Palm Springs Market Watch: February 2008

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

Type	Total Inventory	Pendings	New Listings	New Listings/Sales Ratio	Sales As Percent Of Inventory
Single Family Homes	5511	333	1011	3 to 1	6%
Condos	1835	138	326	2.4 to 1	7.5%
Multi-Family	216	2	52	26 to 1	.9%

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.