Palm Springs Market Watch: January 2009

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

The total number of sales increased from 215 in December 08 to 505 for January 09. This represents a 234% increase in properties going into escrow. Most of these are Bank Owned REO properties priced very aggressively.

Total inventory has declined 15% in the last twelve months.

Rental rates have decreased slightly due to higher unemployment in the area.

The biggest obstacle to investors is the “no more than four loans” permitted for investors requirement by the banking industry. This precludes any long term investors from purchasing/refinancing unless they have all cash.

Some explanations of my report:

Total Inventory

tells us how many properties are on the market for sale. When inventory is rising, prices will fall because there are more properties competing for buyers.

When inventory is declining, prices will rise, such as we saw in 2004 to 2006.

Pendings

tells us how many properties went into escrow for the month. This gives us a very quick picture of the current activity.

Charting “Solds” or actual closed escrows will provide pricing information but in a changing market such as we are in currently, it will not reflect an accurate picture, i.e., Solds usually were placed under contract at least 30 and sometimes as much as 90 days prior to title actually transferring to the new buyer.

Type	Total Inventory	Pendings	New Listings	New Listings/Sales Ratio	Sales As Percent Of Inventory
Single Family Homes	4704	423	1006	2.4 to 1	9%
Condos	1694	77	362	4.7 to 1	5%
Multi-Family	181	5	35	7 to 1	3%

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.