Twice a year, we have the opportunity to meet with the group from Market Watch, a team of respected analysts who study underlying real estate market conditions and trends. This spring at our meeting, Vic Cooper and Mike McDonald with Market Watch discussed the Coachella Valley recovery and where we stand in relation to the financial market melt down of 2008.
Like all markets, the Coachella Valley Real Estate Market is impacted by supply & demand. While prices have increased, the # of sales have slowed, about 14% overall below last year. As sales slow, supply increases. If the pool of buyers are not absorbing the supply, it causes an imbalance. As supply goes above 6 months, seller’s begin to worry & lower their price and so goes the market cycle of supply & demand.
10% of Coachella Valley residents are in the “7 year foreclosure penalty box”. People who lost their homes to foreclosure have been, & will be out of the real estate market for 7 years following the foreclosure, which has had a direct impact on the Coachella Valley real estate market. This 7 year bubble, so to speak, has been a big reason for low sales & a slower recovery, that, along with tighter lending practices & recent dip in value of the Canadian Dollar vs. the US Dollar.
2015 is the leading edge, or the first wave of homeowners who lost their home to foreclosure in 2008 & 2009, they’re coming out of the penalty box this year and getting closer to being able to buy a home again. As they do, sales will start to increase. Projections are a 10% increase in sales over the next 7 years. Now that’s creating some demand for home buying.
Investors can see the trend & the new opportunities; as prices have increased and more former homeowners are able to buy rather than rent; investors have shifted their focus to flipping rather than buying & renting.