Local real estate market experts, Market Watch LLC, have just released their April 2020 Desert Housing Report and supplemental COVID-19 Desert Real Estate Report. Market Watch‘s analysis acknowledges that because the California state-wide stay at home order has only been in effect a little over a month (since March 19th), the Desert Housing Report does not reflect the full effects of the Coronavirus pandemic on the market. To address this, they have released their COVID-19 Desert Real Estate Report, using different metrics to show the effect of the Coronavirus pandemic on the local real estate market. Some highlights:
The Coachella Valley detached home median price in April was $440,000, an increase of 3.9% year-over-year.
The Coachella Valley’s attached home median price in April was $299,000, an increase of 1.5% year-over-year. Market Watch reported seeing a little price weakness in the attached home market, not only due to the California state-wide stay at home order, but from the seasonal factors historically in play at this time of the year.
Year-over-year changes in detached home median prices in April by city ranged from +15% in Desert Hot Springs to -19.7% in Indian Wells. Six cities (Desert Hot Springs, Cathedral City, Coachella, Palm Desert, Indio and Palm Springs) showed year-over-year increases in detached home median prices, while three (La Quinta, Rancho Mirage and Indian Wells) showed decreases in detached home median prices. Palm Springs continued to be the only city in the region where the detached home median price is now higher than the previous high median prices reached in 2006 and 2007 (by 13.3%). Year-over-year changes in attached home median prices ranged from +15.2% in Palm Springs to -14.9% in Rancho Mirage. Three cities (Palm Springs, La Quinta and Palm Desert) had year-over-year increases in attached home median prices and four cities (Indian Wells, Cathedral City, Indio and Rancho Mirage) had year-over-year decreases in attached home median prices.
Market Watch noted that short-term sales metrics (sales averaged over the last three months) are beginning to show signs of the impact of the Coronavirus pandemic, with sales of attached homes down 40% from a year ago. While detached home sales were up 4.6% year-over-year in April, total home sales were down 10% year-over-year in April.
In looking at home sales by city, homes sales declined year-over-year in ten cities and stayed the same in Thousand Palms. Home sales decreased year-over-year by 15.9% in Palm Springs, 14% in Desert Hot Springs, 12.5% in Rancho Mirage and 11.6% in Palm Desert.
In looking at home sales in different price ranges, homes sales declined in all price brackets under $500,000. The primary reason for this is the 40% decline in attached home sales and the fact that attached home sale prices are typically under $500,000. For homes priced between $500,000 and a million dollars, home sales were slightly higher than last year. For homes priced over one million dollars, home sales declined for the first time in a while.
Coachella Valley housing inventory on May 1st was 2,982 units. Market Watch noted that inventory continues to be extremely low (hovering around 3,000 units for the last seven months). If inventory were to follow the normal seasonal pattern, it should decline over the next two to three months, hitting a low sometime in September. However, it's not clear what effect the Coronavirus pandemic will have on this pattern.
On May 1st , the months of sales ratio (inventory divided by the average sales rate over the last 12 months) was 3.7 months (almost a month lower than a year ago). The months of supply ratio primarily reflects changes in inventory and not changes in the sales rate. Market Watch noted that since a months of supply ratio of 3.7 months is an extremely low historical rate, it should allow for large effects on the Coachella Valley market due to the Coronavirus pandemic without reaching high, worrisome numbers. The median number of days in the market stands at 52 days, the lowest number in the last five years.
In looking at months of sales ratio by price ranges, Market Watch pointed out strong improvement in the month of sales ratio compared to last year in all the price brackets from $200,000 to over a million dollars.
Market Watch noted that on May 1st, the months of sales ratio improved year-over-year in every one of the Coachella Valley’s nine cities. Like last month, the largest improvements were in Indio, where the ratio went from 3.6 months down to 2.8, and La Quinta, where it went from 6.0 months to 4.4 months.
The April sale price discount from list was -1.9% (down 0.4% from a year ago). This implies that an average home in the region offered at $400,000 sold for $392,400.
Market Watch noted that it recognized a standard housing report would be insufficient to describe the rapidly changing market conditions due to the Coronavirus pandemic and the California state-wide stay at home order. So Market Watch developed shorter-term housing metrics (based on a 28 day moving average) to indicate changing market conditions on a daily basis.
