Fueled by historically low inventory coupled with soaring demand for the relaxed desert lifestyle, the Coachella Valley real estate market is poised to stay hot in 2021. As we move into the area’s traditional selling season with increasing health and safety and an improving economy, it is time to strongly consider putting your desert home on the market, especially for anyone who has been thinking about selling. To help you determine if now truly is the time, consider these reasons:
Record Scarcity: The desert real estate market is experiencing an historically low inventory level of 742 homes for sale compared to 3,043 units a year ago on April 1.
Continued high sales has driven the “months of sales” ratio to new lows. It is now just 4/5 of a month, or just a little over three weeks. A year ago, it was 3.7 months. A market is considered balanced with 6 months of inventory, further demonstrating how few homes are for sale right now.
By the end of March, this inventory shortage has pushed the median sale price of a Coachella Valley detached home into the mid-$500,000 range, which is 27% above last year. For a condominium or attached home, the median price was in the mid-$300,000 range, an increase of 15% year-over-year. These days sellers can typically get top dollar for their property.
Fewer homes to compete with for the attention of buyers means sellers have more negotiating power at the bargaining table. If you have equity built up in your current home, you may be able to maximize the gains on your initial investment, especially if you can list your home before the next wave of properties hits the market.
Surging Demand: As we have been tracking over the last several months, there are multiple buyer pools seeking to pick up a slice of our desert paradise. In addition to our usual seasonal homebuyers coming from parts elsewhere to purchase a part-time residence, as well as full-time home shoppers, we have a flood of buyers coming from coastal Southern California communities and the Bay Area. Since many major companies have embraced “work from home” many buyers are looking to escape the big city and its cost of living and population density to move to the desert.
This added buyer pool brings even more competition for homes active on the market, which is a good thing if you are looking to sell your property for the highest price possible.
Affordable Properties: Interest rates remain at historically low levels, in most cases coming in well below 3%, making the cost of borrowing money that much cheaper. Lower interest rates also inspire more potential homebuyers to pursue purchasing a home as they can lock in a better mortgage rate and potentially lower their monthly payment.
With more homebuyers accessing affordable loans, their purchasing power increases as well, broadening the buyer pool for many properties up for sale. Despite rising home prices, the Coachella Valley still has properties at price points that are palatable to first-time homebuyers, which creates another possible type of buyer for your home, depending on the price point.
Favorable Trends: The growing number of people who can work remotely has suddenly shifted the landscape of many large metropolitan areas, especially tech hubs in Northern California and the SoCal markets of Los Angeles, Orange County and San Diego. Seeking properties in a locale with more space, a desirable quality of life, and surrounded by natural escapes and splendor, there is a wave of homebuyers identifying the Coachella Valley as the ideal spot to work hard and play hard at a lower cost of living.
Additionally, as home prices rise in the coastal and even some inland markets, there is a push further east to seek more home value. All of these shifts add up to create favorable conditions for sellers as they can capitalize on the feverish demand sparked by homebuyer trends.
Unmatched Appeal: Try to think of a place to call home that is as unique and desirable as the Coachella Valley in Southern California. We are surrounded by epic natural landscapes and beauty, we have key amenities that keep our quality of life high and living costs low, and our laid-back lifestyle is enviable to just about any visitor from around the world.
Better yet, the desert community is strong and well connected, creating a close-knit, small-town vibe in a destination that is larger than life.
If you are considering the purchase or sale of a property, we would love the opportunity to be a part of your process. Please contact Bonnie Steele to start exploring your options. We look forward to unlocking possibilities for you.
Updated and adapted from Bennion-Deville Homes’ “Buzz-Worthy,” February 11, 2021.
The median price for a greater Palm Springs area detached home in March was $549,000, which is 27.3% above last year, according to The Desert Housing Report published by the California Desert Association of Realtors.
Attached home prices continue to show a strong, upward movement and have broken through the restraints of the last few years. The median attached home price in March was $345,000, up 15.4%.
The report anticipates prices will follow the seasonal pattern and continue to move higher into the month of May before pulling back. Attached homes are helping to fill the supply void for detached home in the lower price ranges.
The March median value for “Sale Price Discount from List” was 0.0%.
A “0.0 discount” implies that an average valley home offered at $500,000 sold for exactly $500,000. This number has historically averaged between a 2% and 2.5% discount.
12-Month Change in City Median Prices
Every city in the Coachella Valley is participating in this strong price movement for detached homes, but some more than others. Seven cities — Rancho Mirage (29%), Desert Hot Springs (28%), La Quinta (27%), Palm Desert (25%) , Cathedral City (21%) — now have median price increases for detached homes over 20%, with two cities — Indian Wells (38%) and Palm Springs (33%) — up more than 30%.
It should also be noted that Palm Springs, Desert Hot Springs, La Quinta, Cathedral City and Indio have exceeded their historic highs reached in 2006, with Indian Wells and Palm Desert only a fractional percentage point away. Attached homes have similar but slightly lower percentage changes, with no city near the highs made in 2006.
3-Month Trailing Sales’ Average
The three-month average of total sales is now averaging 1,129 units a month, which is 39% above last year. Because of seasonal forces, the report foresees the average will reach 1,200 units or higher over the next two months providing there is increased supply, and there is every reason to think that sales will continue to stay in this high range, This is especially true of attached homes where sales are now 90% above the pre-pandemic, year ago numbers.
