DESERT REAL ESTATE MARKET REPORT
The Coachella Valley Real Estate Market has Good News for Both Home Buyers and Home Sellers
Research by Market Watch, LLC shows the median home price in the Valley at $670,000. A slight dip over the past two months but still up 15% year over year. Some of the decline we can attribute to seasonal fluctuations, but much of it represents a general return to a more sustainable market locally and across the country. In our Desert Real Estate Market Report, we say we’re in a “new market” from what we saw during, and right after the pandemic.
Based on a 3-month average, valley wide we averaged 581 unit sales per month. That’s about 32% less than last year. The largest percentage of declines were Rancho Mirage, La Quinta & Cathedral City. Properties priced at $700,000 and above have been less affected, with sales running similar to last year.
LIST TO SALE PRICE RATIO
At the end of September, 28% of homes that sold in the Valley, sold above their list price. This compares to 51% a year ago. With rising inventory, in our Desert Real Estate Market Report for the Coachella Valley, Buyers have more of a selection and aren’t as willing to over-bid as they were. Experts expect the pricing premiums will return to past norms which is around 10%.
On September 1st, in our Desert Real Estate Market Report for the Coachella Valley, the Valley inventory was 1,807 units about 13% higher than August. As season gets closer, we expect to see inventory grow further. Our economic team expects we may hit 2,500 units by February. The “months of sales” ratio for the Valley was 2.2 months, up from a year ago. but still below normal ratios of 3 – 3.5 months of inventory.
Interest rates are at the center of the discussion. As of this Desert Real Estate Market Report for the Coachella Valley, rates for a 30-year conventional mortgage loan are nearing 7%. Higher than they’ve been, but still low compared to history.
Current interest rates factor heavily into a Buyers decision and their ability to buy. As you can see in the chart below, as interest rates increase, buying power decreases.
For example, a $400,000 mortgage last year at 4% interest was $1,910 /month for the mortgage payment. Today, that same $400,000 mortgage at a 7% interest rate will cost $2,661 / month. It matters and will become more of an issue as rates continue to climb. This will put downward pressure on home prices as fewer Buyers can afford to buy, even if prices remain the same. Over time, these factors impact Home Buyers seeking a mortgage, but the cash buyer as well, as they see conditions changing.
While we are seeing an increase in inventory and homes are taking longer to sell; prices remain strong. Over the past two + years, many Home Buyers sold their homes in higher priced areas like Orange County, LA, San Diego & San Francisco and brought those proceeds to the Valley. About 70% of our sales in the Valley in the past year have been all cash, that ratio is normally about 30%. This influx of cash, along with historic low inventory and interest rates were the main driver behind the dramatic increase in home prices. But as the market returns to more sustainable conditions, we’ll see both Home Buyers and Home Sellers more comfortable making the decision to make a move.
The work from home trend has slowed since the peak of the pandemic; many employers are calling their workforce back to the office. But experts say the hybrid work model is now part of our new normal and will be a positive factor for home sales here in the Coachella Valley.
In our Desert Real Estate Market Report for the Coachella Valley, we say there will always be a market for nice homes in good locations that are well presented. We believe homes that are positioned properly for the current market will sell at, or even above asking price, but it will take more skill in price positioning and marketing to make that happen.
If you would like more information about the local real esate market, Cathi Walter is a local expert and trusted resource for real estate in the Desert.
You can reach Cathi by cell or text at (760) 218 – 5752 or send an email to [email protected]