or two who are desperate enough to sell at their offering price. There are also buyers who are buying homes because the timing is right for them and still others who are buying because they have recently relocated to the area and need to buy a house.

So, here is the answer to our questions above:
Although summertime in the Desert brings fewer shoppers overall, the ones who are out tend to be more serious and ready buyers. Although many sellers take their homes off the market during the summer, others hope to attract the buyer who is on a time line and can’t wait until the same old stale listings that didn’t sell all winter hit the market again in September.

Overall, it is still a great time to buy: interest rates are still near historic lows, there are many homes to choose from and real estate remains one of the best long-term investments available.

-Gary Drake
The Thomas and Drake Group

Desert Hot Springs Courts New Businesses in Vegas

May 24, 2007

City officials from Desert Hot Springs have been attending the International Council of Shopping Centers convention, hoping to attract more businesses to DHS.

Since this is the first time the City has participated in the event, I am sure the response will be overwhelming for what they have been accustomed to - namely "sit back and do nothing and hope it changes". I applaud the City for finally taking some steps to help this dusty little Desert outpost - a city separated by geography and attitude from its sisters on the other side of I-10.

With new full-time residents moving to "Outpost Freedom", the demographics are changing. Now that the city is getting an influx of residents who will be voting in DHS rather than those seasonal residents who only vote in their home states, the City will be changing. That's a good thing.

The beautiful views will not change, the worlds best hot mineral springs will not change nor will the outstanding weather that Desert Hot Springs is known for.

What will change is the City Council. Already, new council member Scott Matas seems to be making a difference. He brings a more professional and growth-oriented approach to what had for years been called the "Hillbilly Council". A fresh breath of pro-development and growth means new life for a tired city.

Now that D.R. Horton and Century Vintage Homes have broken the ice by developing the West side of town, with nothing but more new and fresh plans in the works, new businesses are coming. People who once scoffed at the idea of living in Desert Hot Springs now entertain the possibility or have jumped in with both feet, and they are demanding new retail services. New roads and traffic signals, new commercial development and new money are coming to this last secret of the Desert.

With the City taking action steps to attract new businesses, more commercial development and better police and city services, the town is making a very good start. Many spas and resorts such as Two Bunch Palms are in the process of updating and revamping to attract a younger, hipper clientele (and it's working). Just keep the momentum going and this Dusty Little Desert Outpost will soon be the Gem of the Desert it once was.

New U.S. home sales surged in April

Biggest gain in 14 years as median prices fell by record amount

The Associated Press
Updated: 9:33 a.m. PT May 24, 2007

WASHINGTON - Sales of new homes surged in April by the biggest amount in 14 years, but the median price of a new home dropped by the largest amount on record. The mixed signals left no clear picture of whether the worst of the nation’s housing slump is over.

The Commerce Department reported that sales of new single-family homes jumped by 16.2 percent in April to a seasonally adjusted annual rate of 981,000 units. That was far better than the tiny 0.2 percent gain that economists had been expecting.

However, the median price of a new home sold last month fell to $229,100, a record 11.1 percent decline from the previous month. The big price decline indicated that builders are slashing prices in an effort to move a huge overhang of unsold homes.

The jump in sales was the biggest increase since a 16.4 percent surge in new home sales that occurred in April 1993.

However, analysts cautioned against reading too much into the big gain, especially in light of other surveys showing that builder confidence has sunk in recent months over worries that troubles in the subprime mortgage market will further crimp demand in coming months.

The strength in sales was led by a 27.8 percent surge in the South. Sales were also up in the West by 8.5 percent and in the Northeast, where they rose 3.8 percent.

Sales fell in the Midwest, dropping by 4 percent.

The drop in median prices in April compared to March was a record one-month decline. If the April sales price was compared to the sales price a year ago, the decline was 10.9 percent, the biggest year-over-year drop since 1970.

In other economic news, the Commerce Department said that orders to U.S. factories for big-ticket manufactured goods posted a moderate 0.6 percent increase in April, helped by a continued rebound in business investment.

In a third report, the Labor Department said that the number of newly laid off workers filing applications for unemployment benefits rose to 311,000 last week, an increase of 15,000. But even with the gain, claims remain at a level indicating a healthy labor market.

While the increase in orders for durable goods was less than had been expected, the government sharply revised the March performance to show a 5 percent surge, much stronger than the 3.7 percent gain previously reported.

Analysts believe that U.S. factories, which have been buffeted by the weakness in housing and slumping demand for autos, are starting to stage a moderate rebound, helped by reviving interest on the part of businesses to spend money to expand and modernize.

The overall economy slowed in the first three months of this year to an annual growth rate of just 1.3 percent, the weakest performance in four years, as a steep slump in housing continued to weigh on the economy’s performance.

Analysts are hoping that spending by consumers and businesses will be able to overcome the weakness in housing and keep the country out of a recession.


The report on durable goods offered encouragement in the area of business investment. It showed that demand for capital goods excluding airplanes, considered a good proxy for business investment, rose by 1.2 percent in April following, the second solid monthly increase.

The 0.6 percent rise in total durable goods orders came even though demand for transportation products fell by 1.3 percent. This reflected a drop of 10.7 percent in demand for commercial aircraft and a 1.9 percent fall in orders for motor vehicles.

Excluding transportation, orders would have been up by 1.5 percent, the same performance as in March.

There was strength in orders for primary metals such as steel which rose by 4.3 percent and orders for electronic equipment and appliances, which rose by 3.8 percent.

But demand was weak for computers, which fell by 7.8 percent, and communications equipment, which dropped 5 percent.