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vOur local real estate market experts, Market Watch LLC, have just released their June Desert Housing Report which serves as a barometer of where our residential real estate market is at and where it might be headed. Since most of the metrics in their report use either 3 or 12 month averages and since it’s been roughly 3 months since the California stay-at-home order was imposed on March 19th, this report now shows the full effects of the Coronavirus pandemic on our market. Market Watch’s companion June 2020 COVID-19 Desert Real Estate Report, which we will cover shortly, shows its shorter-term impact. Some highlights:
The Coachella Valley detached home median price in June was $459,000 (up 6.7% from $430,000 in June 2019).
The Coachella Valley attached home median price in June was $275,000 (down 6% from $292,500 in June 2019). Market Watch pointed out that we are now in the usual seasonal period when attached home prices generally weaken. They went on the add that May and June of this year have been much weaker than in past years and if history is a guide, the median price of attached homes in the Coachella Valley could fall another 10% by September (most likely because 70% of attached home buyers come from outside the region and the Coronavirus pandemic makes long distance travel very difficult).
Seven of nine Coachella Valley cities for which date was available experienced positive year-over-year gains in detached home median prices, with Palm Desert (up 13.7% year-over-year), Coachella (up 11.6% year-over-year), Cathedral City (up 11.3% year-over-year) and Desert Hot Springs (up 10.7% year-over-year) leading the pack. Year-over-year changes in attached home median prices were negative in all Coachella Valley cities, with the smallest declines in Indio (down 1% year-over-year) and Palm Desert (down 1.1% year-over-year showing the smallest declines.
Home sales (averaged over the last 3 months) provide the clearest indication of the effect of the Coronavirus pandemic on the our housing market. Attached home sales averaged 167 units a month (down 50% year-over-year) and detached homes sales averaged 463 units a month (down 28% year-over-year). Market Watch again noted that the decline in attached home sales was primarily due to the fact that 70% of attached home buyers come from outside the region and the Coronavirus pandemic makes travel to the Coachella Valley very difficult.
In looking at average 3 month total home sales in the 11 Coachella Valley cities, Market Watch noted that the largest sales declines were in the three cities with the largest number of condominiums (Palm Desert, Palm Springs and Rancho Mirage). The only city with no change in year-over-year sales was Coachella.
In looking at average 3 month total home sales in different price brackets, Market Watch noted that the largest sales declines were in homes priced under $500,000 (primarily because condominiums, which have experienced the largest sales declines, are almost always priced under $500,000). The higher price brackets primarily catch detached homes where sales declines have been much lower.
On July 1st, Coachella Valley housing inventory stood at 2,340 units (670 units or 22% less than one year ago). Inventory continues to be extremely low. Market Watch noted that our inventory levels in every month have been less than year ago levels every year since 2016. They also noted that this lack of supply has been the primary factor pushing home prices higher, not only in the Coachella Valley, but in most other regions throughout California.
On July 1st, the months of sales ratio was 3.2 months (vs. 3.8 months one year ago). Market Watch explained that this drop in the months of sales ratio has been due to the fact that while sales have been declining, inventory has declined even more. Market Watch further explained that the months of supply ratio represents the balance of supply and demand and even though demand is relatively low, supply (inventory) remains even lower, which is a positive sign for higher home prices. The median value of days in the market in June was 56 days (vs. 66 days one year ago).
Market Watch noted the strong improvement in the month of sales ratio in all the price brackets from $200,000 to over a million dollars from one year ago. The largest improvement was in those homes priced from $500,000 to $900,000. All homes priced under $800,000 now have ratios under four months.
On July 1st, the months of sales ratio in 10 of the Coachella Valley’s 11 cities showed either the same or an improved ratio compared to a year ago. Only Palm Desert had a slightly higher ratio of 3.6 months compared to 3.5 months a year ago.
The June median value for sale price discount from list was -2.2% in June (0.2% higher than one year ago). Market Watch noted that most of the increase in sales price discount from list was from the higher discounts being recorded in the condominium market. The current reading implies that an average home in the region offered at $400,000 sold for $391,200.
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