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Local real estate market experts, Market Watch LLC have just released their August 2020 Desert Housing Report. Some highlights:
Market Watch noted that the combination of exceptionally low inventory and rising sales is having a profound effect on Coachella Valley home prices, especially prices of detached homes (or single family residences). At the end of August, the Coachella Valley detached home median price was $495,000 (an increase of 20% year-over-year). Market Watch explained that since the median value is a statistical calculation, not all of this gain came from price appreciation. In fact, they felt that 15% of the increase came from price gain and the other 5% of this increase came from the fact that this year's grouping of homes in August was 5% larger than last year.
The Coachella Valley attached home median price at the end of August was $289,000 (an increase of 4% year-over-year). While the attached home median price increases have been much smaller than the detached home median price increases, Market Watch noted that we are now entering a seasonal period (from August to March) when attached home prices increase. They felt that the large increase in attached home median price that occurred last month might mark the beginning of this seasonal period.
The 12-month change in median home prices by city confirm that detached home median prices are increasing much more than attached home median prices. Market Watch pointed out that La Quinta lead all Coachella Valley cities in both detached and attached home median price increases (with its detached home median price increasing by 27.9% year-over-year and its attached home median price increasing by 12.8% year-over-year). Market Watch also noted that Palm Springs is the only Coachella Valley city with a detached home median price above the previous high median price reached during the 2004-2006 bubble years (in fact, 20.6% higher). Market Watch pointed out that attached home median prices increased year-over-year in 3 cities (La Quinta, Palm Springs and Palm Desert) and decreased in the other Coachella Valley cities.
Market Watch expressed surprise by the increase in Coachella Valley home sales (increasing by 8% year-over-year for both detached and attached homes) after the expiration of the California stay at home order, since this is normally the slow period of the year.
Four cities (La Quinta, Palm Springs, Indian Wells and Rancho Mirage) registered significantly higher home sales than one year ago. Market Watch called out the 41% increase in homes sales year-over-year in Rancho Mirage and the 32% increase in La Quinta.
Market Watch explained that the decline in home sales for homes priced under $300,000 was due to lower sales of attached homes, which are primarily in this price range. They noted that the increase in home sales was primarily in homes priced over $500,000 (and particularly in homes priced over one million dollars).
Coachella Valley housing inventory reached a new historic low on September 1st, with 1,959 homes for sale (compared with 2,641 homes for sale on September 1st, 2019). Market Watch stated that this low inventory level was one factor that’s been driving home prices higher and creating bidding wars (with the other factor being surging sales). Together, this has created an over balancing of demand above supply that is creating the upward trend in home prices.
Market Watch explained that because of growing sales and record low inventory, the month of sales ratio was at a record low 2.5 months on September 1st (compared to 3.3 months one year ago). The median value for days in the market was 56 days (the lowest days in the market number over the last 5 years).
Year-over-year, the months of sales ratio was lower in every price range, but was particularly lower for those homes priced between $500,000 and $1 million. Market Watch noted that the months of sales ratio was under three months in every price bracket up to $800,000 and in the $800,000 to $900,000 price range was only 3.2 months. They felt that this showed that the strength in the Coachella Valley’s housing market was broad-based in all price categories.
On September 1st, the months of sales ratio in all 11 Coachella Valley cities was the same or lower than it was one year ago. In addition, 8 cities had ratios under three months. Market Watch mentioned the months of sales ration of 1.9 months in Palm Springs (in light of the number of homes there near the million-dollar level and the fact that areas with higher priced homes usually have higher months of sales ratios).
The August median value for sale price discount from list was -2.04% (slightly higher than it was one year ago). This implies that an average home in the region offered at $400,000 sold for $391,840.
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