The Real Estate Market in the Coachella Valley and COVID
A standard market update isn’t sufficient to describe the rapidly changing real estate market in the Coachella Valley due to COVID.
So with the help of Market Watch LLC, we’re watching the market using shorter term metrics that demonstrate more of the daily moves, based on a 28 day average.
We’re comparing Real Estate Market Metrics *March 19 – May 15, 2020 vs the same time period in 2019 and the impact COVID has had on the Coachella Valley Real Estate Market. *(Date of Governor Newsom’s Stay at Home order)
Coachella Valley Single Family Homes
PENDING SALES –
One of many metrics we use to pick up developing market trends is Pending Home Sales. In 2019 there was an average of 23 units going under contract everyday in the Coachella Valley. For the first 2 weeks after the stay at home order, people and business froze – no one knew what to expect and as real estate agents, we were legally NOT able to practice Real Estate – so, it’s no surprise that as of May 15, 2020 we averaged 11 homes going under contract per day. That’s about a 52% decline in the number of sales from one year ago. Eventually, Governor Newsom added the practice of real estate to the list of “Essential Businesses” and since then we’ve started to see a substantial uptick in online home buyer activity.
PRICE / SQ FT –
Interestingly for Single Family Homes,
May 1, 2019 the average price / sq ft was $244. This year it’s $238 / sq ft.
Down just 2.4%. Prices are showing only a small downward bias.
Inventory is actually down from one year ago. May 1, 2019 we had 3,636 units for sale, but inventories had been down since November 2018, (prior to COVID). Inventories have been hovering around 3,000 units for sale since then. We’re down only about 100 units since.
NEW LISTINGS –
No rush to sell. Net new listings are also down, offsetting the decline in pending sales. We generally average about 25 new listings / day, (adjusted for seasonal swings). Currently we’re at about 20 new listings / day.
In a standard market, we average about 5 cancellations / day in the Coachella Valley. Initially, right after Gov Newsom’s Stay at Home order on March 19th, there was a spike in cancellations for about 2 weeks, but we’re now back to the average. So at this point we’re not seeing a long term affect, as buyer’s (and seller’s too) are feeling more confident.
NOTICE OF DEFAULT LISTINGS AND SALES –
From March 19 – May 15, 2019 there were 4 homes that sold as foreclosure with notice of default.
2020 there are 3 homes in default listed for sale and 2 have sold.
DAYS ON MARKET –
There has been little effect to the average time on market.
May 1, 2019 it was taking on average 76 days to sell.
May 1, 2020 is an average 78 days.
PRICE DISCOUNTS –
In a standard market, we average 3% discount off asking price. May 1, 2020 we were averaging 3.2% price discount from asking.
Unlike the financial crisis of 2008 where our entire financial system was teetering on collapse with huge spikes in housing inventory, little to no lending activity, and little to no buyer activity – This is a health crisis, our financial institutions are solid and lending practices are open and operating properly and interest rates are again at near historic lows. True, we’ve seen a decline in the number of sales, but it’s trending up as more and more states and cities open up for business. And unlike 2008, inventories remain low and steady with prices holding.
I believe we will see a shift away from the “trendy urban lifestyle” that’s been so popular among Millennial’s. This health scare seemed to be in epic proportions in large cities and relatively small in outlying suburban areas; shining a spotlight on the benefits of living in areas with space. Both business and their employees have learned they really can work from home and still be productive. The natural next step will be people looking for areas where they can live and work from home but not too far from the office. Far enough away that they feel safe without sacrificing their lifestyle. And an area with homes they can afford to buy. The very things that make our Desert an attractive place for people of all ages to live, work and play.
Yes, we may have a bumpy road ahead short term, but people buy and sell homes everyday for a million different reasons – I do not see this lasting as a long term market problem. There’s pent up demand waiting to get back into the swing of life and doing business. I’m optimistic for the future of our Coachella Valley real estate market.
2019 Coachella Valley Annual Real Estate Report
and 2020 Projections
Coachella Valley Real Estate Market
Our market has become more year round with the number of sales during the summer months exceeding sales during “season” in the past two years running.
WHO WERE THE HOME BUYERS
Remote Owners represented 50% of our home buyers who were looking for a second home or investment property. Nearly 68% of those Remote Owners came from other California cities, followed in numbers by Washington state. Canadian Home Buyers are making an appearance again, with 14% of the Remote Owners coming from Canada.
