Here’s a summary of what happened in our local market during October. The Coachella Valley’s median detached home price in October was $400,000, which is 3.4% above a year ago. In October the median attached home price was $275,000, which is 3.8% above last year. On a city by city basis, prices continue to rise. For detached homes the median value for Cathedral City is 7.5% above a year ago while Palm Springs is 7.1% higher. Indio shows a 4.6% increase, the City of Coachella shows a 3.5% increase. Desert Hot Springs prices are up 2.7%. Palm Desert prices are up 0.9% and Rancho Mirage prices are up 0.5%. La Quinta values have decreased by -0.5% and Indian Wells homes showed the largest decrease in value at -4.8%. Palm Springs continues to amaze! With a median value of $669,000, prices are now 11.5% higher than the all-time high made back in 2006. It is the first city in the region to surpass the overall “bubble highs” made at the turn of the century. This does not mean current prices are in risky territory, as current prices are founded on sound wages and stable mortgages. The previous highs were not.
Are you wondering where the real estate market is headed during the next few years? If Trump gets impeached, interest rates will come down. Here’s an explanation of this “thesis”. After Trump got elected, interest rates went up 1.5% because of his “Trump Business Plan.” Then, the China Trade War and the slowing GDP (Gross Domestic Product) and fear of a recession caused rates to come back down. Trump is a business man and the Bond Market believes in his ability to create jobs (which he did as evidenced by a 3.6% unemployment rate, the lowest in 50 years!). If and when he’s gone, the Bond Market will believe the economy will slow down. Bond prices will go up. The yield on the 10 yr. treasury note drops. And interest rates drop as well. Thesis explained!
What determines if home prices go up or down? Three factors determine whether home prices increase or decrease. The first factor is Population Growth. The population in the Coachella Valley is expected to double in the next 20 years! The valley is the second most affordable area in Southern California. It’s perfect for retirees, first homes, second homes and rental properties. Indio had the fastest growing population in the Coachella Valley. The Coachella Valley consists of 9 cities. 42% of the population increase was in Indio. The second factor is the unemployment rate. As of January 2019, the unemployment rate for Riverside County was 4.1%. The city of Palm Springs had a rate of 3.7%, Rancho Mirage: 2.6%, Cathedral City: 3.2%, Bermuda Dunes: 3.5%, City of Coachella: 10.7%, Desert Hot Springs: 5.3%, Indian Wells: 3.1%, Indio : 5.2%, La Quinta: 3.8%, Palm Desert: 3.5%, and Thousand Palms: 3.1%. The third factor is wages. Are they increasing or decreasing? Suffice it to say that for the Riverside/San Bernardino/Ontario area,September 2019 wages were higher than September 2018 wages in 6 out of 9 job sectors. Wages in Mining and logging stayed the same while construction wages were down -1.3% and “other services” were down -2.6%.
So the valley’s population is continuing to grow. The unemployment rate is low in 7 out of our 9 desert cities. And wages are the same or greater in 7 out of the 9 job sectors. Our population growth is the dominating factor causing home prices to go up. The demand for homes is far greater than the current supply. While developers are building new developments, they cannot keep up with the growing demand. So, since our population is expected to double in the next 20 years, the future looks bright for your real estate investments.in real estate.
If you have any question or concerns about real estate that you’d like to discuss with a local expert, feel free to call me at (760) 534-1231. I also love connecting clients up with reliable, honest, professional contractors and service providers. If you need a referral, call me! You’ll be happy you did. I’d love to be your Realtor for life!
And remember, “For World Class Service at its Best, Call David Van Wess!”
David Van Wess, Realtor
431 S. Palm Canyon Dr. Suite 100
Palm Springs, CA 92262