Recent home sales are down nearly 14 percent from a year earlier. Jon Gordon of Rosenthal & Associates explains why realistic pricing and the full cost of ownership will shape the coming desert season.
The return of winter visitors will give Greater Palm Springs home sellers a fresh audience. The latest housing figures suggest they will still have to compete hard for a buyer.
The October Desert Housing Report from Greater Palm Springs Realtors puts average monthly sales over the preceding three months at 471 homes, down 13.9 percent from 547 a year earlier. Over the same rolling period, the regional median price for detached homes was $610,000, down 2.9 percent. For attached homes, including condominiums and townhomes, it was $410,000, down 2.4 percent.
Jon Gordon, broker with Rosenthal Associates of Palm Desert.
“The biggest adjustment is in the number of homes selling. Prices have softened, but not nearly as much as sales activity. Buyers are being selective, and sellers have to give them a reason to act,” said Jon Gordon, a local real estate broker with Rosenthal & Associates in Palm Desert.
The report also contains signs of resilience. Homes that sold spent a median of 53 days on the market, six fewer than a year earlier, and active inventory was almost unchanged. The result is a market with fewer transactions but no uniform retreat in prices or lengthening of selling times.
Greater Palm Springs Home Sales Remain Below Normal
The sales weakness extends beyond the valley’s usual summer-to-fall transition. The report’s seasonally adjusted recovery measure places activity 27 percent below the historical norm established using 2016 through 2019.
Detached-home sales averaged 341 a month over the latest three-month period, compared with 393 a year earlier. Attached-home sales averaged 130, down from 154.
The longer view is less severe. Average monthly sales over the preceding 12 months were 602, compared with 613 a year earlier, a decline of about 1.8 percent. Together, the measures show recent activity running substantially below the comparable period last year while the full-year pace has slipped more modestly.
These are rolling averages, not counts of transactions completed in October alone. The report also cautions that late-entered sales are incorporated into subsequent updates, making the latest figures preliminary.
For businesses that depend on home transactions, the dollar figures matter. Average monthly sales volume was $367 million, down 16.1 percent from $437 million. The decline means a smaller transaction base for brokerage, financing, escrow and related services.
Home Prices Tell Different Stories Across the Valley
A regionwide price decline conceals substantial differences among communities.
In Palm Desert, the report’s estimated price for an average-size detached home fell 7.4 percent from a year earlier, to $661,584. Desert Hot Springs declined 4.5 percent, Cathedral City 3 percent and Indio 2.9 percent. Palm Springs was nearly unchanged, down 0.2 percent.
Indian Wells moved in the opposite direction, rising 7.1 percent to approximately $1.91 million. La Quinta increased 3.8 percent, Coachella 2.8 percent and Rancho Mirage 0.8 percent. Bermuda Dunes, an unincorporated community included in the report, rose 2.2 percent.
Those city figures are not median sale prices. The report multiplies each community’s median sale price per square foot by a fixed, representative home size. The approach helps account for differences in the size of homes selling, although it cannot eliminate variation in location, condition or property mix.
The distinction also matters when evaluating the retreat from pandemic-era peaks. Palm Springs’ detached-home benchmark was 23.3 percent below its 2022 high, even though it was almost flat over the past year. Palm Desert was 18 percent below its peak. Coachella was just 1.8 percent below its high.
“Before you list, look at what actually closed, what buyers passed over and what else they can buy today. Last season’s asking prices are not comparable sales. If you need to sell this season, your starting price needs to reflect the competition you have now,” Gordon said.
That emphasis on current competition continues the pricing discipline Gordon described in GPS Business Insider’s earlier housing market coverage, when he emphasized that buyers were still participating but becoming more selective.
Stable Inventory Does Not Eliminate Buyer Leverage
The valley had 3,213 active listings at the end of October, just three fewer than a year earlier. The report’s regional supply measure, calculated using the preceding 12 months of sales, was 5.3 months, compared with 5.2 months last year.
