The figures relating to declining home sales in the Coachella Valley as summer begins and temperatures rise do not look good. But as with all things, even poor figures in a strong housing market make for headlines, but have little affect on reality.
Here are the latest figures. First, the Statewide figures are these. Home sales decreased 27.8 percent in April 2007 compared to a year ago. However, the median price of a home rose 6.2 percent. What’s it mean? Confusion to the economists. Bad news to Realtors. And for the general public, your home may still be going up in price, even if you can’t sell it. Overall, that’s not so bad. In areas suffering a decline in prices, or where there is a glut on the market, the prices may have declined 5 percent. Still, that’s not bad. Weren’t bubble bursts supposed to be more dramatic?
Then you have the strong market based on population increase projections which are all extremely rosy for Southern California, the Inland Empire and the Coachella Valley real estate in particular.
That rosy prediction, however, did not help the latest figures for the Coachella Valley MLS. As with the rest of the State, sales of all types of homes (including new, resale and condo) declined 28 percent in April. For new homes alone the drop in the Coachella Valley was 57 percent. And while the median price of a home rose Statewide, in the Coachella Valley, the median price for all types of homes combined suffered a decline of 2.6 percent from a year ago with new home prices suffering the worst (a 6.7 percent decline from a year ago) and resale homes doing best and actually increasing in price 2.4 percent for the median price of a home.
So what’s happening? Builders are building fewer homes. That’s good. They have also taken dramatic steps to sell off their inventory. That’s good too, and even with their incentives and price declines, the median price of homes in Southern California has not declined substantially. That’s good also.
The inventory of homes for sale on the market in the Coachella Valley rose to 9,153 homes in April, and slid back just slightly to 9,108 in mid-May. As summer temperatures heat us and sales dry up further this summer, the inventory may to 10,000 which will make for some bad headlines. But again, all may be explained away by the seasonal drop in sales that normally occur during the hottest months (except when the market was roaring in 2004 when inventory was 1500). And in reality, all it may confirm is that people are stuck where they are, except for first-time home buyers.
The trend is not good and will not likely be improving this summer. The new home sales decline in the Coachella Valley of 57 percent in April compared with a year ago follows three straight months of declines of 53 percent in March, 43 percent in February and 23 percent in January. And the story is the same in the Inland Empire and in Southern California in general where home sales fell to a 12 year low in April.
Some economists have pointed to the recent fall-off in sales of more affordable homes as an indication of the ills caused by the people who brought you no-interest loans and other creative financing that is now biting people in their posteriors. Others claim it is a reflection of those who got in last in the market upswing or who have the least to work with are now being hurt most as the pendulum swings back. But no matter what price community you look at on the MLS, there is a glut of homes for sale and sales are hard to come by.
To paraphrase a Stephen Stills song, you simply need to love the place your in, because moving may be out for the foreseeable future. And if you are a first-time home buyer, just like when you pick stocks, you need to be selective. Have your realtor look for the select homes where the price decline has been dramatic while the rest of the neighborhood has held steady or increased in value. If you think you can time the market just right, lease short-term. But if you have no luck picking stocks remember you want to be a contrarian sometimes. When people are rushing to sell, that’s the time to be buying. We may not be there yet, and if we do get there, you may not even recognize it. And when you are ready to buy or at least ready to be prepared to buy, we can help.
Sebastian Gibson is both a realtor and a real estate lawyer in California of Sebastian Gibson Properties in Rancho Mirage, California dealing in California Real Estate Property, Palm Springs Desert Homes Land For Sale, Desert Area MLS and is the Senior Attorney with the San Diego Personal Injury Lawyer Firm from San Diego, Los Angeles, Orange County, the Palm Springs Desert Area, SoCal
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