DESERT REAL ESTATE MARKET REPORT
2018 Year in Review
As we start 2019, it’s time to take look back at how the Desert Real Estate Market performed last year and look for developing trends.
In 2018, there were 5,836 single family home sales throughout the Coachella Valley. Those homes sold at an average of $610,300 and an average of $260. / Sq Ft. Homes that were priced correctly for the market, sold on average in 89 days. The highest sale price in 2018 was $12,000,000 for a home located in The Madison in La Quinta.
With those statistics, we compared 2018 sales to the previous year and found that while the number of sales were down slightly overall, (2%), Selling Prices were up 10% and the price / sq ft was up 8%. The time it took to sell was down 10% from the year prior. The highest priced home sale in 2017 was $8,700,000. for a home located in The Vintage Country Club in Indian Wells.
While prices are up, inventories remain low as compared to this time of season in years past. Historically when the inventory of homes for sale is low, prices tend to rise due to the pressures of supply and demand.
Interest rates also play an important role in how markets perform; rates are still low despite the fact that the Fed gave us 4 rate increases in 2018. As rates increase, buyers can afford less house for the same mortgage payment, which ultimately puts downward pressure on home prices.
But good news, rates pulled back a bit this week. Conforming loans, (up to $484,350) for a 30 year fixed rate is still just 4.47%.
The Coachella Valley has long been viewed as a destination for the soon to retire and already retired home buyers looking for an active lifestyle, but with the increase in mobile commuting, people can work from anywhere. We’re also seeing more young home buyers who are looking for a quality lifestyle, moving to the Desert full time. Easy Freeway and International Airport access makes that possible.
Combine the Lifestyle that only the Coachella Valley offers along with affordable home prices – the Valley is and will continue to be a destination for both full time residents, second home buyers and
We have a strong and steady real estate market here in the Coachella Valley.
If you would like more detailed information about your neighborhood specifically, drop me a line – we just finished our 2018 “Year in Review” Market Report, I’m happy to send you a copy.
Broker Associate with Bennion Deville Homes
The Real Estate Corner Desert Market Update
NUMBER OF SALES
Home sales are up Valley-wide. The total three-month sales are up 2.9%. On a city by city basis, six cities show higher sales, with three; Palm Desert, Desert Hot Springs and Palm Springs showing the largest increase in sales.
The three cities with the largest sales declines are Indio, Indian Wells and Cathedral City.
INVENTORY OF HOMES FOR SALE
While home sales are up, inventories are down. Typically our inventories dip to to their lowest point every year toward the end of September, but this year inventories are even lower.
Low inventory acts as both a positive and negative; it’s positive for sellers and future home sellers as it tends to move home prices higher. But, it’s also a negative in that low inventory puts the brakes on the number of sales. If interest rates continue to increase, that can put a damper on sales as the cost of borrowing money for a mortgage becomes more expensive.
MONTHS SUPPLY OF HOMES FOR SALE BY CITY
The month’s of supply ratio is down valley-wide compared to one year ago in every city. Most have less than 4 month supply except two; La Quinta which currently has a 4.5 month supply and Indian Wells with a 6 month supply of homes to sell.
MONTHS SUPPLY OF HOMES FOR SALE BY PRICE BRACKETS
When we look at the supply of homes by price category, we see the supply is lower across all price brackets compared to one year ago. The biggest change is homes priced above $800,000. Last year the higher price points were taking 7.5 months – 1 year to sell. Now, it’s taking on average 5.3 – 8 months
The tipping point when using this metric is 6 month’s. 6 months is considered a “Balanced Market”, not particularly favoring either Home Buyers or Home Sellers. Less than 6 months, the market is tipped in the Sellers favor, otherwise known as a “Sellers Market”. More than 6 month supply is viewed as a “Buyers Market”.
As home prices or the cost of buying a home, (rising interest rates), increase – sales will start to slow putting downward pressure on pricing. Markets are always in a state of flux, moving from one market to another and rarely stopping at “balanced” for long.
While there is typically a lag period between market shifts, the lag time is shorter as the number of sales are increasing. Home sellers quickly see an improving market and strive to maximize the price they can ask. When prices increase too fast or too far ahead of sales, potential home buyer’s become reluctant to make offers, fearing they could be buying at the peak.
DISCOUNT FROM ASKING PRICE
In 2018, when negotiating a sale price with buyers; home sellers are discounting their listed price an average of 2%. One year ago, sellers needed to discount an average 2.4% off their asking price to close a sale.