Home Buyers from other metropolitan markets; especially our drive markets such as Los Angeles, Orange County and San Diego see great value here in Coachella Valley Real Estate. Baby Boomers are cashing out from other areas, and looking for a Lifestyle in their retirement; that’s largely what’s driving home sales in the Coachella Valley. Our sunny blue skies are pretty inviting, compared to snow and rain in other parts of the country.
WHAT WERE THE HOME BUYERS LOOKING FOR?
Bigger is not necessarily better in the case of our home buyer demographic. Aging Boomers want a simpler lifestyle and a home that requires less maintenance. Great Room Living, Each Bedroom with en-suite baths, Master Suite separate from the Guest Bedrooms, No Stairs and Light and Bright inside – with the current design trends showing Sleek White Gourmet Kitchens. Outdoor Living is a Must with Covered Outdoor Seating and Outdoor Kitchen / BBQ, most home buyers want a private pool and Views.
HOME BUYERS WANT TO BE WHERE THE ACTION IS
With more and more commercial development and signature events going on here in the desert, growth is on a fast pace and home buyers want to be where the action is. The Coachella Valley has an attractive lifestyle and home prices are a bargain comparatively speaking.
COACHELLA VALLEY REAL ESTATE BY THE NUMBERS
2019 Coachella Valley Real Estate had 9,787 sales. That number is down about 5% from the 10,295 units that sold in 2018. The reason is mostly due to a lack of inventory, (3.9 month supply of homes on the market), but price sensitivity is also a factor.
VALLEY HOUSING INVENTORY
January 1, 2020 there were 3,200 units for sale vs 3,398 units for sale January 1, 2019. The valley median price for detached homes was $425,000 up 9% in 2019. Median prices for attached homes was also up, 2% at $279,000.
The Luxury Home Market has seen in increase in both home value and sales. The California Desert Association of Realtors reports in the million dollar plus market, there was a 22% increase in sales in the 4th quarter of 2019.
|Coachella Valley Luxury Country Club Sales 2019 vs 2018|
|COUNTRY CLUB||2018 SALES||2018 AVERAGE SALE PRICE||2019
|Andalusia||32||$ 1,439,578||27||$ 1,581,415|
|BIGHORN||36||$ 3,892,153||31||$ 3,688,519|
|Eldorado CC||4||$ 1,713,750||16||$ 2,260,250|
|Indian Wells CC||45||$ 1,154,953||23||$ 1,044,192|
|Ironwood CC||22||$ 958,364||18||$ 1,422,800|
|Mission Hills CC||30||$ 914,666||44||$ 1,043,920|
|Mountain View||42||$ 881,012||25||$ 866,619|
|PGA West||121||$ 890,691||111||$ 964,449|
|Tamarisk CC||14||$ 1,090,643||12||$ 1,181,742|
|The Citrus Club||46||$ 871,464||48||$ 900,020|
|The Hideaway||28||$ 2,434,571||44||$ 2,467,545|
|The Madison||8||$ 6,275,000||6||$ 6,529,167|
|The Palms||9||$ 873,333||9||$ 821,555|
|The Reserve||11||$ 1,750,000||14||$ 2,176,607|
|The Quarry||2||$ 2,856,750||2||$ 2,492,500|
|Thunderbird CC||7||$ 1,640,000||5||$ 721,800|
|Toscana CC||37||$ 1,965,600||38||$ 2,171,903|
|Tradition GC||22||$ 2,409,431||22||$ 2,449,045|
|Vintage CC||11||$ 3,271,818||13||$ 3,081,154|
The National Real Estate Outlook
Home prices increased across the country in 2019 and experts predict the National Housing Market will remain strong through 2020 in the January Forbes article: “Five Housing Market Predictions for 2020” they cite crazy rents in the luxury apartment market is driving Millennials to buy instead of rent. More aging Baby Boomers are expected to sell their homes looking to transition into smaller homes with less maintenance. Some estimates say as much as 27% of the housing inventory in the country could hit the market between now and 2040, easing the housing shortage. The National Association of Home Builders report home builder confidence is at a 20 year high, paving the way for a boom in new home construction. That combined with low mortgage rates the outlook for 2020 is strong.
California Real Estate Outlook
The median home price in California was up about 4.1% in 2019, while the number of sales were down slightly. The California Association of Realtors forecast a similar uptick in prices through 2020. Housing affordability, (just 32% of households can afford a median priced home), and low inventory have been an ongoing challenge in California, mortgage interest rates at near historic lows are giving home buyers more buying power.