Market Watch included charts showing total average closed and pending sales in Los Angeles and Orange Counties, to show how other real estate markets in Southern California are doing. Pending sales (homes in escrow) is a precursor to final or closed sales. With the average 35 day escrow period in Los Angeles County, by moving pending sales forward on the chart 35 days, it is possible to estimate where closed sales will be in 35 days. Currently, closed sales are averaging 99 units a day while pending sales are 45 units. This indicates that closed sales will probably fall from 99 units to 45 over the next 35 days. Pending sales in LA County are currently 73% less than a year ago.
In Orange County, the average escrow period is 30 days, so moving pending sales forward 30 days should provide an estimate of where closed sales will be in 30 days. Closed sales are currently averaging 49 units a day while pending sales are averaging 18. This indicates that closed sales will probably fall from 49 units per day to 18 units per day in the next 30 days. A year ago, pending sales were averaging 86 units a day. The current pending sales average of 18 units per day represents a 79% decline from the same time last year.
In the Coachella Valley, single family residence escrows average 14 days, which is far shorter than Orange County and LA County, due to the larger percentage of cash sales here. Pending sales are currently averaging 11 units a day compared to 23 units at this time a year ago (a sales decline of 52%). There also appears to be some evidence, due to the slight flattening of the pending sales curve, that pending sales may be stabilizing around 10 units a day.
Average closed and pending condominium sales in the Coachella Valley show that the Coronavirus stay at home order has affected the condo market more than the single-family residence market. Pending sales are down 63% in the condo market. Market Watch pointed out that since 70% of condo owners are remote owners, the difficulties for people outside the region to travel here may be partly responsible.
In looking at average pending sales per week by city, total pending home sales declined by at least 50% in Cathedral City, Desert Hot Springs, Indio, Palm Desert, Palm Springs and Rancho Mirage. In the case of condominiums, total pending condo sales declined by at least 60% in Cathedral City, Indio, Palm Desert, Palm Springs and Rancho Mirage. Market Watch felt that these steep declines in pending condominium sales could be attributed to the difficulties of remote owners from outside the region getting here.
In looking at the daily average price per square foot for both single-family residences and condos in the Coachella Valley, Market Watch felt that there was little effect on prices in either market since the stay at home order went into effect. For the year, the price per square foot of single-family residences is down 2.4% while the price per square foot of condominiums is up 5.9%.
A comparison of the single-family residence and condominium (i) current price per square foot, (ii) the price per square foot a year ago, and (iii) the price per square foot on March 19, do seem to show an effect on the average square foot prices since the stay at home order. Seven cities (Coachella, Desert Hot Springs, Indio, Palm Desert, Palm Springs, Rancho Mirage and La Quinta) have lower single-family residence average per square foot prices since March 19, while two cities (Cathedral City and Indian Wells) have higher single-family residence average per square foot prices. The regional single-family residence average per square foot price was down 6%. The condominium market, on the other hand, showed a regional average per square foot price gain of 1.9%.
On May 1st, Coachella Valley housing inventory stood at 2,924 units versus 3,019 units on the March 19th start of the stay at home order (a slight decline of about 100 units since the stay at home order took effect). Market Watch pointed out that housing inventory has been hovering around 3,000 units for the last 2 1/2 months.
A plot of average daily new listings and average cancelled listings for single-family residence and condominiums in the Coachella Valley displays one of the reasons why listings have not increased during a time of decreased sales. Market Watch pointed out that even though sales are down, net new listings are also down, negating one another. This graph also shows a seasonal event; the falloff in new listings between Thanksgiving and the first few weeks of the New Year.
Looking at days on the market, it appears that there has been little effect on the average number of days in the market for closed sales since the start of the stay at home order and, in fact, over the entire year. This is true for both condominiums and the single-family residence.
In looking at sales price discounts from list prices for both single-family residences and condominiums, Market Watch noted that the discounts do seem to have increased over the past 2 weeks but added that more time is needed to see how this develops.
CalDRE# 01898254 | 01896117 | 02043759