Palm Springs Market Watch: May 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	4787	415	812	2 to 1	8.7%
Condos	1653	103	276	2.7 to 1	6.4%
Multi-Family	226	3	28	9 to 1	1.3%

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.