Indian Ridge CC 2013 Annual Report
Dear Indian Ridge Resident:
*To view my entire Quarterly Report, please select "View PDF Document" located to the right of this page under my photo.
This is the 10th year of my quarterly and annual reports for Indian Ridge Country Club and the 40th time I have done extensive research to find real estate facts and information that would make sense of the status of the real estate market for each year and quarter. It always comes down to “numbers don’t lie until someone plays with them” and then anything goes. Enclosed are a number of reports showing the market trends for the Coachella Valley. The national and broad based reports show excellent gains in value. When we look at the local level and see what is happening in certain communities and areas, this is when we begin to see that all areas are not adjusting equally. There are some areas where there is limited inventory of homes for sale and other areas where the supply is greater than the demand. Before listing with a Realtor who encourages you list now because this is the best time to sell, be sure you ask for trend reports or more information that supports their generalized promise that “you will get so much more for your home because the market is on fire.”
The Quarterly Homes Sales Activity shows the average price per square foot in both the HOA and PUD has not changed much since 2009, the worst year in the desert for the real estate market. What has changed is the number of homes sold and the length of time on average it takes to get the homes sold. The past four years we have sold 63, 78, 73, 79 homes respectively in Indian Ridge which reflects a fairly stable demand for homes in Indian Ridge. Now we look at the Country Club Annual Sales and see when we combine both the HOA and PUD sales, the average price dropped from $1,010,000 in 2008 to $735,164 in 2009. We have held fairly constant in average sale price since then. In the Price Range of Homes Sold, we see that since 2009 both the lowest and the highest priced sale for each year has steadily increased. This truly supports the reports that show we have been coming out of the ‘crash of the real estate market’ for the past 5 years. The number of homes for sale has held fairly constant during that time with an average of 75 homes on the market during the peak winter selling season.
For residents in Indian Ridge who have been waiting to sell their home and others who know what they could have sold their home for 6 years ago, now may sell their home for 60 to 70% of that top dollar. Take a look at the Indian Ridge Home Report showing the homes actively listed, those in escrow and the sold properties for 2013. It is important to recognize there can be a vast price differential between like homes for a variety of factors. There is a spread of $335,000 in sold price between one Bougainvillea 2 and another. The highest priced Bougainvillea 2 sold for $1,225,000 at the peak of the market. A highly upgraded Bougainvillea 2 just sold for $840,000 which is the highest sale price for this floor plan for a number of years. For the past few years, there has been little difference between the highest and lowest sale prices for the same floor plans regardless of upgrades and elevations. Homes actively listed now show there is a bigger difference in the asking price for the same model homes on the market. As we proceed, homes with the location, upgrades and quality the buyers want, will become easier to sell. The current sale prices are beginning to show the buyers willingness to pay more for premium homes. How far this will climb before buyers step back and drop out is not known.
What will happen to the prices in Indian Ridge as we proceed? A crystal ball please. If we look at the Country Club Home Sales Comparison, three of the twenty one country clubs I track showed a drop in average sales price but remained just under or near the total number of homes sold in that community in 2012. Some of these variances may be due to volume of sales and the wider variation in product available within that country club. Indian Ridge overall saw a 15.7% increase in average sales price in 2013. Prices in the PUD were up 5.1% and the HOA was up 17.1%. The Quarterly Report showed a drop in the number of homes sold in the HOA in 2013 but an increase in price per square foot. In the PUD, there was both an increase in home sales in the PUD and an increase in the average price per square foot .
Economics 101 says when the demand for something exceeds the supply, prices rise. Currently there are 73 homes on the market in Indian Ridge with 27 in the HOA and 46 in the PUD. If we compare Indian Ridge to Rancho La Quinta, they have only 41 homes on the market with their highest priced home well below our top property listed for just under $3 million. Their total pending and actual sales for 2013 was 84. Indian Ridge had sold and pending sales of 85, basically the same number. Rancho La Quinta’s average sales price between 2012 and 2013 was up 4.2%.
Indian Ridge has seen an overall increase in the average sold price of 15.7% with the HOA sales the primary reason for that large an increase. Currently there are 73 homes on the market. Will Rancho La Quinta’s values increase this winter or will the lack of inventory cause buyers to look more seriously somewhere else? If too many homes come on the market in Indian Ridge this season, will it hold down the potential rise in value as a result of too many homes on the market? Only time will tell.
