Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Inventory increased, sales declined and new listings increased in all types of property this month. I expected this because of all the bad news in the credit markets, government bailouts, declining stock market.

October was the first month since February that our real estate numbers did not reflect an improvement from the previous month.

The largest number of sales are occurring in single family homes under $400,000.

Twelve months ago there was practically NO market for the lower priced homes but million dollar plus homes were continuing to move very well. This is why the median or average price reflects a decline. Any questions regarding these calculations, please let me know.

There are some amazing buys! Remember the investment term “Times Gross”??? *

It is now possible to purchase properties at a 10 times Gross, which has not been possible since the early 80’s.

*Times Gross is calculated by dividing the annual rents into the purchase price. The lower the number, the better transaction for the buyer.

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate…obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

August is traditionally a slow month here because it is so hot and everyone is tired of the summer. After Labor Day, the market starts improving. I was very apprehensive about this September because of the credit crisis and the stock market volatility. Plus, all the bad news in the media does not make one feel comfortable about investing!

Inventory increased by 600 properties; however sales increased by 54%!!!! Even though the majority of sales are bank owned REO properties, it demonstrates that there is still a substantial number of buyers for the current bargains.

Multi-Family properties enjoyed 9 sales. Eight of these were Bank Owned, with one being a short sale.

Short sales are where the bank agrees to accept less than the full amount of their loan. Only about 5% of properties marketed as a short sale actually closes escrow. The banks just take too long to make decisions.

I believe if the house/senate passes the bail-out bill, the presidential election is resolved and interest rates stay low, 2009 should be a better year for real estate than 2008 has been.

Remember, there are opportunities in every market. You just have to be smart enough to figure out how to take advantage of any market conditions.

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate…obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Total available properties decreased again this month 9 percent when compared with July. In January of 2008 the total inventory for all categories totaled 7681 properties. We now have 5171 properties on the market reflecting 2510 fewer properties, a decrease of 32%!!!! since the first of the year. This decline should help stabilize the housing market in the area.

Traditionally August is a slow month in the Coachella Valley because it is very hot and humid and we are all ready for a vacation. September will tell us if the market is continuing to improve

Interest rates declined as a result of the government assistance to Fannie-Mae and Freddie-Mac. This assistance provided assurance to lenders that there will be a continuing secondary market for sale of mortgage loans, thus loosening the credit market.

A substantial number of new sales are REO’s at very attractive prices. Bank owned properties are being priced very aggressively in order to get the properties sold.

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate…obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Total available properties decreased again this month by 11.8 percent when compared with June. In January of 2008 the total inventory for all categories totaled 7681 properties. We now have 5624 properties on the market reflecting 2057 fewer properties, a decrease of 27% in six months!!!!

We are being bombarded by bad real estate news in the media. Prices did not start falling substantially until around September 2007. This continued to May 2008 at which time it appears prices are stabilizing for quality property, clean condition and priced correctly.

I believe the best buys for this real estate downturn will be through the end of 2008. Declining Inventory…Low Interest Rates, Stabilizing Sales Activity = Opportunity. Prices are also well below replacement cost!

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate…obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

The trend has continued to improve, not by a huge amount but this is the summer months, the temperature is well over 100 degrees and property sales are only slightly less than May of this year.

Total available properties decreased by five percent when compared with May. In February of 2008 the total inventory for all categories totaled 7562 properties. We now have 6304 properties on the market reflecting 1258 fewer properties, a decrease of 17%!!!!

It is my opinion the bottom of the market in the Coachella Valley was February of 2008. This trend should continue unless we have a sizable increase in interest rates or some earthshaking unforeseen catastrophe.

There are a substantial number of foreclosure properties coming on the market, however investors have returned to the market and if a property is priced properly it will sell very quickly. It is impossible to perfectly time the market, but I feel 2008 will be the best year for bargains in this real estate downturn.

There are still some great buys to be had, i.e. 1700 to 2000 square foot homes in the $225,000 to $260,000 price range that will rent for $1400 per month in Cathedral City. Condos in South Palm Desert for $120,000 that will rent for $925.00 per month are also available. This is in Indian Creek Villas, a great starter investment that is easy to manage and very stable.

The rental market is doing well….in fact we have no vacancy at present for our existing rental homes. Many of the folks that have lost their homes through foreclosure are now becoming tenants. We have rented several of our properties to persons in this situation and they are great tenants since they are used to being owners.

The National News has been very disappointing this month. Most of the statistics being quoted are from the first quarter of the year. It was pretty scary about Fannie Mae and Freddie Mac’s problems, but all indications are that the federal government will provide assistance.

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate…obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Good News Again!!! May continued the trend that started in March of 2008. Inventory is declining, pendings are holding well and the rate of new listings has declined also. This is especially telling for the desert because the snowbirds are gone and our market is still improving.

It is my opinion the bottom of the market in the Coachella Valley was February of 2008. This trend should continue unless some unforeseen act occurs.

All categories enjoyed an 8% decrease in inventory from April 2008. REO properties are driving the market as banks continue to price their inventory competitively. REO* Specialty agents have advised 40% of the REO listings sell over the listing price! I personally have submitted numerous all cash offers on quality properties for investment and up to four offers were on many of the properties.

