Toscana CC 2016 2nd Quarter Report
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Over the past six years, the real estate market in the desert has seen a recovery in sales and home values like two steps forward, a step back, one forward and one back which has caused a great deal of confusion on what is truly happening in the desert market. When we hear that the California Coastal areas and Seattle are on fire, with limited inventory and homes selling for more than asking price, compared to what we see here in the desert, it is hard to remember most of the buyers in the metro areas need a home near their workplace where in the desert or any resort environment, the second and third home is an option. For a buyer to proceed with the purchase of second home they need to feel more confident with the economy in general, see good value and believe the market is showing signs of consistent recovery.
Resort environments have experienced a slower recovery with buyers unwilling to pay top dollar for the upgraded homes and for the most part not interested in purchasing a home that requires upgrading. As a result, homes that have not been upgraded are staying on the market longer and as those sellers continue to drop their prices to get their home sold, they pull on the values of the more upgraded homes on the market. In order to get homes sold we have had a decorator go into the home and make changes that make the home appeal to more buyers. The cost for these changes are far below what the buyer anticipates it would cost to do. Sometimes it makes sense to increase the price of the home after the enhancements, while other times the investment just makes the home sell more easily at the current price. Upgrading does not work for all homes so careful consideration should be used before moving forward.
In the city of Indian Wells, 75% of the homes over $1 million are second homes and consistent with the cities of La Quinta and Rancho Mirage. The average sales price for the past 12 months for a home selling over $1 million in Indian Wells was $1,680,673 with a price per square foot of $400. During the past three months, that average is up to $1,807,973 and $428/sf, showing an increase in the average sale price for higher end homes. This certainly points to positive growth direction for the luxury home market.
When we look at the months of inventory based on the homes sold over $1 million compared to the number on the market, Indian Wells is at 10.1 months, down from 10.6 months last year. Indian Wells and Rancho Mirage have the highest inventory compared to homes sold at 10.1 and 10.0 respectively. When comparing months of sales based on price, homes on the market asking over $900,000 show a 15.4 month supply. Homes between $700,000 to $900,000 have about 11.7 to 12 months supply. For the most part, homes selling under $700,000 have a supply of 8 months or less.
The number of homes on the market in March of this year was 5,980. As of July 16th, it had dropped to 4,239. This drop is due to homes selling, some sellers taking homes off the market for the summer and fewer homes coming on the market. Homes on the market have dropped about 580 units per month from March to July, a rate faster than in the past.
More homes between $300,000 and $700,000 sold this year. These sales were up 9.2% compared to a year ago and accounted for 41% of the homes sold. Home sales between $700,000 and $1 million remained unchanged. Homes selling for more than $1 million are up 8% over last year. These million dollar home sales were up primarily due to four major cities – Palm Desert, La Quinta, Indio and Desert Hot Springs.
Homes sales are finally starting to show growth. Over the past four years, total sales were relatively flat. Over the past three months we have seen average monthly sales increase from 696 up to 873 sales per month.
When comparing the average median price of homes sold by city from June 16 compared to a year ago, Indian Wells is up 4.1%. The 2011 the low median price point was $540,000 for a gain of 51.8%. Indian Wells is still 32% off its all time high of $1,205,000. Palm Springs has experienced the largest recovery at only 6.6% below its all time high. La Quinta is still off 34%, Palm Desert off 27.9% and Rancho Mirage off 35.7%. Only the city of Rancho Mirage showed a decline in average median price this year at -1.5%.
Since February of this year monthly sales in the desert have increased from about 180 to 317 in June. Compared to last June we have seen an increase from 291 sales. Comparing June of 2015 to June of 2016, the median sales price has increased 1.4%. Distressed sales (homes selling for less than owed or bank owned) dropped below 5% of the total sales, a seven-year low. Communities with the highest number of distressed sales on the market are Bermuda Dunes at 8.1% and the lowest in Palm Desert at 2.4%. Distressed sales in Indian Wells in mid June was at 5.7%.
The increase median prices for Desert Hot Springs and Coachella does not necessarily increase the median value for the Coachella Valley as one would expect with the increase in sales and values. Due to the lower prices, they pull the median price down when their sales far exceed the sales in the more affluent communities. So while increases in the valley this June show a gain of 2.5% increase, in actuality we have experienced a 4% average gain per year over the past three years.
Historically an election year has had no negative affect on the California housing market. The fundamentals that have the greatest affect on the housing market are inventory, affordability, interest rates, job-growth and consumer confidence. Home sales and prices are rarely negative during an election year. In fact they have found that home sales outperform non-election years by 7.1%. Home sales in the final five months of an election year have historically shown an increase of 5.3% compared to a -1.8% drop in sales in a non-election year with the exception of the month of December in 2004. Home price growth during the past five election years experienced an average 5.6% gain with the most pronounced gains during the final months of the year which were then boosted by 5.6% following the election as well. This has taken place in-spite of the fact that housing affordability and their solutions is an important topic to consumers that rarely is addressed during election year campaigns.
Based on the Multiple Listing Service, we experienced a 5% increase in total sales in the Coachella Valley with a slight drop in home sales under $500,000 and an 8.1% increase in home sales between $500,000 and $1 million.
Fourteen of the nineteen clubs that I track experienced a drop in value so far this year compared to 2015. Only five of the country clubs are currently projected to sell fewer homes this year than in 2015. The most active clubs in sales tend to be the high-end golf course communities as shown on the Country Club Analysis Report.
Currently there are 11 homes on the market in Toscana. There are five homes in escrow with 15 homes sold to date for a total 20 homes sold in the first half of the year (four of the homes were spec homes). Twelve were resale homes and three were spec homes. Of the five homes in escrow, four are resale and one is a spec home. Diane Williams and Kristi Kramer have represented four sellers and two buyers this season, more than any other outside real estate professional. When representing sellers, our average sale price has been $1,910,667, at an average of $493 per square foot and have sold at 96.68% of list to sale price, all well above the average of $1,621,214; $443 per square foot and 95.25% of list to sale price. We represented the sellers of the two resale homes that sold over $2 million this year in Toscana.
Most of the clubs have less than 50 homes on the market and it would appear that many have taken the homes off the market for the summer. With the activity my team and other active real estate professionals in the desert have seen in May, June and July, there are serious buyers coming to the desert and this should prove to be a very active selling summer. Homes still on the market appear to have a distinct advantage by keeping their home on the market. This is the first time in my 14 years selling homes in the desert where I have encouraged sellers to keep their homes on the market during the summer season.
If you would like a free market analysis of your home we are happy to meet with you. We can also show you how we market homes to get the best price we can for your home. Based on total sales, Diane Williams is the top real estate professional in Indian Wells and Kristi Kramer has been on her team for three years and has 20+ years of experience. Both specialize in Toscana and provide excellent service to their buyers and sellers.
Diane R. Williams, Associate Broker/Executive Luxury Director
Office 760-776-7070 | Cell 760-835-0240 | Fax 760-561-1392
Kristi Kramer, Realtor/Luxe Director
Office (760) 776-7070 | Cell (702) 592-1534 | Fax (760) 561-1392
Bennion Deville Luxury Homes & Estates Division
74996 Highway 111, Indian Wells CA 92210