Well, summer is now behind us and as usual the dog days of summer brought with it low “for sale” inventories and a slowdown in buying, as buyers stayed home. Palm Springs Real estate market trends through August 2013 showed that Palm Springs properties for sale continued to follow summer seasonal trends, with inventories continuing to drop from 465 at the end of May to a bottom of 404 units in July, and only increasing about 9% to 439 at the end of August. My expectation of a inventory bottom in July/August of about 375 units did not happen as inventories started to build in August, a month earlier than expected. Average prices of all types of residential properties have stayed essentially flat, ending in August the same as in May and still over 20% up from this time last year. This average increase is seen across all price ranges but differs somewhat within each category. Here is what has happened since the end of May 2013:
• Low End Properties – Below $200K
Investors continue to be active in this price range. Inventory bottomed in June at 60 units and has steadily increased since then to 76 units in August. Asking prices that have risen steadily over the last year have started to decrease, as inventories increase. “Sold” prices have stayed pretty flat through the summer as investors bought up the limited inventory.
• Upper-Low-End Properties – $200K to $500K
Inventory bottomed in June and July and increased about 14% to 198 units in August. Prices have remained essentially flat since May. Year over year prices are still up at almost 9%.
• Moderately Priced Properties – $500K to $1M
Inventories dropped slightly in June and July but were up to May levels again by the end of August, and up over 50% from a year ago. Active listings at month’s end were 118 units, the same as in May. With inventories up, you would expect prices to drop, but that is not the case, as prices continue to hold steady – up 18% from a year ago.
• High End Properties – Over $1M
Inventory numbers have taken a precipitous drop over the summer. Inventory at the end of May was 71 units; at the end of August it stood at only 47 units, a huge drop of over 40%. “Sold” units have not increased substantially, so I guess many properties went off the market for the summer and will be back this fall. With the exception of a big increase in July, “Sold” prices have held pretty steady since May and continue at about the same levels as measured by $/sq. ft. as a year ago.
In summary, real estate market trends in Palm Springs over the summer months have held pretty much at historical norms with low selling activity, along with diminished “For Sale” inventories. As we enter our peak selling season, we expect inventories will rise; in fact, they started increasing in August a bit earlier than normal this year. What will happen in the next few months is anyone’s guess. With our inventories and mortgage interest rates increasing combined with the weakening of the Canadian Dollar, we may be in for a bit of a price correction downward, after almost two years of year on year increases. It all depends on whether or not our returning snow birds see value at current price levels. Stay tuned.