S&P/Case-Schiller National Index vs. Coachella Valley Real Estate Market
SUMMARY:
| National (1) | Local (1) |
Market high (year) | 2006 | 2006 |
Market low (year) | 2011* | 2009* |
High to low median price decline | 32.7% | 50% |
Median price change since market low | n/a | 4.5% increase |
Market trend of distressed sales | Continued price declines because of foreclosures flooding the market | Decline in affect of distressed sales (63% of sales in 2009 compared with 40% of sales in May 2011) |
(1) National data per May 31, 2011 S&P/Case-Schiller home price index; local data per Desert Area Multiple Listing Service
* For both the national and local data, the lows are comparable to 2002 prices.
DETAILS:
The most recent S&P/Case-Schiller home price index, released May 31, 2011 stated that a double – dip in home prices has been confirmed. This index covers 20 major cities and 80% of the national housing market. The purpose of this blog is to compare the national data with our local market here in the desert.
The Case-Schiller index shows that the top of the market for prices was in 2006, and that prices just hit a new low, dropping the median home price to the current level by 32.7%. This drop brings us back to the 2002 price levels.
Per our analysis of the Desert Area Multiple Listing Service (MLS), the top of the market for prices was also in 2006. However, while the national home sale prices just hit a new low, our low point in home sale prices came in 2009 when prices dropped to 49.9% of the highs in 2006. This drop brought the median sales prices down to levels not seen since 2002. Although average home prices ($336,772) in the first five months of this year are slightly less than the same period last year ($352,978), we are still above the bottom set in 2009 ($319,669). In addition, the average selling price has increased from approximately $331,000 in March 2011 to $335,000 in April 2011 and to $344,000 in May 2011.
LOOKING AHEAD:
Further, the Case-Schiller index analysts see median home prices continuing to be hammered by foreclosures with a high number of repossessed homes flooding the market. Many repossessed homes are in poor condition and sell at a big discount to conventionally sold homes, driving down overall values.
While we agree with the premise of these ideas, our data has shown that we have worked our way through much of the bank owned and short sale properties. To illustrate this point, at the bottom of home price values in 2009, only 36% of total sales in the valley were conventionally sold homes while the balance were distressed property sales. For the month ended May 31,2011, 60% of total sales were conventionally sold homes with the balance being distressed property sales.
While no one can predict what will happen next week, next month, or next year, our real estate market here in the desert certainly is different than the national real estate market portrayed by the S&P/Case-Schiller home price index. Our market is comprised of many resort/destination areas and many of our homes are second or vacation homes. This is a significant difference from the “average” housing market nationwide.
If you are interested in homes in the desert of Southern California and would like information on a specific community, please contact us, the Stefanis at 760.406.1063 or SandL@StefaniRealty.com.