Coachella Valley median housing prices continued to inch up for the eighth consecutive month, even as sales continued on a year-over-year decline. Prices are now only 6 percent short of the long-term 3.5 percent growth curve. However, sales are 15 percent less than the highest sales rate of the recovery established exactly two years ago.
This pattern indicates that home buyers have been slowly but consistently pulling back from the market as prices approach past norms. This is the sign of a natural and normal housing market.
Year-over-year price gains throughout the valley’s nine cities are also beginning to moderate — but at an uneven pace. A year ago, 12-month city gains varied from 40 percent to 20 percent, as we were in the powerful part of the price surge following the crisis lows of 2011. While gains are still strong, most are now clustered around year-over-year returns of 12 percent.
Over the last seven years, many investors purchased homes in the Coachella Valley outright, with 100 percent cash and no financing of any kind. Interestingly, this created a form of stability not typically found in most other markets.
Price risk in normal housing communities usually results from two factors: a cyclical recession that forced selling by homeowners unable to make mortgage payments, or variable rate mortgage resets with homeowners no longer able to make the higher payment. With so many homes now owned without mortgages, these two risks are very much reduced,