Stefani Real Estate Consultants

The real estate market in the Coachella Valley has been rapidly changing and improving.  The following are some specific factors currently occurring in the market.

1. Listing & Sales Activity – In the Coachella Valley, which includes all the cities from Palm Springs to the Salton Sea, there are currently about 5,500 homes for sale (inventory).  It has been 4 years since inventory levels have been this low.   Based on the current sales pace approximately 10,000 homes will be sold in the Coachella Valley this year.  This sales volume has not been experienced since 2005.
2. Pricing - Over the course of this year, we have seen selling prices stabilize and some communities are showing slight price increases.  Given the law of supply and demand, based on the reduced inventory levels this is to be expected.
3. Traditional vs. Distressed - It is important to remember that there are currently two distinct types of real estate markets in the valley.  One is the distressed seller market.  These short sales and bank owned properties are generally priced well below “normal” market value, receive multiple offers, and sell at or above list price.  The other market consists of traditional, non-distressed sellers.  These homes generally sell at market value.
4. Strengthening Canadian Dollar – As the Canadian Dollar strengthens relative to the U. S. Dollar, real estate in the U.S. becomes more affordable for our northern neighbors.  At this time last year, the Canadian Dollar was worth 0.75 – 0.80 U.S. Dollars.  Currently, the Canadian Dollar is worth about 0.95 U.S. Dollars.  Let’s show this as an example:  A $500,000 U.S. home purchased using Canadian Dollars this time last year would have cost $625,000 Canadian Dollars.  Right now, that same $500,000 home would cost only $526,000 Canadian Dollars.
5. Mortgage Interest Rates – Mortgage rates are now near all time lows.  The 30 year fixed rate is just under 5.0%.  Although bank lending standards have increased, banks are still lending money to qualified borrowers. 
6. Buyer Beware!  -  Do not become a frustrated buyer.  If you are looking to purchase property in this market, understand what kind of property you are looking for before you start your search.  If you are looking for property at distressed prices, limit your search only to distressed properties.  Attempting to purchase traditional, non-distressed properties at distressed property prices will only end in frustration for you and the seller.  There is a reason why some properties are distressed sales and some are not.  Distressed properties sell for as low a price as the bank will accept.  Traditional, non-distressed properties will sell for fair, current market values – which are well below the market highs and all indications are that the decline in these prices is over.  You can still get a very good deal on traditional non-distressed properties; just don’t count on getting well below market value on non-distressed sales.

If you are considering buying or selling a home in the Coachella Valley, now more than ever, you need a professional that understands this rapidly changing and diverse market.  As such, we would be honored to help you find or sell your home.  If you would like more information, or would like to discuss your situation in detail, please give us, the Stefanis, a call.  Steve’s cell 760-406-1047 (DRE # 155511289), Lynda’s cell 760-406-1063 (DRE # 155511290), SandL@StefaniRealty.com, www.StefaniRealty.com.

More data has just come out that indicates that the housing market in California is stabilizing.  While we have seen an increase in the number of properties being sold for a few months, the median sales prices have been steadily decreasing.  The month of March, however, has bucked the trend.

Sales of existing single family homes increased 63.8 percent in March 2009 over March 2008.  The significant news is this:  The statewide median price of an existing single family home INCREASED 2.2 percent in March 2009 compared with February 2009.  This is the first month to month increase in statewide median sales price since August 2007.

Further, the unsold inventory index fell to 5 months in March 2009 compared with 12.2 months in March 2008.  This means that it would take 5 months to sell all of the homes on the market at the current rate of monthly sales.

While we have not seen enough evidence to suggest that prices are in a sustained period of rebound, we do believe we have seen sufficient evidence that the bottoming process of the real estate market is well under way.

One other item to note is that the strength of the Canadian Dollar versus the U.S. Dollar has increased substantially over the last two months.  The Canadian Dollar was worth about $0.77 U.S. Dollars in the beginning of March, while it is now valued at just over $0.85 U.S. Dollars.  This increase represents approximately a 10% increase in purchasing power for our Canadian friends.

