The Real Estate Market in the Coachella Valley and COVID
A standard market update isn’t sufficient to describe the rapidly changing real estate market in the Coachella Valley due to COVID.
So with the help of Market Watch LLC, we’re watching the market using shorter term metrics that demonstrate more of the daily moves, based on a 28 day average.
We’re comparing Real Estate Market Metrics *March 19 – May 15, 2020 vs the same time period in 2019 and the impact COVID has had on the Coachella Valley Real Estate Market. *(Date of Governor Newsom’s Stay at Home order)
Coachella Valley Single Family Homes
PENDING SALES –
One of many metrics we use to pick up developing market trends is Pending Home Sales. In 2019 there was an average of 23 units going under contract everyday in the Coachella Valley. For the first 2 weeks after the stay at home order, people and business froze – no one knew what to expect and as real estate agents, we were legally NOT able to practice Real Estate – so, it’s no surprise that as of May 15, 2020 we averaged 11 homes going under contract per day. That’s about a 52% decline in the number of sales from one year ago. Eventually, Governor Newsom added the practice of real estate to the list of “Essential Businesses” and since then we’ve started to see a substantial uptick in online home buyer activity.
PRICE / SQ FT –
Interestingly for Single Family Homes,
May 1, 2019 the average price / sq ft was $244. This year it’s $238 / sq ft.
Down just 2.4%. Prices are showing only a small downward bias.
Inventory is actually down from one year ago. May 1, 2019 we had 3,636 units for sale, but inventories had been down since November 2018, (prior to COVID). Inventories have been hovering around 3,000 units for sale since then. We’re down only about 100 units since.
NEW LISTINGS –
No rush to sell. Net new listings are also down, offsetting the decline in pending sales. We generally average about 25 new listings / day, (adjusted for seasonal swings). Currently we’re at about 20 new listings / day.
In a standard market, we average about 5 cancellations / day in the Coachella Valley. Initially, right after Gov Newsom’s Stay at Home order on March 19th, there was a spike in cancellations for about 2 weeks, but we’re now back to the average. So at this point we’re not seeing a long term affect, as buyer’s (and seller’s too) are feeling more confident.
NOTICE OF DEFAULT LISTINGS AND SALES –
From March 19 – May 15, 2019 there were 4 homes that sold as foreclosure with notice of default.
2020 there are 3 homes in default listed for sale and 2 have sold.
DAYS ON MARKET –
There has been little effect to the average time on market.
May 1, 2019 it was taking on average 76 days to sell.
May 1, 2020 is an average 78 days.
PRICE DISCOUNTS –
In a standard market, we average 3% discount off asking price. May 1, 2020 we were averaging 3.2% price discount from asking.
Unlike the financial crisis of 2008 where our entire financial system was teetering on collapse with huge spikes in housing inventory, little to no lending activity, and little to no buyer activity – This is a health crisis, our financial institutions are solid and lending practices are open and operating properly and interest rates are again at near historic lows. True, we’ve seen a decline in the number of sales, but it’s trending up as more and more states and cities open up for business. And unlike 2008, inventories remain low and steady with prices holding.
I believe we will see a shift away from the “trendy urban lifestyle” that’s been so popular among Millennial’s. This health scare seemed to be in epic proportions in large cities and relatively small in outlying suburban areas; shining a spotlight on the benefits of living in areas with space. Both business and their employees have learned they really can work from home and still be productive. The natural next step will be people looking for areas where they can live and work from home but not too far from the office. Far enough away that they feel safe without sacrificing their lifestyle. And an area with homes they can afford to buy. The very things that make our Desert an attractive place for people of all ages to live, work and play.
Yes, we may have a bumpy road ahead short term, but people buy and sell homes everyday for a million different reasons – I do not see this lasting as a long term market problem. There’s pent up demand waiting to get back into the swing of life and doing business. I’m optimistic for the future of our Coachella Valley real estate market.