Home sales in Coachella Valley are on the decline, the downturn caused by a seasonal trend and the challenge of a record-low inventory.
As reported in The Palm Springs Post, home sales in Palm Springs, along with much of the Coachella Valley, saw a 17% decline in June as the market began to succumb to seasonal pressures. According to a recent Greater Palm Springs Realtors Desert Housing Report, residential sales for Coachella Valley fell 23% in June compared to that month last year.
While that may shake up homeowners hoping to hold onto investment value, the reduction in sales alone cannot paint a true picture of the state of real estate in Coachella Valley. Pricing is another factor especially as it impacts availability for first-time buyers. Increasingly homes are moving into the higher price ranges, and few are priced under $200,000 for condominiums and single-family residences, The Palm Springs Post said.
And even though the Coachella Valley housing market has entered the seasonal period when home prices usually slow, or even decline, the average price of a detached home in the region in July was $710,000, up $10,000 for the month and 19.3% year over year.
That may be so but in a bit of good news for home buyers, COVID's escalation of housing prices is starting to wear off.
In a recent interview, Frank Alvarez, broker of Greater Palm Springs Realtors, told both buyers and sellers what to expect as the market enters what he calls a "period of stabilization" and home prices recover from the pandemic's inflationary influence.
"What we are seeing is a plateau of home prices," Alvarez said. "The steep increases we saw during the pandemic have leveled off. The leveling of prices is being seen throughout our entire market region with few exceptions."
What this means is an opportunity for buyers and sellers to enter reasonable negotiations because there is no longer the pressure of bidding wars in most cases, he said. Because homes are moving closer to true value, that has resulted in few foreclosures, if any, he said, but it is also a departure from overinflated prices.
As for the availability of homes for sale in Coachella Valley, Alvarez said the record-low supply continues to face buyers. This is especially true for homes priced under $500,000, The Palm Springs Post reported. But there are signs of relief to this inventory shortfall on the horizon.
"There are more homes coming on the market than before, but we still have a historically low supply, so while there is no downward pressure on prices, the upward pressure has subsided as well," Alvarez said. "We are seeing more price reductions on the Multiple Listing Service (MLS); however, this is normal when homes that hit the market are over-priced, and it does not indicate a reduction for property values."
That's good news for property owners because it shows their homes are holding value.
"Home buyers should know that while prices are not currently decreasing, they now have more options coming on the market," Alvarez said. "They don’t need to panic-buy, and in most cases, they are not experiencing bidding wars; however, sellers are not distressed either and low-ball offers will not have much likelihood of succeeding."
Today there is more room, he said, for reasonable negotiations with a seller to reduce a home's asking price.
His advice for sellers is to consider market comps when pricing their homes and not anticipate multiple offers.
"So they need to have reasonable expectations," Alvarez said. "Also where their home would sell over a weekend, now they may need to wait for the right buyer to show up."
Reasonable seems to be the name of the game whether buying or selling in Coachella Valley these days.
"For those people who are hoping for (buyers) or afraid of (property owners) a large price drop, there is no indication that it’s coming," Alvarez said. "Employment is robust and plenty of jobs mean plenty of paychecks and home buyers. Interest rate hikes have put the brakes on a runaway freight train, so right now we are seeing a period of stabilization."
Those foreclosure bargains are not a force in today's market by and large.
"For those who are hoping to pick up a foreclosure, we don’t anticipate that," Alvarez said. "Most of the home buyers during the price runup had large down-payments or were all cash buyers - those don’t become foreclosures. Right now homeowners are sitting on a pile of equity, and even if there is a price dip, they will not be upside-down on their loans and if they sell it would be a standard sale, not a foreclosure or short sale."
According to Rocket Homes, the following changes in listing prices were seen in the Coachella Valley housing market from June 2022 to July 2022: one-bedroom properties prices increased by 50.9%; two-bedroom properties jumped 30%; three-bedroom properties went up by 26.2%; four-bedroom properties rose by 16.6%; and prices of five-bedroom properties increased by 18.6%.