Tuesday, February 12, 2008

Positve Real Estate News on the Front Page of the Desert Sun

If you didn't get a chance to pick up the Desert Sun today take a look at the great article that was on the front page.

The number of homes sold in the Coachella Valley in 2007 fell 21.4 percent compared to 2006.

Yet average sales prices are holding steady. In the desert's nine cities and two unincorporated areas, the average sales price inched up less than 1 percent, hitting $555,267 last year.
That happened despite average sales prices falling in every desert community except La Quinta.
The year-in-review data, to be released by the California Desert Association of Realtors this week, shows the local housing slump that began in the second quarter 2005 only worsened in 2007.
And while some hope the market stabilizes this year, several economists and real estate experts point to 2009 and even 2010 before the critical residential real estate market begins an upswing.
"I've never seen (sales) plunge this fast," said Patrick Veling, president and founder of Real Data Strategies.
The Brea consultant company compiled the 2007 data based on the Desert Area Multiple Listing Service, which includes sales of existing homes, new residences and condos. Real Data Strategies also provided additional analysis of the immediate Coachella Valley to The Desert Sun.
The new figures show:
A total of 5,860 homes were sold in the nine desert cities, Bermuda Dunes and Thousand Palms.
That's roughly 1,600 fewer homes than were sold during 2006. And it's a 46 percent tumble since 2005.
Average prices for the immediate Coachella Valley increased $5,269 from the average price of $549,998 in 2006.
When comparing 2006 to 2007, the average sales price dropped in every community except La Quinta.
The year actually marked the second consecutive year La Quinta's average sales price increased: from $771,747 in 2006 to $797,201 in 2007.
The implications of the real estate market are far-reaching.
Housing sales have a direct impact on the valley's entire economy, touching countless other industries - notably construction and retail.
"That affects a whole variety of sectors and different parts of the economy," said John Husing, a Redlands-based economist and consultant for the Coachella Valley Economic Partnership.
"It all affects retail, consumer services, banking - all those are impacted."
Dramatic changes
Experts say the first red flags of of the valley's market problems came with the 2005-06 data:
Sales slowed. Prices leveled. It quickly transformed from a seller's dream to a buyer's market.
It only got worse in 2007, the numbers show.
"We have not seen sales activity at this pace," Veling said.
The figures also reveal a first in recent memory: Luxury homes that sell for more than $1 million continue to fare well, while the entry-level home market struggles.
It indicates that people looking to invest in second or third homes are being more selective about when they're buying.
And sellers aren't budging on prices because they're not motivated by need as much as their intent to get top price.
It's "absolutely opposite" of traditional housing shifts, says Greg Berkemer, executive vice president of the California Desert Association of Realtors.
Previous market corrections, triggered by economic recessions started at the top with high-priced homes. Entry-level purchases generally were not affected.
This time, "the high-end kept selling and the low-end collapsed," Berkemer said.
That's a big reason average sales prices have not dipped, and even gone up slightly.
But until the sales prices go down, experts say the desert's large inventory won't diminish.
The valley ended 2007 with 9,186 homes on the market. That is 11.5 percent - or 950 more homes - than at the end of 2006.
It's also about three times greater than the end of 2004 when the housing market was booming.
And as more adjustable rate mortgages are about to reset, Veling said "one could argue" that it will be late 2009 to early 2010 "before this begins to level off and improve."
"The quicker we (stabilize the market)," Berkemer said, "the better off we are all going to be."

Did you know?
With 933 homes, the 92253 ZIP code in La Quinta had the most homes sold and closed in 2007 of any valley ZIP code. The 374 active agents there totaled $743.8 million in volume. Of the nine valley cities, Coachella saw the fewest home sales, with 79 sold in 2007. All but one were entry-level homes below $500,000; the other sold in the $750,000 to $999,999 range.Indian Wells tops all other desert cities when it comes to average sales price. In 2007, homes there cost $1.1 million. The 92262 ZIP code of Palm Springs had the most sales of entry-level homes at 561 homes in 2007.The valley's luxury market, where homes sell for seven figures, makes up 9 percent of all sales in 2007. Entry-market sales make up 68 percent.