Is there good news for house-hunters in the greater Palm Springs area? There could be if the latest data is any indication. Still, don’t hold your breath, experts said, if you’re waiting for both inventory and prices to return to levels anywhere near pre-pandemic levels.
The latest: A May report from the Greater Palm Springs Realtors (GPSR) shows inventory actually increased, while buyers securing contracts continue to pay a premium.
- On June 1, there were 1,179 units available to purchase in the Coachella Valley — 498 units more than at this time last year.
- Data shows those successfully landing offers in Palm Springs paid 4.8% over asking for a detached home (that’s slightly below last month’s 5.2%) and 5.3% above asking for condos, townhomes, and other attached dwellings.
What they’re saying: “This is the first meaningful increase in inventory in three years,” the report states. “What is particularly significant is that [the inventory increase is] occurring during the seasonal period when inventory normally contracts.”
Zoom in: Local Realtors have been anticipating a seasonal drop in prices. So far, that hasn’t happened. But that could change soon.
- “With seasonal factors and inventory rising, things should slow down,” one Redfin agent told us. “If we continue to follow the normal seasonal pattern, prices should peak sometime next month and then settle back. …[T]hese are not normal times. We’ll have to see if this seasonal pattern materializes this year.”
Zoom out: In May 2022, data shows the average-sized home in Palm Springs sold for $1.4 million. In May 2021, the average-sized home here sold for just over $1 million. Across the entire Coachella Valley, the median price of an average single-family home averaged $700,000 in May — a gain of 21% over May 2021. That’s up $30,000 from just last month.
- The general consensus is that higher interest rates are cooling off the market nationwide, but higher prices are here to stay.
- “Our home price projection is going up as we’re seeing a lot of sticking power in prices and price growth. We do still expect home prices to cool, but we’re starting at a higher price point.” — Realtor.com Chief Economist Danielle Hale
Looking ahead: Is there a housing bubble about to burst? No economist wants to predict the future, but they cautiously assert that no, we’re not in a housing bubble. However, according to Moody’s Analytics, houses are overvalued, meaning home prices are much higher compared to relative household incomes.
- In the Inland Empire, houses are estimated to be overvalued by about 27%.
- Lance Lambert in Fortune explains that this doesn’t mean housing prices will drop 27% when and if things stabilize, but it will become harder for home prices to inch higher than they are now.
What to watch for: Keep a close eye on inventory levels in the next four months. The GPSR report thinks that if we can keep the numbers where they are now, inventory could climb even higher come winter.
Bottom line: “The forces that have been driving prices higher – low inventory and high demand – continue to dominate the market,” the local agent said.