12-Month Sales’ Average
From the 12-month average of sales, which takes out the seasonal pattern and shows the true, long-term sales trend, it’s clear that after the four-month sag due to the pandemic’s outbreak, sales have been surging for both detached and attached homes. Long-term total sales are higher by 20%, detached sales are up 16.7% and attached sales are higher by 24%. Demand currently exceeds supply. With increased supply, sales could be much higher.
Home Sales by City
The largest sales increases are in the cities of Palm Desert and La Quinta, with sales increases of 85 and 71 units respectively. Percentagewise, the largest increase is in Indian Wells, with a 64% sales increase. The cities of Cathedral City, Coachella, Desert Hot Springs and Indio continue to show sales’ increases over last year.
Home Sales by Price Range
When we measure sales in the different price brackets, we continue to find the largest increases in the middle to higher price brackets. What is particularly interesting is that sales of detached homes under $300,000 are declining while condominium sales, which are generally in this price range, are growing.
This is because there are fewer and fewer homes in these lower price ranges due to overall price increases and, as a result, sale prices are rising into the higher brackets. The largest percentage sales’ increase is the million-dollar and over price bracket partly owing to above-mentioned rise in sale prices.
Coachella Valley Inventory
Inventory continues to decline and on April 1st stood at 742 units for sale, which is an historic low That compares to 3,043 units one year ago. The saga of low supply and high demand in the greater Palm Springs area continues.
“Days in the Market”
The median number of “days in the market” is now 37 days compared to 54 days a year ago.
It’s easy to look up how much money you have in your savings account or the real-time value of your stock investments. But determining the dollar value of a home is trickier.
This is especially true in our region with buyers moving from large cities and urban areas to our laid-back lifestyle, open spaces and more house for the money. The sales’ surge has created a historic low inventory which is driving home prices ever higher almost daily.
As a seller, knowing your home’s worth helps you price it correctly when you put it up for sale. If you price it too high, it may sit on the market. But price it too low and you may be losing out on a good chunk of money (nobody wants that!). For buyers, it’s important to know a home’s worth before you make an offer. You want your offer to be competitive, but you don’t want to overpay for the property.
Even if you’re not a buyer or seller right now, as a current homeowner you might just be curious about the value of your home. Keeping track of your home’s worth year over year helps you understand the trends in your market. So when you are ready to sell, you can take advantage of a good window of opportunity.
The good news is, a trained real estate agent — who understands the nuances of your neighborhood — can determine the true market value of your property … and at no cost to you!
THE THREE TYPES OF HOME VALUES
When you start the process of buying or selling a home, you’ll frequently hear the words appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, informed decisions.
A professional appraiser determines the appraised value of a home. These appraisals are typically required by a lender when a buyer is financing the property. And while the lender is the one requiring this information, the appraiser does not work for the lender.1 Your appraiser should be an objective, licensed professional who doesn’t have allegiance to the buyer, seller, or lender—no matter who is paying their fee.
The number the appraiser comes up with (the appraised value) assures the lender that the buyer is not overpaying for the property. For example, imagine a seller lists a home for $400,000. They reach a deal with the buyer to sell the home for $375,000. However, if an appraiser evaluates the property and determines that the appraised value is $325,000, then the lender will not lend for an amount higher than that appraised value of $325,000.2
When figuring out this number, an appraiser will compare the property to similar homes in your neighborhood, and they’ll evaluate factors such as location, square footage, appliances, upgrades, improvements, and the interior and exterior of the home.
The assessed value of a home is determined by your local municipal property assessor. This value matters when your county calculates property taxes each year. The lower your assessed value, the less property tax you’ll pay.3
To come up with this value, your assessor will evaluate what comparable homes in the neighborhood have sold for, the size of your home, age, overall condition, and any improvements or upgrades that have been made. However, most assessors don’t have full access to your home, so their information is limited.
Assessments are done annually to determine how much property tax you owe. Many counties use a multiplier (typically between 60%-80%) to calculate the final assessed value. So, if the assessor determines that the value of the home is $300,000, but the county uses a 70% multiplier, the assessed value of the home would be $210,000 for tax purposes.4
If your assessed value isn’t as high as you envisioned, don’t sweat it. Many homeowners appeal their assessment in favor of a lower valuation so that they can save money on property taxes. If you’re interested in appealing your property tax assessment, let us know. We offer complimentary assistance and would be happy to help you build your case.
True Market Value
True market value is established by your real estate agent. It basically refers to the value that a buyer is willing to pay for the property. A good real estate agent is an expert in determining true market value because they have hands-on experience buying and selling properties. They understand the mindsets of buyers in your market and know what they’ll pay for a desirable house, townhouse, or condo.
As a seller, knowing your true market value is important because it helps you choose how much to list your property for. It can also help you decide if you want to make any improvements to your home before putting it on the market. Your agent can help you figure out which updates and upgrades will have the biggest impact on your true market value.
WHAT’S THE DEAL WITH ONLINE CALCULATORS?
When figuring out your home’s value, you might be tempted to see what popular real estate sites like Zillow, Redfin, and Trulia have to say. When you use an online calculator to determine your home’s value on these sites, it is just an estimate. It’s not an actual appraisal or the “true market value.” These sites all have their own algorithms for coming up with their estimates. For example, Zillow comes up with their “Zestimates” by calculating “public and user-submitted data, considering special features, location, and market conditions.” 5
These online estimates can be a great starting point for opening the conversation with your real estate agent about your home’s worth. But even Zillow recommends that you use a real estate agent for coming up with the actual market value of your home. The site says that once you get your “Zestimate,” you should still get “a comparative market analysis from a real estate agent.”
For example, in our area of Southern California, there are many gated communities that are in effect “micro-markets.” They need to be analyzed separately.
