I have mentioned here on several occasions that contrarians often take advantage of down markets. Whether those markets are in real estate, stock, or commodities, savvy buyers usually look the hardest when everyone else looks the other way.
Well, it looks as if a little of that contrarian philosophy has been in play here in the Palm Springs area over the last few months. Our summer sales activity is typically somewhat slow because of the desert heat, then in August – our hottest month, it picks up rather dramatically. Lots of folks interested in buying here start looking in earnest when it’s hot. Perhaps they think that the rest of the buying public is elsewhere, so bargains will be found aplenty.
This year though, I’ve noticed that our business volume has been picking up throughout the summer. This season has seemed to me a little different, with more buyers looking and buying here than in a long time. One factor in this increase is the emergence of many foreclosed and bank owned properties over the last year. Clearly there has been an increase in our sales volume, as compared to a year ago. Recent statistics quoted in a Desert Sun article on September 03, 2008 showed that from a year ago July sales were up 41.6 % and July prices were down more then 36%, throughout the valley. The article also stated that valley wide inventory is the lowest since September 2006.
So is the market turning? Are we at a bottom? On a macro level – who really knows? But on a micro level, as measured by sales activity and year to date price reductions, I think that we are at a bottom or very close – in certain communities.
In those communities where inventories are low, I think that their low price for that particular community has been established. While we won’t see prices go lower in those neighborhoods, we should expect to see them remain stable for a fairly long period at the bottom of their pricing trough, before their prices start to increase again. Barring some major unforeseen event, further large price decreases are just not going to happen in those specific communities. Of course, there are no guarantees, but all of these signals indicate a period of stability may be starting to materialize. This will spread across the valley over the next year, as more inventories are sold.
I do believe that for a savvy buyer looking for a bargain, this is really the time to buy. The door might be already starting to close on “bargains” in specific communities.