The housing market in Greater Palm Springs presents a multifaceted picture as we delve into the data from May 2024. The Desert Housing Report, produced by Market Watch LLC for the Greater Palm Springs Realtors (GPSR) and the California Desert Association of Realtors (CDAR), highlights several key trends and dynamics in this unique real estate market. This comprehensive analysis explores fluctuations in home prices, sales volumes, inventory levels, and market dynamics across various cities in the region, complemented by insights from local real estate experts.
Price Trends and Sales Activity
In May 2024, Greater Palm Springs experienced a slight dip in the median price of detached homes, settling at $710,000 after reaching an all-time high the previous month. Despite this decrease, the median price remains 3.6% higher than the same period last year. Conversely, the median price for attached homes rose to $494,000, marking a 1.9% year-over-year increase. Notably, price changes for detached homes varied significantly across different cities. For instance, Coachella saw a remarkable 14.1% increase, whereas Bermuda Dunes experienced a 10% decline. Attached homes in Bermuda Dunes exhibited a significant 23.7% price increase, whereas Desert Hot Springs recorded a 7% decline.
The report indicates that the three-month average sales stood at 763 units per month in May, slightly down from 777 units during the same period last year. Sales remain 20.2% below historical norms, largely attributed to persistent high mortgage rates. Among the cities, Palm Desert led with 172 unit sales, followed by Palm Springs with 164. Palm Springs, La Quinta, Desert Hot Springs, and Indian Wells recorded higher sales than the previous year.
Inventory and Market Balance
As of June 1, 2024, Greater Palm Springs’s housing inventory reached 2,610 units, the highest in four years but still about 1,000 units below pre-pandemic levels. The region’s “months of sales” ratio, which measures the balance between supply and demand, increased to 4.2 months, reflecting a slight shift towards a more balanced market. This improvement in inventory levels is a positive sign, though the market still faces challenges in meeting pre-pandemic norms.
Days on Market and Price Discounts
The median number of “days in the market” (DIM) for homes in Greater Palm Springs was 45 days at the end of May, five days longer than last year. Coachella had the shortest average selling time at 27 days, while Rancho Mirage had the longest at 51 days. Regarding pricing, detached homes sold at an average discount of 2.1% and attached homes at 2.6%. Desert Hot Springs had the lowest selling discount at 0.2%, whereas Rancho Mirage had the highest at 3.4%.
Insights from Local Realtors and Brokers
Local realtors and brokers have provided valuable insights into the current market conditions, underscoring the complexity and dynamism of the Greater Palm Springs housing market. Michael Niven, a real estate broker in Palm Springs, mentioned on his website that the housing market is stabilizing despite high mortgage rates, and he expects a gradual recovery in sales as mortgage rates potentially decrease later this year. Similarly, Julie Tinker, a realtor in La Quinta, highlighted in a recent media interview that the increase in inventory levels is providing more options for buyers, which could lead to a more balanced market in the coming months.
Paul Kaplan of The Paul Kaplan Group also noted that while high-end homes (over $1 million) drive the largest sales increases, the overall market shows stability, with three-month sales slightly higher than last year. However, sales are still 20.2% below historical norms due to high mortgage rates. Kaplan emphasized that the market remains dynamic and well-balanced across most price ranges.
Kimberley Kelly of Desert Luxury Properties added that the rise in inventory is a positive development for buyers, which may shift the market balance slightly in their favor. Kelly also pointed out that the “months of sales” ratio increased to 4.2 months, indicating a more balanced market than the previous year.
Detailed Market Analysis by City
Breaking down the data by city reveals significant variances in market conditions across Greater Palm Springs. Palm Desert and Palm Springs continue to be major hubs of activity, with the highest unit sales at 172 and 164, respectively. Four cities – Palm Springs, La Quinta, Desert Hot Springs, and Indian Wells – saw higher sales than a year ago, indicating robust demand in these areas.
The inventory levels also vary considerably by city. Palm Springs leads with 648 units available, up from 464 last year. Other cities like Palm Desert and La Quinta also show substantial increases in inventory, which can provide more opportunities for buyers and potentially balance the market dynamics.
Sales by Price Range and Market Dynamics
Analyzing sales by price range shows that the largest increase continues to be in homes priced over $1 million. This trend underscores the growing demand for high-end properties in Greater Palm Springs. However, most other price brackets show comparable sales to a year ago, which is a positive sign indicating that the housing market is well balanced across various price ranges.
The report also highlights that dollar sales in May were $689 million, which is 1.5% higher than last year. This increase in dollar sales, despite the fluctuations in unit sales, points to the higher prices being achieved in the market.
Outlook and Market Predictions
Looking ahead, the report suggests that inventory levels may begin to decline as we move into the summer months. However, the extent of this decline remains to be seen. The report also notes that while inflation rates have declined, the Federal Reserve Board seems reluctant to lower mortgage rates until there is stronger evidence that inflation will remain down. This cautious approach means that mortgage rates may stay relatively high in the short term, continuing to influence market dynamics.
Local experts like Paul Kaplan and Kimberley Kelly remain cautiously optimistic about future trends, anticipating gradual improvements as economic conditions evolve. They believe that a potential decrease in mortgage rates later in the year could spur further recovery in sales activity.
For buyers and sellers navigating this market, staying informed and working with knowledgeable real estate professionals is crucial to achieving their goals.
Sources:
- CDAR Desert Housing Report – May 2024
- Paul Kaplan Homes
- Desert Luxury Properties