Having an agent involved in this process is essential because they understand the market better than a computer ever could. They’re showing property in your neighborhood every single day, and they know the particular preferences of buyers and sellers in the area. Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has most likely worked with all of them, so they understand what every segment in your market is specifically looking for.
HOW A REALTOR® FINDS YOUR HOME’S TRUE MARKET VALUE
So, how does a Realtor® determine true market value? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare your home’s features to similar properties in your neighborhood. For the CMA, the agent looks at the factors listed below to determine your home’s worth:6
Neighborhood sales – Your agent will look at similar, recently sold homes in your neighborhood to see what they sold for and what they have in common with your house.
The exterior – What does your home look like from the outside? Your agent will factor in curb appeal, the style of the house, the front and backyard, and anything else that impacts how the house looks to everyone walking and driving by.
The interior – This is everything inside the walls of the house. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.
Age of the home – Whether you have a newer or older home affects the number your agent comes up with as part of their assessment.
Style of the home – The style of your home is important because buyers in different markets have different tastes. If buyers prefer ranch-style homes and you have one, then your home may sell for a premium.
Market trends – Because a local agent has so much experience in your market, they have their finger on the pulse of your area’s trends and know what buyers are willing to pay for a property like yours.
Location, location, location – This one’s probably the most obvious. Your agent will think about how popular the area is, how safe it is, and what schools are like.
A computer algorithm simply can’t take all of these factors into account when calculating the value of your home. The reality is, nothing beats the accuracy of a real estate agent or professional appraiser when it comes to determining a home’s true market value.
YOUR AGENT IS THERE EVERY STEP OF THE WAY
Determining a home’s true market value is a real estate agent’s forte. If you’re a seller, your agent will help you find your home’s market value so you can list it at the right price.
For buyers, your agent will help you determine the value so you can come up with a fair offer. Your agent can also set up a personalized home search on the Multiple Listing Service (MLS) for you so you’ll receive emails of listings that meet your criteria. This will help you see what’s out there and how properties are being priced.
Get a Complimentary Report with Your Home’s True Market Value
Curious about your home’s true market value?
Call us at 760-219-1450 to request a free, no-obligation Comparative Market Analysis to find out exactly how much your home is worth!
If you’re thinking of buying a home in the greater Palm Springs area, we can guide you to finding your dream home.
Homeownership offers many advantages over renting, including a stable living environment, predictable monthly payments, and the freedom to make modifications. Neighborhoods with high rates of homeownership have less crime and more civic engagement. Additionally, studies show that homeowners are happier and healthier than renters, and their children do better in school.1
But one of the biggest perks of homeownership is the opportunity to build wealth over time. Researchers at the Urban Institute found that homeownership is financially beneficial for most families,2 and a recent study showed that the median net worth of homeowners can be up to 80 times greater than that of renters in some areas.3
So how does purchasing a home help you build wealth? And what steps should you take to maximize the potential of your investment? Find out how to harness the power of home equity for a secure financial future.
WHAT IS HOME EQUITY?
Home equity is the difference between what your home is worth and the amount you owe on your mortgage. So, for example, if your home would currently sell for $250,000, and the remaining balance on your mortgage is $200,000, then you have $50,000 in home equity.
$250,000 (Home’s Market Value)
– $200,000 (Mortgage Balance)
$50,000 (Home Equity)
The equity in your home is considered a non-liquid asset. It’s your money; but rather than sitting in a bank account, it’s providing you with a place to live. And when you factor in the potential of appreciation, an investment in real estate will likely offer a better return than any savings account available today.
HOW DOES HOME EQUITY BUILD WEALTH?
A mortgage payment is a type of “forced savings” for home buyers. When you make a mortgage payment each month, a portion of the money goes towards interest on your loan, and the remaining part goes towards paying off your principal, or loan balance. That means the amount of money you owe the bank is reduced every month. As your loan balance goes down, your home equity goes up.
Additionally, unlike other assets that you borrow money to purchase, the value of your home generally increases, or appreciates, over time. For example, when you pay off your car loan after five or seven years, you will own it outright. But if you try to sell it, the car will be worth much less than when you bought it. However, when you purchase a home, its value typically rises over time. So when you sell it, not only will you have grown your equity through your monthly mortgage payments, but in most cases, your home’s market value will be higher than what you originally paid. And even if you only put down 10% at the time of purchase—or pay off just a small portion of your mortgage—you get to keep 100% of the property’s appreciated value. That’s the wealth-building power of real estate.
WHAT CAN I DO TO GROW MY HOME’S EQUITY FASTER?
Now that you understand the benefits of building equity, you may wonder how you can speed up your rate of growth. There are two basic ways to increase the equity in your home:
Pay down your mortgage.
We shared earlier that your home’s equity goes up as your mortgage balance goes down. So paying down your mortgage is one way to increase the equity in your home.
Some homeowners do this by adding a little extra to their payment each month, making one additional mortgage payment per year, or making a lump-sum payment when extra money becomes available—like an annual bonus, gift, or inheritance.
Before making any extra payments, however, be sure to check with your mortgage lender about the specific terms of your loan. Some mortgages have prepayment penalties. And it’s important to ensure that if you do make additional payments, the money will be applied to your loan principal.
Another option to pay off your mortgage faster is to decrease your amortization period. For example, if you can afford the larger monthly payments, you might consider refinancing from a 30-year or 25-year mortgage to a 15-year mortgage. Not only will you grow your home equity faster, but you could also save a bundle in interest over the life of your loan.
