Palm Springs Market Watch: April 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	5158	445	966	2 to 1	8.6%
Condos	1782	120	353	3 to 1	6.7%
Multi-Family	244	4	48	12 to 1	1.6%

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.