Tucked behind the peaks of San Jacinto in Coachella Valley, Palm Springs is a popular destination for people looking to escape the cold. It’s a popular retirement community and relies heavily on tourism. The community is thriving, and real estate opportunities in this region can be very rewarding.
Palm Springs real estate forecast: sales prices higher than home values
According to Zillow, the median home value in Palm Springs is $316,900. Palm Springs home values have gone up 1% over the past year, and Zillow predicts they will rise 3.9% within the next year. It should be noted that at $417,066, the average sales price in Palm Springs, is 54.4% higher than the actual value of the average home. Sales prices in Palm Springs are also well ahead of the national average, but that is to be expected of most California markets. With homes selling for well above their actual value in Palm Springs, it’s definitely a seller’s market. However, there are still deals to be found by determined buyers who know how and where to look, according to real estate forecasts for the Palm Springs area.
Palm Springs home prices jump to start off 2018
The median price for single-family, re-sale homes in the Palm Springs area jumped 23.9% in January, gaining 25.5% compared to January 2017, while prices for attached homes were also up. The median price rose 10.2%, and the average price gained 15.3%. Sales of detached homes were off 2.1%, and attached home sales gained 2.1%. The detached home market could see gains of 4-7% in the coming year according to experts, while attached home markets could see a rise of 3-5%.
The good news for buyers is that inventory is rising, which usually keeps prices in check. Detached homes jumped from 4.5 months’ worth of inventory in December to 5.6 months in January, and attached homes went from 4 months to 5 months’ supply. Nationally, a balanced market has about six months of inventory.
Low affordability: Palm Springs real estate
Forecasts of continued low affordability have started to become a topic of conversation recently in California, where, in the state as a whole, the median home value is at $529,900. California home values have gone up 8.8% over the past year and Zillow predicts they will rise 3.7% within the next year. The California Association of Realtors’ (CAR) forecast is even higher, at 4.2%. Leslie Appleton-Young, chief economist for CAR, said that California’s 5-year run of rising home prices is expected to last another 3-5 years, with median house prices set to beat the record highs reached during the housing bubble.
CAR also expects mortgage interest rates to rise slightly next year, but not enough to discourage homebuyers. Rates for traditional 30-year, fixed mortgages are forecast to rise to 4.3% in 2018. That’s still low compared with historical averages but up from 4% in 2017.
Foreclosure market dissipating
According to RealtyTrac, there are about 459 homes still in some state of foreclosure (default, auction, or bank-owned) in the Palm Springs region. As investors and investors-to-be are well aware, these properties will continue to serve as a source of good deals on real estate for the time being. Much like the rest of the state of California, Palm Spring’s foreclosure market has been gradually chipped away at by appreciation. Over the course of a year, foreclosures have in fact decreased by up to 28%.
Bottom line: Palm Springs real estate forecast
The Coachella Valley real estate market has had a very strong start to 2018. Closed sales were up 4.6% in January of 2018 from January of the previous year; pending sales were up 22%, and active listings were down 17.6%. The median home price was up a striking 15.1% compared to this same time in 2017. Indeed, 2018 is starting off in the same way 2017 ended: declining inventory continues on its way while sales activity keeps increasing. While the increase in median price year-over-year is significantly higher than it was the previous year, pending sales should mean a sustained rise in values. Now is a great time to buy with likely interest rate hikes in the foreseeable future. As prices continue to rise, it’s also a great time to sell.
All in all, Palm Springs is an even stronger “owner-occupied” Valley market than it was 2017, with a similar remote owner market, according to David Kibbey and Associates. In the coming year, they predict continued improvement in the Valley homeownership rate, higher national mortgage rates, and fewer, simpler financial regulations, which will lead to more home loans.