Boosting the market value of your property is another way to grow your home equity. While many factors that contribute to your property’s appreciation are out of your control (e.g. demographic trends or the strength of the economy) there are things you can do to increase what it’s worth.
Raise your home’s market value.
For example, many homeowners enjoy do-it-yourself projects that can add value at a relatively low cost. Others choose to invest in larger, strategic upgrades. Keep in mind, you won’t necessarily get back every dollar you invest in your home. In fact, according to Remodeling Magazine’s latest Cost vs. Value Report, the remodeling project with the highest return on investment is a garage door replacement, which costs about $3600 and is expected to recoup 97.5% at resale. In contrast, an upscale kitchen remodel—which can cost around $130,000—averages less than a 60% return on investment.4
Of course, keeping up with routine maintenance is the most important thing you can do to protect your property’s value. Neglecting to maintain your home’s structure and systems could have a negative impact on its value—therefore reducing your home equity. So be sure to stay on top of recommended maintenance and repairs.
HOW DO I ACCESS MY HOME EQUITY IF I NEED IT?
When you put your money into a checking or savings account, it’s easy to make a withdrawal when needed. However, tapping into your home equity is a little more complicated.
The primary way homeowners access their equity is by selling their home. Many sellers will use their equity as a downpayment on a new home. Or some homeowners may choose to downsize and use the equity to supplement their income or retirement savings.
But what if you want to access the equity in your home while you’re still living in it? Maybe you want to finance a home renovation, consolidate debt, or pay for college. To do that, you will need to take out a loan using your home equity as collateral.
There are several ways to borrow against your home equity, depending on your needs and qualifications:5
Cash-Out Refinance – With a cash-out refinance, you refinance your primary mortgage for a higher amount than you currently owe. Then you pay off your original mortgage and keep the difference as cash. This option may be preferable to a second mortgage if you have a high interest rate on your current mortgage or prefer to make just one payment per month.
Second Mortgage – A second mortgage, also known as a home equity loan, is structured similar to a primary mortgage. You borrow a lump-sum amount, which you are responsible for paying back—with interest—over a set period of time. Most second mortgages have a fixed interest rate and provide the borrower with a predictable monthly payment. Keep in mind, if you take out a home equity loan, you will be making monthly payments on both your primary and secondary mortgages, so budget accordingly.
Home Equity Line of Credit (HELOC) – A home equity line of credit, or HELOC, is a revolving line of credit, similar to a credit card. It allows you to draw out money as you need it instead of taking out a lump sum all at once. A HELOC may come with a checkbook or debit card to enable easy access to funds. You will only need to make payments on the amount of money that has been drawn. Similar to a credit card, the interest rate on a HELOC is variable, so your payment each month could change depending on how much you borrow and how interest rates fluctuate.
Reverse Mortgage – A reverse mortgage enables qualifying seniors to borrow against the equity in their home to supplement their retirement funds. In most cases, the loan (plus interest) doesn’t need to be repaid until the homeowners sell, move, or are deceased.6
Tapping into your home equity may be a good option for some homeowners, but it’s important to do your research first. In some cases, another type of loan or financing method may offer a lower interest rate or better terms to fit your needs. And it’s important to remember that defaulting on a home equity loan could result in foreclosure. Ask us for a referral to a lender or financial adviser to find out if a home equity loan is right for you.
The above article by Jordan Terry is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
WE’RE HERE TO HELP YOU
Wherever you are in the equity-growing process, we can help. We work with buyers to find the perfect home to begin their wealth-building journey.
We also offer free assistance to existing homeowners who want to know their home’s current market value to refinance or secure a home equity loan.
And when you’re ready to sell, we can help you get top dollar to maximize your equity stake. Contact us today to schedule a complimentary consultation!
We’ve all spent a lot more time at home over the past year. And for many of us, our homes have become our office, our classroom, our gym—and most importantly, our safe haven during times of uncertainty. So it’s no surprise to see that design trends for 2021 revolve around soothing color palettes, cozy character, and quiet retreats.
Even if you don’t have immediate plans to buy or sell your home, we advise our clients to be mindful of modern design preferences when planning a remodel or even redecorating. Over-personalized or unpopular renovations could lower your property’s value. And selecting out-of-style fixtures and finishes could cause your home to feel dated.
To help inspire your design projects this year, we’ve rounded up five of the hottest trends. Keep in mind, not all of these will work well in every house. If you plan to buy, list, or renovate your property, give us a call. We can help you realize your vision and maximize the impact of your investment.
1. Uplifting Colors
Colors are gravitating toward warm and happy shades that convey a sense of coziness, comfort, and wellbeing. This year’s palettes draw from earthy hues, warm neutrals, and soothing blues and greens.1
While white and gray are still safe options, expect to see alternative neutrals become increasingly popular choices for walls, cabinets, and furnishings in 2021. For a fresh and sophisticated look, try one of these 2021 paint colors of the year:
Aegean Teal (coastal blue) by Benjamin Moore
Urbane Bronze (brownish-gray) by Sherwin-Williams
Soft Candlelight (muted yellow) by Valspar
On the opposite end of the spectrum, indigo, ruby, sapphire and plum are showing up on everything from fireplace mantels and floating shelves to fabrics and home accessories. These classic, rich hues can help bring warmth, depth, and a touch of luxury to your living space.