For example, this ratio means if a home is listed at $400,000 it’s selling at an average of 98% of their asking price, or $392,000. a discount of $8,000. This metric also shows a strong and improving real estate market here in the Desert.
When we look at the story each of these metrics are showing for the Desert Real Estate Market, we can see an improving but pretty balanced market. In addition, we can see that the market has had and continues to show sustained growth. Making now the right time to be a participant in the market.
The Desert Lifestyle is unlike any other, as we head into our season now is a great time see what the Desert has to offer. Check out these FAB Desert Homes!
Palm Desert Golf Cart Parade 2018
Sunday, October 28th from 12:00 – 3:00 p.m.
It’s time to kick off a new season in the Desert with the Palm Desert Golf Cart Parade! This years theme is “Celebrating our Super Heroes” Our community will showcase and celebrate all of our different types of Super Hero’s including our Police Officers, Fireman, Veterans, Teachers, Parents, the list is endless. Come be a part of the pageantry and fun as scores of whimsically decorated golf carts and bands march down El Paseo.
Palm Desert is a progressive city with an eye on the future – this picturesque desert community has a Dynamic Big City Vibe; with Exclusive Country Clubs, Fine Dining, Art Galleries, Live Theater, World Class Championship Golf and home to the valleys only zoo, The Living Desert, which combines an indigenous zoo with an authentic arboretum. Be a part of what makes Palm Desert the place to be, check out these FAB homes for sale in Palm Desert!
SUMMER STAGING TIPS
Did you know that more than 50% of the desert home sales happen during the summer months? The desert summer real estate market is as hot as it is outside; knowing how to present your home for sale will be an important factor for you to ask and receive top dollar.
Top 6 Summer Staging Tips
Keep it cool as a cucumber. no one wants to walk into a hot house. All of a sudden, they’re thinking how do I get out of here instead of looking at your home. Now is not the time to skimp on energy bills.
Show that the grass is greener. High water costs and water conservation are hard on our summer desert landscape. However, keeping at least the front landscape looking fresh and lush will make your home stand out as the gem. The curb appeal will lure them in.
Set the Mood. set up a refreshing beverage station for your hot and tired home buyer’s and their agents. Place a vase with fresh flowers. Have a pitcher of Ice Tea or Lemonade with lots of ice and pretty glasses set out just before your showing.
Visual Power. Use fresh flowers in as many places througout your house as you can. Make sure your home looks fresh, cheery and refreshing as possible.
Making Scents. Aromatherapy can help make your home more alluring. Scents like Citrus, Eucalyptus or Rosemary say summer. They add a clean refreshing scent to your home.
In the Swing. There is an intimate relationship between music and marketing. Music can evoke an emotional response. The awkward sound of heels on a hard floor is hardly inspiring. Heighten the senses of your buyer with background music, it changes the ambiance and heightens the senses and mood of buyers touring a home. Music has a persuasive impact and can create an illusion of life inside your home for buyers increasing their emotional attachment. The music you play is important, pair the music style to the style of your home and the buyer’s you’re targeting.
Summer Desert Market Report – Median home prices rose for the 8th straight month. Up 9.6% from last year. The hottest cities for sales by volume were Palm Desert (233), Palm Springs (213), La Quinta (156), Indio (131), Rancho Mirage (97). Each city and each community has its own story some communities have seen huge growth, while others are relatively flat. The cities that had the largest price increases, have seen the number of sales flatten, which tells us that prices were getting ahead of the market.
Inventories are down again putting upward pressure on pricing. Overall the desert has seen a decline in the time it’s taking to sell, nicely presented homes in a good location and priced well are selling quickly. Currently there is a 3 month supply of homes for sale in the desert, which puts us in a “Sellers Market” as we head into season.
The Fed has indicated there will likely be two more interest rate increases before the end of the year, which could start to weigh on the market and slow sales until the shock is absorbed.
Southern California and specifically, the Coachella Valley continues to be a sought after destination for a second home get a way.
As we head into our “Season”, we expect to see continued strong home sales and price appreciation valley-wide.
How’s your neighborhood doing? Send me an email, I’ve got the details!
Ever wonder how much income you need to buy an average home in other areas of the country?
@HowMuch.net just published a map showing How much income you need to buy the average home in each state in the U.S.
They collected average home prices for every state from Zillow and then plugged that information into a mortgage calculator to figure out monthly payments. The interest rates used varied from 4 to 5% depending on the market, a 10% down payment, and total cost of housing not exceeding more than 30% of gross income. Using this rule as the benchmark, they calculated the minimum salary required to afford the average home in each state.
