The Coachella Valley Housing Market

The figures relating to declining home sales in the Coachella Valley as

summer begins and temperatures rise do not look good. But as with

all things, even poor figures in a strong housing market make for

headlines, but have little affect on reality.

Here are the latest figures. First, the Statewide figures are

these. Home sales decreased 27.8 percent in April 2007 compared

to a year ago. However, the median price of a home rose 6.2

percent. What’s it mean? Confusion to the economists.

Bad news to Realtors. And for the general public, your home may

still be going up in price, even if you can’t sell it. Overall,

that’s not so bad. In areas suffering a decline in prices, or

where there is a glut on the market, the prices may have declined 5

percent. Still, that’s not bad. Weren’t bubble bursts

supposed to be more dramatic?

Then you have the strong market based on population increase

projections which are all extremely rosy for Southern California, the

Inland Empire and the Coachella Valley real estate in particular.

That rosy prediction, however, did not help the latest figures for the Coachella Valley MLS.

As with the rest of the State, sales of all types of homes (including

new, resale and condo) declined 28 percent in April. For new

homes alone the drop in the Coachella Valley was 57 percent. And

while the median price of a home rose Statewide, in the Coachella

Valley, the median price for all types of homes combined suffered a

decline of 2.6 percent from a year ago with new home prices suffering

the worst (a 6.7 percent decline from a year ago) and resale homes

doing best and actually increasing in price 2.4 percent for the median

price of a home.

So what’s happening? Builders are building fewer homes.

That’s good. They have also taken dramatic steps to sell off

their inventory. That’s good too, and even with their incentives

and price declines, the median price of homes in Southern California

has not declined substantially. That’s good also.

The inventory of homes for sale on the market in the Coachella Valley

rose to 9,153 homes in April, and slid back just slightly to 9,108 in

mid-May. As summer temperatures heat us and sales dry up further

this summer, the inventory may to 10,000 which will make for some bad

headlines. But again, all may be explained away by the seasonal

drop in sales that normally occur during the hottest months (except

when the market was roaring in 2004 when inventory was 1500). And

in reality, all it may confirm is that people are stuck where they are,

except for first-time home buyers.

The trend is not good and will not likely be improving this

summer. The new home sales decline in the Coachella Valley of 57

percent in April compared with a year ago follows three straight months

of declines of 53 percent in March, 43 percent in February and 23

percent in January. And the story is the same in the Inland

Empire and in Southern California in general where home sales fell to a

12 year low in April.

Some economists have pointed to the recent fall-off in sales of more

affordable homes as an indication of the ills caused by the people who

brought you no-interest loans and other creative financing that is now

biting people in their posteriors. Others claim it is a

reflection of those who got in last in the market upswing or who have

the least to work with are now being hurt most as the pendulum swings

back. But no matter what price community you look at on the MLS,

there is a glut of homes for sale and sales are hard to come by.

To paraphrase a Stephen Stills song, you simply need to love the place

your in, because moving may be out for the foreseeable future.

And if you are a first-time home buyer, just like when you pick stocks,

you need to be selective. Have your Realtor look for the select

homes where the price decline has been dramatic while the rest of the

neighborhood has held steady or increased in value. If you think

you can time the market just right, lease short-term. But if you

have no luck picking stocks remember you want to be a contrarian

sometimes. When people are rushing to sell, that’s the time to be

buying. We may not be there yet, and if we do get there, you may

not even recognize it. And when you are ready to buy or at least

ready to be prepared to buy, we can help.

The Coachella Valley Housing Market