As we start a new year, it’s the perfect time to look back at what worked and what didn’t work in the local real estate market. In this survey, our primary focus is the single-family home market.
While we can’t predict future market action, we can look for patterns and developing trends. Our goal is to provide insight and clarity into this dynamic market. We know a well-informed decision creates the best outcome for your Desert Real Estate investments.
OVERVIEW
Persistent fears of a recession in the residential real estate markets have not played out. Despite stubbornly sticky interest rates, a Presidential election, and sweeping changes in the way real estate is transacted across the country, the Desert Real Estate Market has proved to be resilient.
The market has a more tempered growth pattern. property prices are up, but not at the meteoric pace we saw in years past.
We had a pretty steady increase in inventory throughout 2024; up about 38%, which is in alignment with our pre-pandemic seasonal patterns.
THE LUXURY MARKET
The Luxury Segment of the Market had an uptick in buyer activity, sales, and inventory. Compared to 2023, the Luxury market had a 4% increase in the number of sales and a 2% increase in home prices. But the $2m + segment showed some softening, sales were down about 24% year over year and inventory is up. As of December, this segment had a 9.6 month supply of inventory.
While entry-level homes are most sensitive to interest rate fluctuations, homes priced between $700,00 – $1.5m are also impacted by higher interest rates and are taking slightly longer to sell.
We expect the Desert market will be impacted by fallout from the LA fires, but it will take time and we believe it will happen in phases. Initially, and we’ve already started to see it, displaced homeowners will be looking for rentals, first short term – then as reality sets in about how long it will take to process insurance claims and rebuild, we expect to see an increase in sales which has the potential to reduce our inventory. The result may be a tighter supply of inventory and higher prices here in the Desert.
CONDOMINIUM MARKET COMPARISON
Sales in the Condo market are steady; 2,228 sales in 2023 vs 2,240 in 2024. Prices were up about 4% and the price per sq ft was up about 2% over last year.
SALES
After a significant drop in the number of sales post-pandemic, Valley home sales have been steadily increasing since. Despite the large percentage of cash buyers in the Desert real estate market, there is no doubt that interest rates have played a role in sales. Rising home prices combined with higher mortgage interest rates have impacted Home Buyers by limiting their buying power. Home Sellers are also affected when Buyers can’t pay the higher prices.
Indian Wells had the largest increase in number of sales, ending the year up 5%. While Thousand Palms was at the other end of the spectrum, with an 18% decline in sales, albeit a much smaller sampling. Most of the individual cities had an increase in the number of sales between 2%-4%
PRICES
Over the past 5 years, home prices nationally are up nearly 58%, the Western region is up 48% and locally, the Desert real estate market has enjoyed close to a 40% increase in prices for single-family homes over the past 5 years.
When we look at each city, Indian Wells is the stand-out. A November sale at $11m, (the highest selling price in The Reserve), put Indian Wells over the top for the largest price increase, up 18% from 2023.
Running a close 2nd, Thousand Palms had an 11% increase in prices. At the other end of the spectrum, despite monster sales last year in The Madison Club, La Quinta had a 4 % decline in prices.
INTEREST RATES
Contrary to all the major forecasts, mortgage rates did not come down in 2024 as expected; they remain elevated. The 7% rate proved to be a barrier for Buyers; as rates popped up, sales in the market segments sensitive to mortgage rates, slowed. Going into 2025 with new economic data, experts predict that mortgage rates will stay in the mid 6% range and will stabilize throughout 2025.
Housing isn’t just an economic decision; life events continue to play on. As we see mortgage rates stabilize, Home Sellers and Buyers, will both become more comfortable moving on with life. The mid 6% range will be the new norm going forward.
RENTS
Typically, our seasonal lease inventory is booked a year in advance, with very tight supply and high seasonal rates. Going into 2025, we may see a significant increase in long-term rental demand due to displaced homeowners who have been impacted by the fires in LA County. Time will tell on this topic.
NEW CONSTRUCTION
New construction is going strong valley-wide; several new home developments are popping up across the valley. Currently, there are 100 new homes on the market, down by 2 from last year. The average listed price is $1,993,879. about 12% lower listing price than last year.
182 new homes sold in 2024, (about 15 sales / month) at an average selling price of $990,046 ($358/ Sq Ft). while that number is down from 2023, Home Sellers cannot ignore this growing segment of the market, the allure of “new” is a compelling story for Home Buyers.
ABSORPTION RATE
We use absorption rate to price homes correctly for the market; it’s the most accurate way of understanding the market trend. We want to know if demand is on the rise, or trending downward.
We can measure the absorption rate by taking the average number of homes sold / month, (373) and dividing that by the current inventory, (2,002) Based on this metric, in 2024 we had a 19% absorption rate valley-wide.
The standard for measuring Seller market vs Buyer market:
Above 20% – Sellers Market Below 15% – Buyers Market
At 19%, the valley market is slightly in the Seller’s favor. However, each community is a micro market unto itself; as a seasoned real estate professional, we will do this exercise for each community to understand the market and trend. This piece of information helps our Home Sellers accurately price their homes for current market conditions and helps us show our Buyers what they can expect, and how to frame a winning offer.
The absorption rate can also help us see the pace of the market. Based on the same metrics, we know that If no new listings were to enter the market, it would take about 5.4 months to clear the existing inventory. 6 months is considered a balanced market, so again we see that the market is slightly tipped in the seller’s favor, even though we’ve seen a slight uptick in the time it’s taking to sell a home.
