The Market Today
My primary data source is the monthly Greater Palm Springs Realtor (GPSR) Desert Housing Report. This information is made available monthly to all GPSR members.
My commentary and observations are my own, and do not necessarily reflect the opinion of others in the Real Estate industry.
Disclaimer: Past performance is not always indicative of future performance.
Read the full January 2025 Desert Housing Report for yourself. Lots of interesting facts, observations, and conclusions. The market analytics are really quite good. My thanks to the Greater Palm Springs Realtors Association (GPSR) for pulling this data together each month.
The median 12 month change in price for the area is +5% for detached (single family homes), and you can see not all cities are performing equally and notably some of the high growth average is in cities with a smaller base of comparable sales, such as Coachella +17.4%, Bermuda Dunes +17.1%. The larger cities are experiencing a more modest average increase like Palm Springs +2.5%, Palm Desert +2.4%, LaQuinta +4.9%. I’m most surprised by Rancho Mirage with -7.7% change in average price from +2.3% in December. One month doesn’t make a trend, but let’s keep our eye on Rancho Mirage, a city I think of as the bellwether of the Palm Springs area ❤️. Continuing my thoughts about attached homes (condos) the median price is up about 2% across all the cities in the valley. Indian Wells and LaQuinta experienced an outstanding +24.6% and +12.5% increase, respectively. Palm Springs +1.7%, Palm Desert +1.2% and Rancho Mirage -0.1% are all relatively flat in terms of year-over-year change in prices.
A higher inventory of homes for sale means a greater selection of homes for buyers to choose from, and maybe it's the news they have been waiting for, but on the flip side, sellers need an effective sales strategy that works in a competitive market.
Maybe our most important indicator of where the market is heading is the “Months of Sales” (MOS) ratio - basically the real estate industry’s measure of supply and demand. MOS is the number of months it would take to sell the current inventory of homes at the existing rate of sales. When the demand for properties is high and the supply is low, prices tend to rise (seller’s market), correspondingly when the supply is greater than demand, prices usually fall (buyer’s market). 6 months is the magic number: *below 6 months supply is low and favors the seller both in price and time on market, **above 6 months favors the buyer, with a greater selection of homes and increased bargaining power** At our current 5.6 MOS, we are on the precipice of a buyers market - and more inventory is expected to come on the market in the next few months with the beginning of our season. Watch for MOS by city and price range - there are some pretty wild swings so whether you’re a buyer or seller, you’ll want to have a plan in this market 🤓.
Another way to slice the “Months of Sales” ratio (MOS) is the supply and demand by city. On a macro level, inventory of homes available for sale in the area is up 43% over the same time last year. High inventory and high MOS supports the theory that >6 MOS favors buyers with lower prices, and <6 MOS favors the sellers with higher prices. Depending on which side of the fence you’re on, you may or may not like the trajectory of where price appears to be heading. Whichever the case, in uncertain times, buyers and sellers need to be certain their Realtor has a plan 😎.
Finally the “Months of Sales” ratio (MOS) by price bracket. Since MOS is the supply and demand metric for real estate, it’s relevant which segment is driving the results. Generally, it’s the high end of the market, specifically the $900K-$1M and +$2M homes where inventory appears to be stacking up when compared to the average MOS for all price ranges of 5.6 months. The low to moderately priced homes don’t seem to be screaming for attention as the high end. I imagine there’s a lot of tough conversations going on between agents and sellers in this market segment. In uncertain times, buyers and sellers need to be certain their Realtor has a plan 😎.
End of year 2024 market data is out, and results are somewhat a mixed bag, looking at the greater Palm Springs area, it appears as though prices and number of home sales were stable, but there’s quite an increase of inventory returning to pre-pandemic levels, correspondingly the months of sales and days on the market have increased, but not to a level of overly concern - yet. Naturally, this isn’t true for all desert cities or neighborhoods, the details are quite interesting 🧐
Seems like we have several bubbles in the price ranges of what’s selling compared to last year. Maybe it’s intuitive and all is as it should be, but maybe it’s a leading indicator of what’s happening in our market. Seeing strength in the very high end homes over $2M, and the low end under $300K. The middle is conflicted, but the big surprise is the weakness of the $900K to $2M range. Is this the fallout from interest rates effecting market segments differently?🧐
For years we’ve complained that lack of homes for sale was our biggest challenge, well that’s all changed now. We are back to what would be considered “normal” and inventory in the greater Palm Springs area is up everywhere (with the exception of the city of Coachella.) On average 35% more homes for sale compared to the same time last year. Pretty wild differences between cities with Palm Springs at +25%, Rancho Mirage +34%, Palm Desert +44%, and Indio at +64%. No doubt this correlates with the rise in the “months of sales” and “days on the market”, and what appears to be a directional shift away from a seller’s market. How might this affect sellers and buyers today? Talk to someone who can help with the answers 😀
Maybe our most important indicator of where the market is heading is the “Months of Sales” ratio - basically the industry’s measure of supply and demand measuring the number of months it would take to sell the current inventory of homes at the existing rate of sales. Remember that old economic principle from school? Well, turns out we should pay attention - when the demand for properties is high and the supply is low, prices tend to rise, when the supply exceeds demand, prices usually fall. Most experts see 6 months as the magic number: *below 6 months supply is low and favors the seller both in price and time on market, *above 6 months favors the buyer, with a greater selection of homes and increased bargaining power. At our current 4.8 months of sales, we’re probably in a “balanced” market, favoring neither buyer or seller - but look at the direction it appears to be heading, and more inventory is expected with the beginning of our season. Swipe left to see how your city is doing - we want to keep our eyes on this key indicator 🤓.
