Market Update – May 2015
The Greater Palm Springs and Coachella Valley real estate market is currently challenged by slow sales. Home sales are about 15% below two years ago and 30% below the long-term norms of the pre-bubble market period. Several factors that were mentioned in last month’s update (higher prices, loss of our Canadian buyers due to devaluation of their currency and tight lending) continue to be factors in the sluggish sales growth. From the latest information provided by the Palm Springs Regional Association of Realtors and Market Watch, there are two notable factors to consider and watch to understand the current trends of the local real estate market.
As the chart above indicates, three of our cities (Coachella, Palm Springs and Cathedral City) have seen significant increases in their price per square foot over the past 12 months. Palm Springs is now only 11% shy of its all-time high price per square foot experienced in 2006.
Of all the Desert Resort Cities, Palm Springs continues to be the most active market in overall sales activity. Some factors that may contribute to Palm Springs’ greater success in real estate recovery include: the continued increase of tourism and marketable promotion of the city’s overall appeal as a brand and destination; a greater concentration of homes for sale at a price point under $1 million; a limited space available for new construction – though, to note, there continues to be an increase in new construction projects in Palm Springs in addition to the revival of additional Phase projection construction in developments where further planned build-outs froze after the real estate bubble.
The inventory of homes throughout our desert resort cities has increased by nearly 1,000 units from last year. April 2015 saw 5,029 homes on market in the Coachella Valley. The overall valley has an average of 7.2 months of inventory. Many of our valley cities continue to be in a Buyer’s Market with the competitive negotiating edge proving that pricing your home correctly when first placing it on the market is key to successful listing and selling.
On a positive note, we anticipate our selling season expanding past the normal “season” of the Valley with buyers showing a strong presence into June and the summer months. This is also indicative of the Valley’s overall appeal as a year-round destination with special events and attractions being offered and sponsored by local municipalities to further enhance this appeal. Once a Winter & Spring destination, our valley cities are continuing to see extended tourism and home sales seasons extending further into the Summer months and starting earlier in the Fall as well.