INVENTORY
Throughout 2024 the valley real estate markets saw a steady increase in inventory, (up about 38% from 2023). Currently, we have 2,002 single-family homes for sale in the valley. Based on the rate of sales and current inventory. the market is absorbing about 373 units / month. (12 sales / day)
COUNTRY CLUBS
We have more than 120 Golf Courses in the Coachella Valley and over 45 are Private Country Club Communities, They range from Lock and Leave Condos to Luxury Custom Estates. Private Country Clubs and Gated Communities are still enjoying a resurgence in interest post-pandemic, although some clubs have slowed slightly, many of our top-tier clubs have membership waiting lists. This segment of the real estate market remains strong
PRIVATE GOLF CLUBS
We surveyed 19 Private Golf Clubs in the Desert. 11 had an increase in sales, and 13 either had a price increase or had roughly the same number of sales as last year.
The winner for price appreciation was El Dorado Country Club in Indian Wells. They had a 29% increase in the number of sales and a whopping 40% increase in prices over 2023. Next was Indian Wells Country Club, with a 34% price increase but a 14% decline in the number of sales.
At the other end of the spectrum, The Madison had the largest decline in price, down 21%, and a 43% decline in the number of sales. Followed by Tradition Golf Club also in La Quinta, with a 10% decline in price and 17% decline in sales.
In our Guide Private Golf Clubs of the Desert, we look at each club, the amenities they offer, and Real Estate sales for 2024. If you would like a copy, contact me directly.
FOREIGN vs DOMESTIC BUYERS
The US dollar was up almost 8% last year compared to the Canadian dollar. As of January 13, 2025 – for every $1 US, it costs the Canadian Home Buyer / Homeowner $1.44 Canadian.
That exchange not only impacts the home-buying decision but also impacts the cost of ownership for the Canadian. A simple example; the average pool service costs about $150 / month. For the Canadian homeowner, they will spend $216. Expand those higher costs out to all facets of maintaining a home in the US, and it can be a deterrent to investing in Desert real estate.
This may show up as Canadian homeowners selling their Desert home; cashing out of the market – but we haven’t seen a big increase. It could become a factor, adding to our inventory – we’ll see how this plays out in 2025.
In years past, the Canadian Buyer represented as much as 31% of our sales when the US and Canadian dollar were on par.
Today, our home buyers are more likely to be domestic coming from the States and most likely, from our drive-markets such as Orange, LA, San Diego, and San Francisco. The recent fires in LA County will most surely increase this market segment.
WHAT’S AHEAD FOR 2025?
Consensus says mortgage interest rates will remain in the mid 6% range throughout 2025. As higher rates have been a factor for most of 2024, Home Buyers are becoming more accustomed to the current mortgage rate environment, helping reset norms.
Home Buyers were more “discerning” in 2024, and they were more willing to walk. In a 2024 survey, June 2024 had the highest number of canceled sales of any June.
With the 2025 season now in full swing, we’re seeing an increase in Buyer activity, and some price reductions. Home sellers who are unwilling to align their pricing with current conditions are sitting on the market longer, with some not selling. Homes are selling on average at about 98% of the asking price, with the Luxury and Condo markets a little softer, selling at an average of 97% of the asking price.
SUMMARY
For Home Sellers – There’s more inventory on the market and the competition for a Buyer’s attention is more of a challenge. Buyers have more choices, so they can be choosy. They’re not just comparing the home, they’re also looking at the neighborhood, price, and the terms – it all needs to align. Buyers are buying, they’re willing to pay for move-in ready properties that show well and top-notch condition. But they are not willing to over-pay. Conditions that created multiple offers and over-bidding are over.
Buyers are looking for more current design trends. The gray phase has given way to a more neutral color pallet, re-introducing warm natural color tones back into the design trend. Buyers are looking for light, bright, and a more contemporary look. That means for top dollar, Home Sellers need to bring their properties up to the new standard.
Short of that, the price must reflect the investment a Buyer will need to make for the changes. The problem with that strategy is that buyers are generally not willing to do work unless the price makes it too good to pass up and even then, they’re reluctant if they don’t have resources in place to do the work. Presentation and pricing are more important now than ever.
For Home Buyers – The Market is more balanced as we enter 2025 but favors Home Sellers. Prices are not falling through the floor and market indicators say they aren’t likely to any time soon. Most Home Sellers are in a strong equity position and absent anecdotal stories of “needing to sell” Home Sellers can afford to wait.
For both Home Buyers and Home Sellers, understanding “fair market value” for the neighborhood is essential to negotiating your best deal and successfully closing.
A TRUSTED RESOURCE
For a market in transition, having an experienced team working for you is more important now than ever. We have a deep understanding of this market and bring over 20 years of market knowledge and experience to assist you in negotiating your best deal whether as a Home Seller looking to capture top dollar for your home or as a Home Buyer looking for your Desert Dream Home.
Reach out to us today to find out why most of our business is repeat clients and referrals from happy clients. We like to say, “if it’s important to you, it’s important to us.” It defines who we are and the way we do business.
We want to be your first call when it’s time to buy or sell your home in the Desert. We’re here, and on standby to help, we look forward to the opportunity to discuss your real estate goals.
If you have a question or would like more information about your neighborhood, contact me today
CHEERS!
Broker Associate | LUXE Director
01346930
Bennion Deville Homes
