In a recent Desert Sun article, Melissa Daniels writes that the Coronavirus pandemic and associated economic tumult are not stopping people from buying homes here in the Coachella Valley, confirming what we’re seeing on the ground and in the trenches.

Robin DuFault, President of the California Desert Association of Realtors® (CDAR), is quoted as seeing a surge in demand for single family residences from people beginning to transition to working remotely currently living in the more populated, very dense Los Angeles, Orange County, San Diego and even the San Francisco Bay areas. And let’s not forget the motivating factor of record-low interest rates in the 2.5% range, down from 4% at this time last year.

As a result, the single family residence median price in the Coachella Valley was $459,000 in June, up 6.7% from the prior year, according to data from the CDAR and the Palm Springs Regional Association of Realtors. In addition, single family residences median prices increased year-over-year in all Coachella Valley, except Rancho Mirage and Indian Wells. In fact, single family home median prices were up the sharpest in Palm Desert, where the median single family home price reached $470,000 compared to $314,000 one year ago. In addition to the surge in demand and record low interest rates, these single family home median price increases are also linked to the Coachella Valley’s current extremely low housing inventory (2,340 houses for sale in the Coachella Valley on July 1st, down 22% drop from one year ago). 

In the case of attached homes, the median price in June was $275,500, down 6% year-over-year. Attached home median prices decreased in all Coachella Valley cities year-over-year, with the attached home median price in Rancho Mirage decreasing by nearly 22% year-over-year. Theories advanced in the article as to why this is happening range from the spring stay at home orders keeping tourists, some of whom might have purchased second homes, away to first-time home buyers putting off home purchases because of unemployment fears or job uncertainties. 

The current median prices in the Coachella Valley cities as of June 2020 for both single family residential homes and attached homes were as follows: 

  • Palm Springs: $706,000 SFR / $248,000 attached;
  • Cathedral City: $378,750 SFR / $176, 250 attached;
  • Rancho Mirage: $620,000 SFR / $289,000 attached;
  • Palm Desert: $470,000 SFR / $305,000 attached;
  • La Quinta: $603,000 SFR / $327,625 attached;
  • Indian Wells: $942,000 SFR / $399,000 attached;
  • Indio: $335,000 SFR / $197,000 attached;
  • Coachella: $292,500 SFR / N/A attached; and
  • Desert Hot Springs: $250,000 SFR /N/A attached

Interestingly, Melissa writes that the Coronavirus pandemic has worsened the existing housing crisis in California. The CA Department of Housing and Community Development has stated that the state must build 180,000 new homes each year to keep pace with population growth. And, according to the California Association of Realtors®, just 31% of Californians can afford the statewide median home price of about $588,000, which is more than double the national median home price. To hit that new home target may require streamlining housing requirements and making it more affordable to build housing in California. The California State Legislature, which has until the end of August to pass new legislation, is considering a number of proposals that supporters say will help make it easier and more affordable to build new housing, including: 

  • Senate Bill 995: Would make changes to the California Environmental Quality Act in an attempt to speed up housing development;
  • Senate Bill 1085: Would give developers a "density bonus" for developing affordable housing;
  • Senate Bill 1120: Would enable duplexes  and second units to be built on single-family lots to support small-scale development; and
  • Senate Bill 1385: Would work through local governments to allow housing developments on lots zoned for office, retail or commercial uses, in an attempt to re-purpose vacant properties.

The legislature is also considering ways to address rental affordability and missed payments in light of the expiry at the end of September of the statewide order allowing eviction moratoriums in California. One proposal, Senate Bill 1410, would allow tenants to pay what they owe their landlords over 10 years beginning in 2024, with landlords receiving the money in tax credits. One consequence is that this could leave small landlords financially distressed.

To read Melissa Daniels’ original article, courtesy of The Desert Sun, please visit: https://www.desertsun.com/story/money/business/2020/07/20/coachella-valley-houses-hot-commodity-people-move-desert/5451253002/

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