Palm Springs Market Watch: June 2009

Palm Springs Area - (Palm Springs, Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, La Quinta, Indio, Bermuda Dunes)

BIGGEST NEWS is Declining Inventory. Inventory declined 9% during the month of June. There were 7681 properties available for sale in January of 2009. Currently there are 4805 properties available for sale reflecting a

37% decline in six months.

The market is changing very quickly. If a property is priced accurately, multiple offers will be generated in a matter of hours.

Does this signal we are past the bottom? Unfortunately no one knows.

It’s going to depend on what the banks do with their unsold inventory and future foreclosures. I don’t think we will see a huge flood of REO properties hitting the market in late summer.

If the inventory remains limited we will start seeing price appreciation.

A very misleading item is short sale listings. Short sales are often listed at a much lower price than what the property will sell for. This is done by the listing broker in order to attract many offers in which to negotiate with the lender. When reviewing “available properties” online, it’s critical to ascertain the short sales from regular or REO sales.

See my next posting for stats on sales activity of REO’s, Short Pays and Regular sales.

Some explanations of my report:

Total Inventory tells us how many properties are on the market for sale. When inventory is rising, prices will fall because there are more properties competing for buyers.

When inventory is declining, prices will rise, such as we saw in 2004 to 2006.

Pendings tells us how many properties went into escrow for the month. This gives us a very quick picture of the current activity.

Charting “Solds” or actual closed escrows will provide pricing information but in a changing market such as we are in currently, it will not reflect an accurate picture, i.e., Solds usually were placed under contract at least 30 and sometimes as much as 90 days prior to title actually transferring to the new buyer.

Type	Total Inventory	Pendings	New Listings	New Listings/Sales Ratio	Sales As Percent Of Inventory
Single Family Homes	3226	419	596	1.4 to 1	13%
Condos	1444	98	243	2.5 to 1	7%
Multi-Family	135	33	22	.67 to 1	24%

Each month I reiterate you have to understand the numbers to really see what is happening in the marketplace. Anyone can make a case for whatever they want to project if they use the right numbers.

*REO – stands for Real Estate Owned and is a term that means Bank Owned Real Estate…obtained from a foreclosure action.