That sits within the report’s definition of a balanced regional market, although individual communities offer different conditions.
Palm Desert had 723 listings, up from 674 a year earlier. Palm Springs had 703, compared with 710. Indio’s inventory fell to 417 from 454, while Coachella’s declined to 30 from 40.
Completed sales also show room for negotiation. Detached homes sold an average of 2.8 percent below list price, compared with 2.4 percent a year earlier. Attached homes sold 3.7 percent below list. Only 10.7 percent of homes sold above asking price, down from 12.2 percent.
Those discounts are not a complete measure of buyer savings. They do not, by themselves, reveal earlier asking-price reductions or the value of negotiated concessions.
“Buyers have room to negotiate, but the leverage depends on the property. A home priced well and needing little work can still attract competition. A listing with deferred maintenance or a price left over from the peak has a much harder case to make,” Gordon said.
The shorter regional selling time describes completed sales, not every listing. Unsold homes can remain available while competitively positioned properties move through the market.
Mortgage Costs Complicate the Winter Outlook
Borrowing costs remain a major obstacle for buyers who need financing, even as sellers lower prices.
Freddie Mac’s November 5 mortgage survey put the average 30-year fixed rate at 7.18 percent. That was down from 7.24 percent the previous week but above 6.22 percent a year earlier.
For a $610,000 purchase with 20 percent down, a $488,000 mortgage at 7.18 percent produces a monthly principal-and-interest payment of approximately $3,306. At 6.22 percent, the same loan would cost about $2,995, roughly $311 less each month. The illustration holds the purchase price and loan amount constant and excludes property taxes, insurance, association dues and other expenses.
“A lower price does not automatically mean a lower payment. Financing costs can absorb the savings a buyer negotiates on the house. That is why a cash buyer and a buyer relying on a mortgage can look at the same property and reach very different conclusions,” Gordon said.
What the Prime Desert Season Can Bring
“The return of our winter visitors gives sellers a larger audience, but we should not confuse more people in town with more people ready to buy. The season creates opportunity. It does not fix an asking price that is out of line with the market,” Gordon said.
The report provides no pending-sales measure to establish how many purchases are already moving toward closing. Its completed transactions show the market entering the season, rather than a reliable forecast of winter demand.
“I would approach this season with realistic expectations. If borrowing costs ease and sellers meet the market, there is room for more transactions. But I would not build a selling strategy around a significant drop in rates or a return to pandemic-era bidding,” Gordon said.
Condo Buyers Face a Broader Cost Calculation
The attached-home market warrants particular attention as seasonal buyers compare resort properties.
Its regional median price slipped only 2.4 percent, but the city benchmarks diverged considerably. Indio’s average-size attached-home measure fell 7.9 percent, Rancho Mirage’s declined 7.4 percent, and Indian Wells’ dropped 7.1 percent. La Quinta rose 6.9 percent, while Desert Hot Springs increased 14.4 percent.
“With a condo, the purchase price is only the starting point. Buyers need to understand the dues, reserves, insurance and potential assessments. A lower-priced unit can be the more expensive choice once you look at the full cost of owning it,” Gordon said.
Luxury Home Sales Slow Despite Some Price Gains
The gains in Indian Wells’ and La Quinta’s detached-home benchmarks do not mean the upper end is uniformly strong. Across the region, average monthly sales of homes priced at $2 million or more fell to 21 from 30 a year earlier. Properties in the two brackets starting at $1 million still accounted for 44.7 percent of total sales dollars.
Homes above $2 million sold at an average discount of 5.4 percent from list price. Even in the segment generating an outsized share of the valley’s residential sales dollars, sellers were accepting meaningful adjustments to complete a deal.
Bob Marra is the CEO/Publisher of GPS Business Insider and GPS Market Intel. He has been studying, writing and giving presentations about business, economic and public affairs news and issues and the local economy in the Greater Palm Springs/Coachella Valley region for more than 20 years.