If you have any questions about the status of the real estate market here in the desert of Southern California or specific questions about the value of your home and how long it might take to sell it, please give us, The Stefani’s a call at 760-406-1047 or email us at SandL@StefaniRealty.com.  To read more information on the real estate market in the Coachella Valley, please visit our website at www.StefaniRealty.com.

In the Coachella Valley, there are currently two “types” of real estate markets.  One is the traditional market of buyers and sellers.  The other is the market of distressed sellers (short sales and bank owned) and deep discount buyers.  They are two different markets and each have distinctly different characteristics.

First, let’s examine the distressed market.  In this market, the sellers typically offer the home at prices that are below the prices of similar homes in the same neighborhood that are being offered by the traditional sellers.  These distressed sellers need to sell the home, and therefore, they are willing to take a loss (sell below traditional market value) in order to move the home relatively quickly.  Most of these homes are sold “as is”, meaning that the sellers normally will not fix requested repairs or warranty condition at final transfer.  In many, if not most instances, these homes will get multiple offers.  The seller will then request that the buyers submit their “best and final” offer, then the seller will choose which buyer’s offer they want to deal with.  Many times, dealing with distressed sellers can be a lengthy and ever changing process.

Now, let’s take a look at the traditional market of buyers and sellers.  In this group, the sellers typically would like to sell for any number of reasons, but are not forced to sell.  Buyers typically are looking for a specific community, or amenities, or lifestyle and are willing to pay a fair price, so long as it is a good deal based on current market conditions relative to historical prices.  With sales prices down 25% to 35% (in these traditional markets) from the highs, interest rates at 40 year lows and the Canadian dollar still relatively strong compared to historical data, traditional buyers have begun snapping up properties.

Over the last six months about one half of the home sales in the desert have come from the distressed market and one half of the sales have come from the traditional market.  The average price of the distressed sale over the last six months was $308,597, while the average sales price of a home in the traditional market over the same time period was $451,058.

Finally, here are excerpts from The L.A. Daily News on 1/10/09:

Signs of a comeback for the California housing market

By Gregory J. Wilcox, Columnist

Here's a little good economic news - finally - amid all the bad: California's residential real estate market is starting to make a comeback.

Alexis McGee, co-founder and president of Foreclosures.com, made that observation on Friday.

It's refreshing, since her company has been focused on the dismal state of the housing market for the past couple of years as foreclosures soared to record levels.

McGee notes that the California Association of Realtors is reporting that sales in November rebounded from the previous year's while inventory and time on market shrank. The November numbers are the most recent available from the trade group.

And inventory - the time it would take to deplete the supply at the current sales pace - dwindled to seven months from 14 months a year earlier.

"I would say anything under six months is a healthy market, so we are getting close," McGee said.

Here are some of her other observations:

Home sales soared from their year-ago levels through November. They were 22 percent higher than in November 2007 and a whopping 102 percent above the levels through September 2007.

Housing affordability is driving this surge of buyers. California's median price fell 42 percent in November to $285,500 from $490,500 a year earlier.

It was the first time the median price dipped below $300,000 since 2002.

As compared with the average sales prices noted above, the median sales price over the last six months in the Coachella Valley “distressed” market was $214,900, while the median sales price over the same period in the traditional market was $319,000.  Note: Please see a previous blog discussing the difference between average and median home sales prices.

If you have any questions or comments, please respond to this blog, email us at SandL@StefaniRealty.com or visit our website www.StefaniRealty.com for telephone contact information.  We would be happy to help you find the home of your choice, or discuss with you the value of your home and our marketing strategies.

The Desert Sun reported on 12/3/08 that the median price of Coachella Valley homes fell 34% in October to $225,000, a level not seen since February 2003.

They also reported that in October, there were 853 sales of new and resale houses and condos that closed escrow.  That’s nearly a 32 percent increase in home sales in a valley that strongly depends on real estate to fuel its economy.