To incorporate these colors, designers recommend using the “60-30-10 Rule.” Basically, choose a dominant color to cover 60% of your room. For example, your walls, rugs, and sofa might all be varying shades of beige or gray. Then layer in a secondary color for 30% of the room. This might include draperies and accent furniture. Finally, select an accent color for 10% of your room, which can be showcased through artwork and accessories.2
2. Curated Collections
After a decade of minimalism, there’s been a shift towards highly decorative and personalized interiors that incorporate more color, texture, and character. Clearly defined styles (e.g., mid-century modern, industrial, modern farmhouse) are being replaced by a curated look, with furnishings, fixtures, and accessories that appear to have been collected over time.3
This trend has extended to the kitchen, where atmosphere has become as important as functionality. The ubiquitous all-white kitchen is fading in popularity as homeowners opt for unique touches that help individualize their space. If you’re planning a kitchen remodel, consider mixing in other neutrals—like gray, black, and light wood—for a more custom, pieced-together look. And instead of a subway tile backsplash, check out zellige tile (i.e., handmade, square Moroccan tiles) for a modern alternative with old-world flair.4
3. Reimagined Living Spaces
The pandemic forced many of us to rethink our home design. From multipurpose rooms to converted closets to backyard cottages, we’ve had to find creative ways to manage virtual meetings and school. And designers expect these changes to impact the way we live and work for years to come.
For example, some home builders are predicting the end of open-concept floor plans as we know them.5 Instead, buyers are searching for cozier spaces with more separation and privacy. Cue the addition of alcoves, pocket doors, and sliding partitions that enable homeowners to section off rooms as needed.4
The necessity of a home office space is also here to stay. But what if you don’t have a dedicated room? Alternative workspaces have become increasingly popular. In fact, one of the biggest trends on Pinterest this year is the “cloffice” — essentially a spare closet turned home office. Searches for “home library design” and “bookshelf room divider” are on the rise, as well.6
4. Staycation-Worthy Retreats
Although travel options are becoming more available, many homeowners are turning their vacation budgets into staycation budgets. Essentially, recreate the resort experience at home — and enjoy it 365 days a year!
Bedrooms should provide a soothing sanctuary for rest and relaxation. But this year, minimalist decor and muted colors are giving way to bolder statement pieces. To create a “boutique hotel” look in your own bedroom, start with a large, upholstered headboard in a rich color or pattern. Layer on organic linen bedding and a chunky wool throw, then complete the look with a pair of matching bedside wall lights.7
Carry those vacation-vibes into your bathroom with some of the top luxury upgrades for 2021. Curb-less showers and freestanding tubs continue to be popular choices that offer a modern and spacious feel, and large-format shower tiles with minimal grout lines make clean up a breeze. Add a floating vanity and aromatherapy shower head for the ultimate spa-like experience.4
5. Outdoor Upgrades
From exercise to gardening to safer options for entertaining, the pandemic has led homeowners to use their outdoor spaces more than ever. In fact, backyard swimming pool sales skyrocketed in 2020, with many installers reporting unprecedented demand.8 But a new pool isn’t the only way homeowners can elevate their outdoor areas this year.
The home design website Houzz recently named 2021 “the year of the pergola.” They’re a relatively quick and affordable option to add shade and ambiance to your backyard.4 Another hot trend? Decked-out, custom playgrounds for exercising (and occupying) the youngest family members who may be missing out on school and extracurricular activities.9
But don’t limit your budget to the backyard. Landscapers are reporting an increase in front yard enhancements, including porch additions and expanded seating options. These “social front yards” enable neighbors to stay connected while still observing social-distancing guidelines.10
DESIGNED TO SELL
Are you contemplating a remodel? Want to find out how upgrades could impact the value of your home? Buyer preferences vary greatly by neighborhood and price range. We can share our insights and offer tips on how to maximize the return on your investment. And if you’re in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area. Contact us to schedule a free consultation!
Bonnie and Hank Steele began work as Realtors in 1983, They have successfully listed and sold homes in suburban New York City, St. Simon’s Island, Georgia, and the greater Palm Springs area. Bonnie also is a Certified Staging Professional.
While many areas of the economy have contracted, the housing market has stayed remarkably strong. But can the good news last?
When COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the shift. Record-low interest rates caused some lenders to call a halt to new underwriting, and homeowners debated whether or not to put their houses on the market. However, those first days of uncertainty ushered in a period of unprecedented demand in the U.S. real estate market, which ended the year with increasing average home prices (up 13.4% from the previous year) and shrinking days on market (13 fewer than in 2019).1
Now, as the spring market approaches, you may be wondering whether the good times can continue to roll on. If you’re a homeowner, should you take advantage of this opportunity? If you’re a buyer, should you jump in and risk paying too much? Below we answer some of your most pressing questions.
How is today’s market different from the one that caused the 2008 meltdown?
At the beginning of the pandemic, fears of an economic recession and an ensuing mortgage meltdown were top of mind for homeowners all across the country. For many buyers and sellers, the two seemed to go hand in hand, just as they did in the 2008 economic crisis.
However, the conditions that led to 2008’s recession were very different from those that triggered the current downturn — and this time, the housing market is the source of much of the good news.2 This is in line with historical patterns, as housing prices traditionally hold steady in the face of recession, with homeowners staying put and investors putting their money into bricks and mortar to ride out uncertainty in the stock market.
This time around, because of lessons learned in 2008, banks are better funded, homeowners are holding more accrued equity, and, crucially, much of the economic activity is focused on financial factors outside the housing market. As many industries quickly pivoted to work-from-home, early fears of widespread job loss-related foreclosures have failed to materialize. Federal stimulus payments and the Paycheck Protection Program also helped to offset some of the worst early effects of the shutdown.
Are we facing a real estate bubble?
