Market Overview

The Palm Springs real estate market continues to evolve in 2025, showing distinct patterns that reflect both post-pandemic adjustments and emerging buyer preferences. As we enter the prime season from January through March, we’re witnessing significant shifts in inventory levels, pricing dynamics, and buyer demographics that paint a compelling picture for both sellers and buyers.

Seasonal Population and Market Activity

Palm Springs maintains its traditional seasonal rhythm, with our desert community welcoming the familiar influx of winter residents and tourists. However, the composition of this population has notably changed since 2020. We’re seeing:

• Extended stays: Many “seasonal” residents are now staying 6-8 months instead of the traditional 3-4 months
• Remote work influence: A significant portion of winter residents are working professionals who can operate remotely
• Earlier arrivals: The season now effectively begins in October rather than November, extending the peak market period

Current inventory levels stand at 1,247 active listings as of February 2025, representing a 23% increase from the same period in 2024. This marks the highest February inventory since 2019.

Price Trends and Market Performance

Palm Springs median home prices have shown resilience despite broader market corrections. The current average price per square foot sits at $385, representing a 4% increase year-over-year, though significantly more moderate than the double-digit gains seen in 2021-2022.

Key Price Indicators:

• Median home price: $650,000 (up 3.2% YoY)
• Average price per sq ft: $385 (up 4.1% YoY)
• Days on market: 47 days (up from 28 days in 2024)
• Months of inventory: 3.2 months (up from 1.8 months in 2024)

Market Analysis by Price Category

Entry Level – Under $400K

The sub-$400K market has become increasingly competitive, representing only 18% of available inventory compared to 35% in 2020. Investment activity remains strong but more selective:

• Inventory: 224 units (down 8% from last month)
• Sales activity: 67 units sold (up 12% from January)
• Price trend: Up 6% YoY to average $298/sq ft
• Market dynamic: Continued demand from investors and first-time buyers, though affordability constraints are evident

Mid-Market – $400K to $800K

This segment represents the heart of the Palm Springs market, accounting for 42% of all transactions:

• Inventory: 525 units (up 15% from January)
• Sales activity: 89 units sold (down 5% from January)
• Price trend: Up 3% YoY to average $367/sq ft
• Market dynamic: Showing signs of buyer fatigue as inventory builds, creating more negotiation opportunities

Upper Mid-Market – $800K to $1.5M

The luxury-adjacent market continues to see strong demand from relocating professionals and upgrade buyers:

• Inventory: 318 units (up 18% from January)
• Sales activity: 34 units sold (down 12% from January)
• Price trend: Flat compared to last year at $425/sq ft
• Market dynamic: Buyers becoming more selective, with properties needing to be competitively priced and well-presented

Luxury Market – $1.5M and Above

The high-end market has stabilized after the volatility of 2022-2023:

• Inventory: 180 units (up 35% from January)
• Sales activity: 8 units sold (down 20% from January)
• Price trend: Down 2% YoY, though significant variation by property type
• Market dynamic: Buyers are returning but with specific criteria; properties with unique features or prime locations still command premium pricing

Emerging Market Trends

1. Sustainability Premium

Properties with solar installations, energy-efficient systems, and drought-resistant landscaping are commanding 5-8% premiums and selling 25% faster than comparable homes.

2. Home Office Integration

The pandemic’s lasting impact is evident in buyer preferences, with properties featuring dedicated office spaces or the potential for conversion seeing increased interest.

3. Community Amenities Focus

Developments with resort-style amenities, walking trails, and community spaces are outperforming the broader market by an average of 12%.

4. Generational Shift

We’re seeing increased activity from Gen X and younger Millennial buyers (ages 35-50) who are purchasing both primary residences and investment properties, shifting away from the traditionally retirement-focused demographic.

Market Forecast: Q2-Q4 2025

Q2 Outlook (April-June):

• Inventory expected to peak at 1,400+ units by May
• Price appreciation to moderate to 2-3% annually
• Increased negotiation opportunities for buyers

Q3-Q4 Outlook (July-December):

• Traditional seasonal softening with inventory declining to 800-900 units
• Prices to remain relatively stable
• Best opportunities for sellers will be unique properties or those in premium locations

Investment Perspective

For investors, the Palm Springs market presents a mixed but ultimately positive outlook:

Opportunities:

• Rental market remains strong with average annual occupancy rates of 78%
• Short-term rental regulations have stabilized, providing clarity for investors
• Infrastructure improvements (airport expansion, downtown revitalization) support long-term appreciation

Considerations:

• Cap rates have compressed to 4-6% for most properties
• Maintenance and management costs have increased 15-20% since 2020
• Water restrictions and sustainability requirements may impact some property types

Conclusion

The Palm Springs real estate market in 2025 reflects a maturing post-pandemic landscape. While the explosive growth of 2020-2022 has moderated, the fundamentals remain strong. The market is transitioning toward a more balanced dynamic, providing opportunities for both buyers and sellers who approach transactions with realistic expectations and proper preparation.

For Sellers: Focus on competitive pricing, property presentation, and highlighting unique features. The days of automatic multiple offers are largely over, requiring more strategic marketing.

For Buyers: Increased inventory and longer market times provide more options and negotiation power. However, desirable properties in prime locations still move quickly.

For Investors: Due diligence is more critical than ever, with emphasis on cash flow analysis, property management considerations, and long-term market fundamentals.

The Palm Springs market continues to benefit from its unique appeal as a desert oasis, with its mid-century architecture, resort lifestyle, and proximity to major metropolitan areas ensuring sustained interest from a diverse buyer base.

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This report is based on MLS data, public records, and market analysis as of February 2025.