A Market Update for the Palm Springs Area

What are the latest trends of the Palm Springs area market? I’ll fill you in on the numbers today.

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Are you up-to-date about what’s going on in our local real estate market?

As of February 1, the months-of-supply ratio was 4.9, which is a record-low ratio and is responsible for the continued trend of being in a seller’s market. The chart shown at 0:44 in the video shows that March is usually the high in this ratio, and we expect it not to exceed five months of supply for the entire year.

This is a considerable improvement over the last three years, when it often went above six months for extended periods of time. This indicates that inventory should remain low and tight in 2018, making it a seller’s market in general, and putting upward pressure on pricing.

The days on market remains low as well, at just 66 days. The inventory improvement compared to a year ago is found in all price brackets, but especially between $400,000 and $800,000. As we expect, the months-of-supply ratio increases at higher prices, but it doesn’t really start until prices get over $700,000, while inventory ratios for prices above $900,000 are better than a year ago—that segment of the market is still a buyer’s market.

Our continued price appreciation and lower inventory point to a great time to consider selling your Greater Palm Springs area home.

Inventory rose by 330 units in January for a total of 4,083 units listed by February 1. As the graph at 2:06 in the video indicates, for the last five years, January has shown an increase in inventory. With some January increases larger than others, the largest increase was in January of 2016, when it rose by 1,000 units. If inventory continues its historical pattern, we should see a peak sometime next month in the low 4,000s, then slowly declining. This continuing low supply of inventory should put upward pressure on pricing.

Year-over-year changes in single-family or detached median home prices of the nine major cities remain very strong. Only LaQuinta has a lower median price than it did a year ago. The other eight cities are all higher.

The attached, or condo, market continues to show marginal price increases. The two largest condo cities—Palm Springs and Palm Desert—show increase of 4.9% and 3% respectively. With the threat of inflation, interest rates have begun to climb, and most experts project a steady trend towards a 5%, 30-year fixed rate by the end of the year.

Our continued price appreciation and lower inventory point to a great time to consider selling your Greater Palm Springs area home. If you’re a buyer who will be getting financing, there is some urgency to get into this market now before interest rates affect your purchasing power.

If you have any questions about the value of your home or you’d like to explore purchasing a home in the Palm Springs area, then please feel free to reach out to us. We’d be happy to help you out.

4 Ways the New Tax Bill Will Impact the Real Estate Market

The new tax reform will impact the real estate market in four key ways. These changes indicate that now might be the time to start the process if you’re thinking about selling in 2018.

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I’ve gotten a lot of questions recently about how The Tax Cuts and Jobs Act will affect the real estate world. There are four key tax changes that will impact the housing market:

1. Deductions for property taxes. Prior to the new tax bill, if you itemized deductions on your federal return, you were able to deduct the entire property tax bill along with any state income taxes. Going forward, this total amount will be capped at $10,000.

2. Deductions for mortgage interest. The final tax bill reduces the limit on deductible mortgage debt to $750,000 for or new loans that were taken after December 14, 2017. Other loans of up to $1 million prior to that time are grandfathered in.

3. Exclusion for capital gains. Previously, if sold your home and turned a profit, then up to $500,000 of that profit was exempted from the capital gains tax if you were married and had lived in the home for two out of the last five years. There was some concern that this rule would be changed so that you had to live in the home for five out of the last eight years, but no change occurred. You still only need to live in the for home two out of the last five years in order to claim this exemption

4. The deduction of moving expenses. You used to be able to deduct your moving expenses if you moved for a job, but the final bill repealed this rule and modified it so that you can only deduct your moving expenses if you’re a member of the U.S. armed forces.

The first two changes increase taxes on current homeowners who itemize. Therefore, they might make homeownership a little less attractive. This is why the NAR stated that we would see a 10% drop in prices in 2018. On the other hand, the last change makes it more expensive to sell your home. As a consequence, there may be more homes not coming on the market.

If you’re thinking about selling your home in 2018, now might be the right time to start the process.

We’ll have to see how things play out, but there seems to be a consensus among experts that these reforms might drive home prices down in the midterm.

On the bright side, sellers still get to keep the capital gains exemption, which is a huge win for real estate. If you’re thinking about selling your home in 2018, now might be the right time to start the process.

If you have any other questions about these changes or you need help buying or selling a home in our market, feel free to call or email me. I’d be glad to help you.

Latest Trends in the Palm Springs Area Real Estate Market

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Today, we’re going to talk about what’s going on in the greater Palm Springs area real estate market.

Overall, our market has shifted to a buyer’s market, with 8.4 months of sales. While this shift has occurred in all nine cities, some price points have more inventory than others. For example, homes over $900,000 have the highest absorption rate with 24.2 months of inventory. That means if no other homes came on the market, it would take over two years to sell everything that’s currently on the market. This is a significant shift compared to last year, which stood at 9.8 months of sales.

Today, homes under $300,000 have 5.8 months of inventory, compared to 5.1 months of inventory last year. As of January 31st, our entire inventory stood at 5,801 units, which is 826 units higher than this time last year.

The seasonal nature of our market is such that January and February typically have the highest levels of inventory. However, inventory has increased recently due to a lot of Canadians taking advantage of rising home appreciation and a favorable U.S. currency exchange rate. When these Canadians sell their properties, not only are they cashing in on their home appreciation, they’re also getting a 30% to 35% bump when exchanging U.S. dollars for Canadian money.  Since this puts more inventory on the market, there is some downward pressure on pricing.

Our current median price per square foot is $177, which is a slight decline of $2.80 from last month. As of the end of January, six of the nine cities saw positive year-over-year appreciation, while Palm Desert, La Quinta, and Indian Wells saw home values decline.

Interest rates are still hovering around 4% despite the Federal Reserve increasing rates last December. This, combined with our increased inventory levels, makes now a great time to buy a home in the Palm Springs area. If you have any questions, give us a call or send us an email. We would be happy to help you!