A real estate bubble can occur when there is a rapid and unjustified increase in housing prices, often triggered by speculation from investors. Because the bubble is (in a sense) filled with “hot air,” it pops — and a swift drop in value occurs. This leads to reduced equity or, in some cases, negative equity conditions.
By contrast, the current rise in home prices is based on the predictable results of historically low interest rates and widespread low inventory. Basically, the principle of supply and demand is working just as it’s supposed to do. In addition, experts predict a strong seller’s market throughout 2021 along with increases in new construction.3 This should allow supply to gradually rise and fulfill demand, slowing the rate of inflation for home values and offering a gentle correction where needed.
Effects of low interest rates
According to Freddie Mac, rates are projected to continue at their current low levels throughout 2021.4 This contributes to home affordability even in markets where homes might otherwise be considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.
Effects of low inventory
Continuing low inventory is another reason for higher-than-average home prices in many markets.5 This should gradually ease as an aggressive vaccination rollout and continuing buyer demand drive more homeowners to move forward with long-delayed sales plans and as new home construction increases to meet demand.6
Aren’t some markets and sectors looking particularly weak?
One of the big stories of 2020 was a mass exodus from attached home communities and high-priced urban areas as both young professionals and families fled to the larger square footage and wide-open spaces of suburban and rural markets. This trend was reinforced by work-from-home policies that became permanent at some of the country’s biggest companies.
Speculation then turned to the death of cities and the end of the condo market. However, it appears that rumors of the demise of these two residential sectors have been greatly exaggerated.
With the first vaccine rollouts, renters have begun returning to major urban centers, attracted by the sudden rise in available inventory and newly discounted rental rates.7 In addition, buyers who were previously laser-focused on a single-family home responded to tight inventory by taking a second look at condos.8 While nationwide condo prices continue to lag behind those of detached homes, they’ve still seen significant price increases and days on market reductions year over year.
In addition to these improvements, the 2020 migration has spread the economic wealth to distant suburban and rural enclaves that normally don’t benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.
How has COVID affected the “seasonal” real estate market?
Frequently, the real estate market is seen as a seasonal phenomenon. However, the widespread shutdowns in March 2020, coming right at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”
While Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020’s historic numbers, the outlook overall is positive as we embark on the 2021 spring selling cycle.9 Duncan anticipates an additional lift in the second half of 2021 as buyers return to business as usual and look to put some of their pandemic savings to work for a down payment. Thus, we could be looking at another longer-than-usual, white-hot real estate market.
How will a Biden administration affect the real estate market?
Projected policy around housing promises to be a boost to the real estate market in many cases.10 While some real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. In addition, Biden-proposed policy pinpoints low inventory as a primary driver of unsustainable home values and is geared toward more affordability through investments in construction and refurbishment.
Overall, according to most indicators, the real estate news looks overwhelmingly positive throughout the rest of 2021 and possibly beyond. Pent-up demand and consumer-driven policies, along with a continued low-interest-rate environment and rising inventory, should help homeowners hold on to their increased equity without throwing the market out of balance. In addition, the increase in long-term work-from-home policies promises to give a boost to a wide variety of markets, both now and in the years to come.
STILL HAVE QUESTIONS? WE HAVE ANSWERS — While economic indicators and trends are national, real estate is local. We’re here to answer your questions and help you understand what’s happening in your neighborhood. Contact Bonnie & Hank Steele (CalDRE# 01701506) to learn how these larger movements affect our local market and your home’s value.
Bonnie and Hank became licensed Realtors in 1983, They have successfully listed, sold and staged homes in suburban New York City, St. Simon’s Island, Georgia, and the greater Palm Springs area. Bonnie also is a Certified Staging Professional.
In February, following one of the strongest years for home sales ever, the greater Palm Springs area showed no signs of slowing down. The frenetic sales pace is poised to continue into the foreseeable future as long as our market receives fresh home inventory to meet the high demand. If you’re thinking of buying or selling a home, here are some key points to remember:
Inventory continues to shrink but prices are starting to stabilize after a several months of strong increases.
Sellers who have been in their homes for several years should strongly consider acting now to profit from any accumulated equity while inventory remains at historic lows.
Buyers looking at homes need to keep in mind that properties are moving quickly in this market – come with your strongest offer up front and act quickly once you find the property you want.
Detached & AttachedHome Prices Up Again
At the end of February, the Coachella Valley median detached home price was $527,000, up 22% from twelve months ago, according to February’s Desert Housing Report published by the California Desert Association of Realtors.
The median price for attached homes in February was $340,250, up 19.4% over the last twelve months. It’s clear from the data that attached prices have experienced a powerful, upward surge over the last eight months and have broken through the restraints of the last few years.
The report speculates that prices will continue to follow the usual seasonal pattern of reaching highs in the month of May before pulling back.
When February’s median prices for area cities are compared to values of a year ago, we see that every city is participating in the strong price surge. For detached homes, four cities now have year-over-year price increases above 20% – Indian Wells, La Quinta, Palm Springs and Desert Hot Springs. The report noted that five cities have now exceeded their historic highs made in 2006, with the median value of Palm Springs’ homes now 45% above its high.
Attached homes have similar patterns with slightly lower percentage changes.
12-Month Average Sales Rate Positive
The increase in sales has been primarily in detached homes and less so in the attached home market.
The 12-month sales’ average removes the seasonal pattern and shows the true, long-term sales’ trend. There was a sharp dip down to 832 units in sales last spring during the first three months of the pandemic. However, with the big uptick that followed, total sales surged to an average 948 units over the last 12 months, and this number appears poised to continue to move even higher, the report said.
