While both home prices and sales in the Coachella Valley typically see a seasonal rise this time of year, analysts tracked another steady – and puzzling – decline last month, according to the local housing report from Greater Palm Springs Realtors (GPSR).
The median price of a detached home in the valley declined to $640,000, down almost 10% from the peak of $710,000 a few months ago. Even though most valley cities actually had double-digit, year-over-year price gains, Palm Desert and Palm Springs had price changes of .5% and -4%, respectively.
Palm Springs is the only valley city that saw a year-over-year price decrease, with the median home price now sitting at $1.14 million, compared to $1.19 million last year.
“The decline is unexpected since prices typically begin to rise in December,” the report said.
The reason for the decline in prices, the housing report says, is a little more complicated than an abundance of supply over demand. Instead, the change from a “premium market” to a “discount market” could account for much of the average price decline.
For example, “homes which sold for 2% over list now sell for 2% under,” the report said. “With no change in list price, this accounts for a 4% decline.”
When it comes to sales, local analysts are even more puzzled. The three-month average of sales in the valley sits at 444 units a month, almost 50% less than last year and 38% below the pre-pandemic average for December. In fact, every valley city has seen lower sales compared to a year ago, with the biggest percentage declines in La Quinta, Indio and Palm Desert.
The analysts tracked sales decline in every price bracket, but saw the largest decline in homes priced under $500,000. While higher price brackets had largely resisted this sales decline, last month changed that.
“Sales of million-dollar homes are now down 48%,” the report noted.
Despite the continued decline in sales, the report’s authors are optimistic that historical seasonal norms will soon kick in.
“We are entering the time of year when desert sales stop declining and begin to rise,” the report stated. “We’ll have to see if this seasonal pattern helps increase sales, or at least stops the decline, as we move into 2023.”
At the start of the new year, the valley had 1,911 units, which is below last month’s inventory but still marks 1,304 more units than last year. In previous housing reports, the analysts anticipated that inventory would reach 2,500 units by February; their most recent report is predicting that the area will reach that number at the end of February or March.
The median number of days on market, a marker of how long it takes to sell a home, also continues to increase. Last month, the median selling time was 37 days, and Palm Springs had the lowest median selling time at 29 days. Though selling time is increasing, it’s not happening as quickly as analysts had predicted, but they still expect it to return to the historic average of 50 to 60 days “relatively soon.”
Nationally, real estate analysts with Redfin think 2023 will start off slow, with home sales falling to their lowest rate in 11 years thanks to mortgage rates. On the bright side, they also expect mortgage rates to eventually decrease later this year. Redfin said that national home prices will decline during the first part of the year, “marking the first year-over-year drop since the beginning of 2012.”
In general, during an uncertain housing market, analysts continue to urge buyers and sellers alike to avoid immediately imagining the worst case scenario.
“It is important to follow data and not opinion during critical times like this,” stated the Redfin report.