The Top Three Places Where You Need the Highest Salaries to Afford the Average Home 1. Hawaii: $153,520 for a house worth $610,000 2. Washington, DC: $138,440 for a house worth $549,000 3. California: $120,120 for a house worth $499,900 Here’s a quick snapshot of housing affordability across the United States.
Home much income do you need to buy the average home in each state; Check it out!
HOME SALE NEGOTIATIONS
Home Sellers Want the Highest Price and Home Buyers Want a Deal.
How Can They Ever Find Common Ground?
THE TUG OF WAR BEGINS!
The foundation for any negotiation starts with the data, the black and white of it all. Then it becomes a dance of personalities, emotions, and skill.
At the end of the day, Sellers want to sell and Buyers want to buy and both have the goal to close the deal. It’s the in between that can get a little murky along the way.
In every market, one party has the upper hand; in a Buyer’s market, there are lot’s of choices and it can be easy for the Buyer to walk away in favor of the home down the street. In a Seller’s market, inventories are tight with limited choices, which can create multiple offers or bidding wars and the Seller can be picky about the price and terms.
Typically, in any kind of market, a truly motivated Seller is less inclined to want a lengthy negotiation, they just want to get the deal done.
TOP 10 THINGS TO KNOW WHEN YOU’RE
NEGOTIATING YOUR NEXT REAL ESTATE DEAL
PRICE – it means different things to different parties. The Seller wants the highest price and the Buyer wants to pay the least amount possible. They don’t want to overpay or price themselves out of a resale when it comes time for them to sell.
CLOSING COSTS – Buyers will pay the prepaid closing costs for their mortgage. Items like taxes and insurance. The Buyer might ask for a flat amount paid by the Seller to go towards their closing costs; up to 3% of non-recurring closing costs are allowed by the lender. In this case, if the Seller is asked to make a concession, that will typically end up in a higher sales price for the Buyer.
CLOSING DATE – Sellers may want to get out from under the monthly costs as quickly as possible to preserve their capital. Buyers, when getting a mortgage will pre-pay the first month’s mortgage payment so they don’t have to make their 1st mortgage payment until the 2nd month, in this case, the Buyer will likely want to move in at the beginning of the month so they can skip the next month.
FINANCING CONTINGENCIES – Buyers who are getting a mortgage are competing with all cash offers, which is more appealing to any Seller knowing that there isn’t a financing contingency. The best way for a Buyer to compete is to get complete loan approval prior to making the offer, that way they can move quickly to remove or waive the financing contingencies.
APPRAISAL CONTINGENCY – If the Buyer is getting a mortgage, the Seller can push the Buyer to waive the appraisal contingency. On a conventional mortgage, banks will lend 80% of the appraised value or the purchase price, whichever is lower. But if the house doesn’t appraise for the contract purchase price and the appraisal contingency has been waived, the Buyer must come up with the difference. Any shortfall would have to be paid in cash by the Buyer.
HOME WARRANTY – The Home Seller will typically provide a one year home warranty that covers the mechanical’s, appliances and pool equipment. This is a “Peace of Mine” insurance policy for the home seller in case something goes wrong.
LEASEBACK – The Seller may need a little extra time to make the move, especially if they’ve lived in the home for many years. The Buyer could offer a zero cost rent back for 30 days to entice the Seller to accept a price that they may not otherwise accept.
REPAIRS – When a home needs a lot of updating, the Buyer has a lot of room to negotiate if the home is priced on par with properties that are updated. If the Kitchen and Baths are out of date, the appliances are old and there’s popcorn on the ceilings the Buyer will make a lower offer to accommodate the repairs necessary. The Seller can price the home accordingly ahead of time and say they won’t make any repairs, in this case, there will be less room to negotiate on price.
FURNITURE – Negotiation over personal property such as the furniture has killed more than one deal, this is when emotions can get heated. It’s best if the Seller will consider selling the furniture to make out a list of items and their prices ahead of time. An important note here, a lender will not lend on personal furniture. If there will be personal property transferred it must be done outside of escrow with a bill of sale.
APPLIANCES – The stove, dishwasher, built-in microwave and any other built-in appliance will be included, but a free-standing refrigerator or the Washer and Dryer don’t necessarily. Seller many times will wait to see how the negotiation goes first before they commit.
INSPECTION CONTINGENCY – Buyer’s remorse and waiving their home inspection contingency generally go hand in hand. It’s never a good idea to waive the home inspection unless it’s a complete remodel and you re a skilled investor / contractor / remodeler. But the Buyer can shorten the time frame for the inspection from 17 days to maybe 10 or even 7 days.