Short sale listings distort the market, i.e., most of these homes do not sell through a short pay agreement with the lender and are priced in the MLS ridiculously low to attract offers. These offers do not sell the property and most of the time the property goes to foreclosure sale. Individuals perusing MLS inventory however are given the impression that prices are much lower than they really are because of the short pay listings.

There are still some great buys to be had, i.e. 1700 to 2000 square foot homes in the $225,000 to $260,000 price range that will rent for $1400 per month in Cathedral City. Condos in South Palm Desert for $120,000 that will rent for $925.00 per month are also available.

Very little new inventory is being built. Once we work through the current foreclosures, existing product should enjoy increases in rental income as well as prices, especially since the cost of construction is rising due to inflated oil and gas costs.

Today is June 15th, half way through June. I did a quick check on the statistics from June 1 through today. June is doing even better than May did!!!!!

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate….obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Single family homes continued to improve. March had shown an improvement and April has continued that trend. Total inventory of SFR’s decreased by 317 homes or 6%. Properties going into escrow rose by 57, a 15% increase over March! New Listing activity was almost identical to March.

Since March is traditionally the strongest month in the desert area, it’s a good sign that April continued to reflect strength and improvement. I believe a substantial number of the sales are REO* sales at unbelievable prices.

Home buyers are recognizing there are great buys and investors are also coming back in to the market after a hiatus since late 2005.

Condos reflected an improvement with a 5% decline in inventory and the number of sales declined by 5% as well. In both Single Family Homes and Condos the ratio of new listings to pendings (properties going into escrow) is now 2 or 3 new properties coming on the market for each pending. In the fall of 2007 there were 6 to 8 new properties coming on the market for each pending!!!

There are some amazing investment opportunities in the current market. Condos that will rent for $925 are selling in the low 100’s after selling for 200+ twenty four months ago. Single Family Homes in Palm Desert Country Club can be purchased for under $200,000, down from the high 300’s!! Rents would be around $1250. Single Family Homes in Desert Hot Springs can be purchased for low 100’s and will rent for $1050 to $1100. All of these available purchases are currently under replacement cost. Once the excess inventory is depleted, values should start rising again.

Have we passed the bottom of the market? It’s too early to tell for sure. But we have three months of improving data, with the exception of multi-family.

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate….obtained from a foreclosure action.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Single family homes fared very well in March. Total inventory of SFR’s decreased by 64 homes, properties going into escrow rose by 55 and new listings were 51 fewer than February. All of these are positive indicators.

It’s my understanding that March is traditionally the largest sales month in the desert, i.e., the winter vacationers like to purchase prior to departing for the summer. April should be more indicative of any developing trends.

This March a substantial number of Canadians and Europeans were purchasing here for second homes as well as investments. The U.S. Dollar is now worth 30 to 35 % less than the Euro or Canadian Dollar was four years ago, making our real estate a huge bargain for those folks.

My investors got some good buys this month. Banks are now beginning to price their REO (foreclosed properties) at very reasonable values, up to 55% LESS than what a property sold for 18 months ago! In order to obtain this kind of purchase, you have to be able to make your offer almost immediately after the property comes on the market, minimal or no contingency, short escrow period, but it’s worth it.

Remember to understand the numbers when looking at percentage quotations. I can state that “sales of multi-family increased by 100% in March or that sales doubled! The fact is we had four sales rather than two!!!!! In this downtown, my biggest pet peeve is headlines using the data to make a case either positive or negative. This is why I do my own stats……….I know what’s going on! *

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

February was far more positive than January. Pendings Sales increased by 25% over January. Total available inventory held constant and new listings for the month of February decreased by 25% as compared to January.

Is this an indicator that the market is turning around? Way too early to tell. January stats were skewed because people held off doing business during the holidays and waited to list their property until January, thus accounting for the large increase in inventory. Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

The market with serious problems is multi-family. Multi-Family consists of duplexes to large apartment buildings. For some of you in that have been in real estate for a long time, we used to call these apartments. The inflated cap rates that owners/sellers enjoyed in 2004 and 2005 are gone. Currently a cap rate of 6 is required in order for a building to sell. The higher the cap rate the better deal for the buyer. Income property is supposed to produce…..INCOME.

It’s a 100% absolute that prices on multi-family need to come down. It’s a waste of time to place a property on the market at a 3 or 4% cap rate, with few exceptions. Properties that are over priced sit on the market and overstate inventory because they are not going to sell.

Let’s hope March comes in even more positive.

-- Jeannie

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

Unfortunately, the statistics for January are not good. Inventory increased in all categories. New Listings of Single Family Homes increased by 77% over December 2007. Probably a bit overstated because some sellers held off until after the holidays. This most likely will level off during February.

The number of properties going into escrow (pendings) increased in all categories, however inventory is still coming on around five properties for every one that goes into escrow. Prices will continue to fall until the market returns to a more equal number of sales to new inventory.

The recent interest rate cut by the Federal Reserve Board has not had an impact either way on the real estate market. Mortgage rates are set by the 10 year treasury auction, therefore any increase/reduction was already factored into the market at an earlier date. The only upside to the interest rate cut is a psychological one, i.e., positive news for a change rather than more statistics on sub prime foreclosures.

-- Jeannie