Palm Springs Market Watch: September 2009

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

September almost identical to August activity.

The market continued to improve throughout the summer months, even with temperatures well over 100 degrees.

Fewer Foreclosures…Many more Short Sales. *

635 properties closed escrow in September.

Rental Market firming up.

In order to be successful in getting a good property at a great price, it’s important to be ready to submit an offer as soon as the property comes on the market. Get a qualification letter from your lender and have your “proof of funds” to close escrow available. I try to submit the first offer when a great property hits the market.

New Listings are reflecting the shift from foreclosures to short sales:

Condos - 262 total, 39 REO, 28 Short Sale
SFR’s - 646 total, 115 REO, 118 Short Sale
Multi-fam - 11 total, 5 REO, 1 Short Sale

On investment property it is common to enjoy a 7% cash on cash return…..Where else in today’s financial market can you achieve this kind of earnings safely?

Send an email or make a phone call…. There are some great buys in the desert. Some attractive investments are SFR’s in Cathedral City, multi-family in South Palm Desert and condos in Indian Creek Villas.

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	Contingent Other	Pendings	New Listings	New Listings/Sales Ratio	Sales As Percent Of Inventory
Single Family Homes	2972	331	404	646	.8 to 1	24.7%
Condos	1347	71	70	262	1.8 to 1	10.5%
Multi-Family	110	5	10	11	.7 to 1	13.6%

The category “contingent other” is when a property is placed into escrow but the buyer still has contingencies in the transaction. Pending is when all contingencies have been removed and the buyers deposit becomes non-refundable. Agents are supposed to report a property going into escrow as “contingent other” until all contingencies are removed, at which time the property is moved into “pending” status. Unfortunately some agents are now leaving their listing in the “contingent other” status until it is ready to close escrow and some agents place an open escrow into pending immediately. This inconsistency in reporting will skew the results somewhat, but the trends will remain the same .Any questions or suggestions, PLEASE let me know!

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.

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