HOA ASSESSMENTS – If the home is in a homeowners association – there could potentially be special assessments in place or coming up. The Buyer may ask the Seller to clear the assessment, paying it all. This can be negotiated between Buyer and Seller for who pays and how much they pay toward the assessment.
Want a break from the desert heat? Head to Idyllwild for Jazz in the Pines, a 30-minute drive from the desert, but a world away.
Enjoy a Weekend of Jazz in the Pines with more than two dozen Amazing Jazz, Blues, and R & B Artists. Sit back and take in this Breathtaking Setting with a Gentle Breeze carrying the Fresh Scent of the Mountain Pines in the Air. August 11 – 13 will be the Idyllwild Arts 24th Annual Jazz in the Pines Event including the Famous Festival Marketplace with all types of Art including Hand-made Jewelry, Art, Pottery & Crafts, it’s easy to find your treasure. Not to be outdone, you’ll also find a variety of great food and drink including a Cajun BBQ this year, home-made ice cream, smoothies and more.
Close to Idyllwild sits this Stunning Custom Tennis Estate located high off the desert floor, and still a short drive to El Paseo for Dining, Entertainment, and Shopping.This home has great value and is a Must See Before you Buy,
Call or Email Cathi today (760) 218 – 5752 for more information.
Idyllwild Jazz in the Pines Line-Up
Beginning Friday evening, August 11th at 6:00pm
Patrons VIP Dinner and Dance
Besos de Coco
Lorraine Castellanos – Guitar, Vocals
Evona Wascinski – Bass
Claudia Gomez Vorce – Percussion and Tap Dance
Headliner: Gilbert Hansen Band
Gilbert Hansen – Bass, Harmonica, Vocals
Rick Cowling – Guitar, Keys, Vocals
Lenny Hansell – Guitar, Vocals
Sal Frisura – Drums and Vocals
Saturday on the Main Stage
11:00am – 12:15pm
Matt DiBiase – Vibraphone, MalletKat, Electronics
Nathan Rice – Tenor Saxophone
Russell GelmanSheehan – Guitar
Giveton Gelin – Trumpet
Michael Orenstein – Keys
Eli Heath – Bass
Patrick Graney – Percussion
Chase Kuesel – Drums
12:45pm – 2:00pm
Robert Dove Quintet
Robert Dove – Tenor Saxophone
Gilbert Castellanos – Trumpet
Hugo Suarez – Piano
George Delancey – Bass
Kevin Kanner – Drums
2:30pm – 3:45pm
Evan Christopher’s Clarinet Road
Evan Christopher – Clarinet
Bob Boss – Guitar
Joshua White – Piano
Daniel Sazer-Krebbers – Bass
Andy Fraga, Jr., – Drums
4:15pm – 5:30pm
The Charles McPherson Quintet
Charles McPherson – Alto Saxophone
Randy Porter – Piano
Rob Thorsen – Bass
Richard Weller – Drums
Gilbert Castellanos – Trumpet
Lowman Concert Hall 6:30pm – 8:30pm
Seahawk MOJO (Modern Jazz Orchestra)
Sunday at Stephens Hall 10:45 am – 11:45am
Sunday on the Main Stage 11:00am – 12:15pm
Voices in Praise Gospel Choir (VIP)
Bob Emmit – Piano
Larry Washington – Drums/Vocals
Brad Bobo – Bass/Vocals
Yve Evans – Piano/Vocals
Ava Dupree – Vocals
Chrystal Matthews – Vocals
Kym Foley – Vocals
Allison Bobo – Vocals
Billy Redd – Vocals
Ricky Taylor – Vocals
12:45pm – 2:00pm
Tamir Hendelman Trio
Tamir Hendelman – Piano
Alex Frank – Bass
Dean Koba – Drums
2:30pm – 3:45pm
Vagelis Stefanopoulos (GR) – Composer/Piano
David Lynch (USA) – Saxophones
Adedeji Adetayo (Nigeria) – Guitar/Vocals
Yoel Soto (Cuba) – Bass
Yiannis Angelopoulos (GR) – Drums
4:15pm – 5:30pm
Russell Malone Quartet
Russell Malone – Guitar
Rick Germanson – Piano
Luke Sellick – Bass
Willie Jones III – Drums
Tickets sell fast, prices range from $85 for one-day admission to $350 for the Patron Package which includes all events throughout the weekend. All proceeds from the festival benefit Idyllwild Arts. Our mission is changing lives through the transformative power of art.