If prices for homes rise too quickly, it may have a direct effect on the buyer’s willingness, excitement and ability to purchase. The buyers are now saying, we should have bought a year or two ago. Referring to the Coachella Valley Total Home Sales Evaluation, total home sales were down in 2013. The under $500,000 saw the greatest decline in number of sales while those homes over $500,000 and over $1 million were up. We haven’t seen the total number of sales for homes over $1 million this high since 2008 but they are still well below the number of sales in 2005-2006. The decline in the lower priced home sales is a direct result of rising prices, higher interest rates, lower inventory and a drop in buyers’ affordability in purchasing a home.
Last quarter in my report I indicated the effect the rise in interest rates had on the new home construction and loan applications. This decline was duly noted by the Feds and as a result, are attempting to keep the interest rates below 5% as they do not want to stall the improving real estate market. According to the President of Franklin Loan, he predicts, CHANGE. The Fed will taper down and end their QE3 program in 2014, which purchased mortgage back securities (MBS) & treasury bonds with the objective of keeping mortgage rates low until the real estate market recovered. This will cause long term interest rates like 30 year fixed mortgages to rise to 6%. The Dodd/Frank 2012 Financial Reform Act, will introduce its next level of mortgage industry reform, by implementing their Qualified Mortgages (QM) & Ability to Re-Pay (ATR) guidelines. This will eliminate some of the predatory lending issues that the mortgage industry faced during the real estate bubble. But with a little good, comes a little bad, many new families will not be able to qualify with the more conservative guidelines. Fannie Mae, Freddie Mac & FHA are all lowering their loan limits in 2014, making it more expensive & difficult for millions of American’s to qualify for a residential mortgage at higher loan limits. The big question for 2014, is what impact will these changes have on the real estate economy. Will housing supply & demand stay strong? Will your home be worth more money next year than it’s worth today? Will 60% of all buyers pay cash for their homes in 2014 like 2013? I wish I had all the answers, but we will just have to wait and see.
Under the Dodd/Frank bill, the QRM (Qualified Residential Mortgage) went into effect on January 1, 2014. This will place greater rules and regulations on lending institutions which some predict will affect 18 to 20% of the borrowers who will be denied a loan. The delinquency rate for all home loans is 6.41%, the lowest since the second quarter or 2008. Foreclosure actions are the lowest since the first quarter of 2007.
Predictions for California real estate for 2014 indicates an increase in sales by 3.2% and median price increase of 6%. Interest rates should increase from 4.1% in 2013 to 5.3% for a 30 year fixed in 2014. While home values increased from November of 2012 to November of 2013, there was a slight drop in the median price between October and November of 2013.
The Coachella Valley has just under 4000 homes on the market, and although this is the highest since April of 2012, there is still a lack of inventory. This lack of inventory may bring out sellers who have been waiting for the market to recover. Inventory was at a 3 month level this summer. The November supply had increased to a 5 month supply. Overall, the number of sales are down with average sales prices increasing. We expect the market to remain at the same pace in 2014, while buyers and sellers reach a level playing field.
Even though the total number of sales in 2013 was down from 2012, my sales were up almost 22% (68 homes) and so far, the start of this year indicates sales will be even higher for me in 2014. The number could have easily been higher if the right inventory had been available to my buyers who are very specific on what they want. In this day an age when 93% of all buyers begin their search for a home on the internet, they are far more knowledgeable and can easily identify an agent who knows the market and has done their homework. The purpose of these quarterly reports started for two reasons, so I would always be on top of the current market to be able to represent my Sellers and Buyers best interests and to provide important information so homeowners would be able to make better informed decisions when it came to their real estate based on market research and stats rather than the financial interests of someone in the business just to list homes.
So if inventory increases as more Sellers put their home on the market, improvements that meet the buyers’ demands will give a Seller a greater chance to get a higher price for their home and make it more marketable. Here is what the buyer is looking for when buying a home: Grey is the New Black. Wood or Porcelain floors, wireless control for electronics, window coverings, thermostat controls and more. Here are ten decorator recommendations:
Wider reclaimed wood or wood-like porcelain floors
Simpler cabinets, bigger drawers
Paint colors in warm gray or soft hues in corals, shell colors, sea greens, lavenders and misty blues
Smaller work areas for computers and portable devices
More luxurious bathrooms, bigger showers, steam showers, tubs and whirlpools
Wireless for everything, security, internet, windows and doors
Global style with more ethnic fabrics and handcrafted artwork mixed with traditional, transitional and modern spaces
Quality in furnishings. More expensive one of a kind pieces
Enjoy the season and call me with any questions or concerns. I look forward to hearing from you.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate Luxury Homes and Estates Division