3-Month Average Home Sales by City
When we look at three months of sales in each city compared to a year ago, we see most of the regional sales’ increase comes from a few cities — specifically La Quinta and Palm Desert, followed by Palm Springs and Rancho Mirage.
Percentage-wise, the largest increase is in Indian Wells, with a 96% sales’ increase. The cities of Cathedral City, Coachella and Desert Hot Springs show smaller sales’ increases.
In the different price brackets, the largest average increases continue to be in the middle to higher price brackets. The largest percentage increase is the million-dollar and over price bracket, with a sales gain of 128%.
Another large increase is in the $400,000 to $500,000 price bracket, where sales went from 95 units a month to 178 units a month, which is an increase of 87%.
A historic low inventory of 902 units coupled with the continuation of high sales has reduced the month of sales ratio to an all-time low. The ratio is now just one month; a year ago it was 3.6 months. This is by far the lowest ratio in history, the report said. It means that at the current sales rate it would take just one month to liquidate the area’s entire home inventory.
In addition, the median value of “days in the market” is just 40 days compared to 52 days a year ago.
The report concludes that the forces of supply and demand are driving almost daily home price increases.
Five Paint Colors That WillIncrease the Value of Your Home — and make it sell faster.
“A buyer needs to be able to envision their furniture coordinating with the chosen paint color,” Kostiw adds. For this reason, agent George Case of Warburg Realty recommends selecting a neutral shade of paint when staging your home, which he says will appeal to the largest base possible. “The most important thing is to use paint color to create a space that feels fresh and relevant to any aesthetic or style,” he says. So, which paint colors can increase both the appeal and value of your home? There are a number of good options.
Warm Grays — For an elegant paint color that’s versatile enough to use in any room, our experts say to look no further than a warm shade of gray. “When selling your home, you want high-traffic spaces to feel welcoming, so people can envision themselves living in them,” says Sue Wadden, Director of Color Marketing at Sherwin-Williams. “Mindful Gray SW 7016 is a timeless, warm, greenish gray that suits a variety of interiors, while Agreeable Gray SW 7029 is our most popular, light soft gray.” For a warm gray that will complement just about any color of furniture, Ashley Banbury, Senior Color Designer at Pratt & Lambert Paints suggests Row House 408B. “It’s a slightly more mid-tone neutral that provides the perfect balance of warm and cool,” she explains.
Soft Whites — Light and airy, our experts say a coat of white paint can make a big impact on buyers when selling your home. “White walls allow a buyer to see how their furniture, artwork, and fabrics can seamlessly fit into their potential new space,” explains Patrick O’Donnell of Farrow & Ball. “Soft nuanced whites, such as School House White No. 291, or the perennially popular Wimborne White No. 239, create a clean backdrop for anything.” For a bright shade of white that will stand out in listing photos, Wadden recommends Pure White SW 7005. “Think about how color will translate [virtually],” she says. “Certain colors can appear different in person than they do online.”
Creamy Off-Whites — According to Banbury, you can always count on cream-colored paint to make a stark space feel cozy and welcoming. “Shades of cream work wonders when selling a home, because they make a space feel comfortable but adaptable,” she explains. “Milk Glass WH31 brings a sophisticated touch to a room while creating a warm backdrop for furniture and accessories.” For a creamy shade of off-white that will complement both warm and cool color palettes, Wadden suggests Dover White SW 6385. “Spaces painted in off-white are seen as versatile across various design styles,” she explains.
Light Pastels — If you want to introduce some color into a room, O’Donnell says to consider a mid-to-light-tone pastel that can supply a dash of drama without overpowering the space. “A soft muted pink, like Setting Plaster No. 231, or a pale silvery blue or green, such as Light Blue No. 22 and Mizzle No.266 are interesting enough to bring a pop of personality to a room, but gentle enough to read as a warm neutral,” he said.
Velvety Beige — Wadden says that a fresh shade of beige paint is a foolproof way to make a space feel more inviting to buyers. “Spaces painted in beiges are seen as versatile across various design styles,” she explains. “Accessible Beige SW 7036 has a gray undertone that works well with differing wood tones, while bringing depth and dimension to open floor plans.”
Fueled by an historically low home inventory and surging demand sparked by a mass exodus from larger cities and major metro areas, the Coachella Valley market is riding a housing wave into 2021 unlike any we’ve ever seen. Here are the January figures published in The Desert Housing Report by the California Desert Association of Realtors.
In the Coachella Valley, the surge in sales and the resulting price increases that began mid-summer are showing signs of leveling off. In January, the median price of a detached home was $525,000 and it’s been in the same price range for the last three months. Nevertheless, it’s still up 22% over last year.
12-Month Change in City Median Prices
Year-over-year, median detached home prices are up 20% or higher. Ranking the median price gains from largest to smallest, the cities with increases over 20% were Indian Wells, Palm Springs, La Quinta and Cathedral City. With median price gains over 20% in the attached market are Indian Wells and La Quinta.
Coachella Valley Attached Median Price
Last month, the median price for attached homes in the greater Palm Springs area was $335,500, an increase of nearly 20% from last year’s median price of $280,000. Median prices for attached homes have yet to reach their 2006 highs although detached homes have.
Coachella Valley Monthly Sales
In our valley, the seasonal pattern of home sales is well-known — low numbers in October and highs in May. However, unlike our traditional pattern, sales have been at all-time highs from October to December and just now appear to be leveling. The three-month moving average showed total sales of 1045 units a month, which is 46% above last year’s numbers. “As we move into spring, we expect sales to remain near these levels” the report said.
