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.