While this is both true and meaningful at some level, some clarification needs to be made.  First, what does “median” actually mean?  The median sales price is the price at which one half of the homes sold for more and one half of the homes sold for less.  In this case we can say that one half of the 853 homes sold (approx. 426 homes) sold for more than $225,000, while one half of the homes sold for less than $225,000.

Another meaningful term is average sales price.  What is average sales price?  The average sales price is the total amount of all sales prices divided by the number of sales, in this case, 853 homes.  The average sales price is currently at about $329,000.  It is important to note that the average sales price also dropped by over 30% from the same period last year.

Why such a large difference between the median ($225,000) and average ($329,000) sales prices?  What this shows is that while half of the sales were less than $225,000, the other half that was over $225,0000 included a significant number that were well over this price.

In addition, the number of homes and condos sold over the last six months has increased by more than 43% over the same period last year.  To put this into perspective, this number is right in line with the number sold each year during the same period of time from 1999 to 2002, which was a normal selling cycle.

What we are trying to do is give you a clearer picture of the real estate market here in the Coachella Valley.  Our next blog will include a discussion of how different neighborhoods in our various cities in the desert affect the total numbers reported in the press.  For more information, please visit our website at www.StefaniRealty.com. 

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• 1,814 sq. ft., 2 bath, 3 bdrm single story - MLS® $310,000 - Best Priced

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We would like to take this opportunity to keep you up to date on the real estate market here in the Coachella Valley desert communities of Southern California.  As you probably know, the real estate market is actually a lot of very unique markets all rolled up into one.  Just as one national weather forecast does little to predict what the day will be like outside your front door, a national real estate forecast does little to predict what the market is like here in the desert.

What gets reported, generally, pertains to single family homes that are typically primary residences.  Most of the homes in the Coachella Valley are second homes or investment properties.  We make this differentiation for the following discussion.

Each unique real estate market is made up of the supply of owners who want to sell and the demand of buyers who want to buy.  As the sales prices of the homes for sale decrease, the demand from the buyers tends to increase.  There is a secondary force at play here, which is the financing of those homes.  Even when the buyer and seller agree on a price, the buyer needs to obtain financing in order to complete the transaction.  If the buyer cannot obtain the required financing, the deal will fall through.  As buyers fall away because of a lack of financing, foreclosures and short sales increase and prices continue to decline.

This brings us to a very important point:  The financing side of the real estate market is generally a national market, very unlike the unique neighborhood market of buyers and sellers.  Regardless of the area, financing becomes harder to obtain.  This in essence, decreases the demand of buyers.

All of this is to explain the differences between our local real estate market and the much more typical real estate markets found around the country.  First, many of the markets here in the desert are not single family primary residences.  Instead, they are for the most part, second homes, located in gated, country club communities.  As a result, although sales prices in many areas have dropped by nearly 25%, there are very few foreclosures and short sales.  Most importantly, most of the buyers of these second homes either pay cash or have a large enough down payment that obtaining financing is not a problem.  This, for all intents and purposes, eliminates the biggest obstacle and problem in the housing market.

This is to show that the fundamentals are in place for a strong rebound in the country club communities here in the desert.  The sellers are selling for reduced prices and the buyers are here looking and buying. 

The only factor that is weighing on the buyers is a psychological one.  They hear all of the negative news on TV and the internet, which is true in many areas of the country.  We have such a unique market in the desert that most of the issues bringing down the “national market” are not in play here.  Never the less, the resulting psychology is very powerful. 

We have been working with some very shrewd buyers who recognize the underlying fundamentals and are picking up some very good deals.  For our Canadian buyers, they have the increased incentive of a weak US dollar as compared to the Canadian dollar.  As the US dollar strengthens, this incentive will be reduced. 

The purpose of this email is to educate you on our market and let you know that the buyers who recognize the early stages of a fundamental recovery typically get the best deals.  We believe we are currently in the early stages of the fundamental recovery in our market.

If you would like more information or would like to see a sampling of these great deals, give us a call or shoot us an email.  We look forward to helping you find just the right place for you!

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• 2,259 sq. ft., 3 bath, 3 bdrm single story - MLS® $539,000

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