Home Sales by City
The sales’ increase has been primarily in the second-home resort cities and not the cities primarily housing working families, which are Cathedral City, Desert Hot Springs, Coachella, and Indio. In these cities, sales have changed little from last year. The largest sales increases are in four cities, with Indian Wells up 138%, La Quinta up 65%, Palm Desert up 60% and Rancho Mirage up 54%, said the report.
Home Sales by Price Range
When reviewing home sales in different price brackets, the largest sales’ increases are again in the $400,000 to $600,000 range and in the $1 million or more price bracket.
Coachella Valley Inventory
The area’s home inventory is still shrinking. On February 1, it was at 1,283 units while last year it was 3,202 units for a whopping 60% drop. Such an abnormal decline is happening in many other areas of California as well.
The Desert Housing Report suggests that some owners may be reluctant to list their homes until Covid-19 vaccines are more widely distributed.
“Days in the Market” and “Months of Sales”
The “months of sales” ratio measures how many months it would take to sell the entire inventory at its current sales rate. This ratio is currently at 1.4 months, which is again at an all-time new low.
The median of days in the market in January was 39 days compared to 51 days a year ago.
Sale Price Discount from List Price
The January median value for “Sale Price Discount from List” was -0.8%, which continues the significant improvement since August. One out of every four sales are now selling for more than their asking price.
You’ll do far more than ‘settle’ in the greater Palm Springs area — you’ll live!
By Steven Biller, Palm Springs Life Magazine*
If you’re thinking about moving to the greater Palm Springs area, at least this much is certain: The $1 million or more your primary home brings will buy you the space and amenities of your dreams in the desert communities.
Whether you’re coming from the Southern California coast, Bay Area, Pacific Northwest, or Midwest, you’ll likely double or even triple your space and still have cash remaining to furnish the place.
In San Francisco, for instance, $1 million might cut you in for 800 square feet of living space with no yard.
In the greater Palm Springs area, it will buy 3,000 square feet on a generous lot of an acre or more.
(Editors’ note: At the end of December, the median sale price of a detached home in the area was $520,000 up 22% for the year; at the same time, the median attached home price was $329,000 up almost 18% for the year. The area’s surging real estate market is due to the influx of new residents from cities such as Chicago, Los Angeles, Portland, San Diego and San Francisco.)
Dollar for dollar, the desert offers more square footage, land, and amenities than most other desirable regions. And who could put a price on quality of life? The desert has great weather, reasonable traffic and world-class entertainment and activities.
“We have big-city amenities without the hassles of big-city living,” says David Robinson, geographic information systems coordinator at the Coachella Valley Economic Partnership.
He added that there are a variety of living costs in the nine cities that make up the greater Palm Springs area.
(Editors’ note: We added he figures below in parentheses to show the median prices of detached homes in each city and their year-over-year price gains. It should be noted that Palm Springs and Indio now have median prices above their all-time highs reached during the 2006 housing bubble.)
The cities with the highest costs of living and the most amenities are respectively: Indian Wells ($959,500 | 16%), Rancho Mirage ($737,000 | 5%), La Quinta $650,000 | 27%), Palm Desert ($500,000 | 15%) and Palm Springs ($822,000 | 23%).
The eastern cities of the region — Coachella ($275,000 | 7%) and Indio ($384,465 | 10%) — are resurgent, sharply focused on their historic downtowns, and creating opportunities for growth. They also offer moderately priced housing.
Stunning, updated, move-in ready home offers 2BR – 2.5BA plus Den and Formal Dining Room / 3rdBR. Updates include a huge center island kitchen and deep, landscaped backyard and expanded patio with built-in BBQ. Check out the laid-back Sun City Shadow Hills lifestyle, an award-winning active adult community with low dues and lots and lots of amenities. 81164 Avenida Castelar
Ultimately, Robinson says, it’s the qualitative factors that give the greater Palm Springs area an edge over other cities in California and beyond: its natural beauty, world-class arts and culture, and ease of living make it the place to be.
*This blog is adapted from an article by Steven Biller published in November’s digital Palm Springs Life Magazine. Please contact Bonnie & Hank Steele if you have any questions about living in the greater Palm Springs area.
Sun City Shadow Hills is an award-winning gated community located in the beautiful Coachella Valley in the city of Indio, California. Shadow Hills is part of the Palm Springs desert resorts area where shopping, dining, entertainment and cultural venues abound.
When compared to large cities in the U.S., SCSH offers affordable homes and a laid-back lifestyle. This newer Del Webb development has 3,450 homes with a stable, professionally managed HOA and some of the lowest dues in the Coachella Valley.
At Shadow Hills there are amenities for all lifestyles including golf, tennis, pickle ball, bocce, two fitness centers, indoor and outdoor pools, a library. billiards and more. Residents also enjoy the social side of their community at two clubhouses with access to a variety of events, classes and clubs.
The golf clubhouse offers a popular full-service restaurant overlooking the 18th hole of the championship course.
Presented below are two beautifully updated Homes at Shadow Hills:
NEW PRICE: 40158 Calle San Geronimo @ $475,000 — Owners invested over $200,000 making this a 21st century dream home. Almost everything in kitchen & baths recently replaced with high-end quartz & stainless steel fixtures; bamboo & Italian porcelain tile floors; crown molding and new paint inside & out. Also there’s a pool & spa and BBQ island & a fire pit on extended back patio. Recent HVAC system and A/C in insulated 3-car garage. Home has 2BD & 2BA, great room, a den/office and bonus room or office or studio or 3rd BD. And there’s more. Click for virtual tour.