Indian Ridge CC 2014 Annual Report
*To view my entire Quarterly Report, please select "View PDF Document" located to the right of this page under my photo.
Dear Indian Ridge Resident:
The real estate market continues to show signs of improvement and stability in spite of some setbacks along the way. Some of these setbacks are due to overall price appreciation, tightened lending guidelines and lower inventories of available properties. Price appreciation realized in 2012 and 2013 reduced buyer affordability. Lenders continually tightened loan qualification requirements and as noted above, inventory of homes on the market was low. As a result, the number of properties sold in 2014 were down and overall price appreciation slowed.
The conditions experienced during 2014 will likely prove to be helpful for 2015 and beyond as the market continues to improve. With appreciation moving at a slower pace, affordability will remain more stable with fewer buyers priced out of the market. Additionally new loans are being offered making it easier to purchase a home and the inventory of available homes will increase giving buyers more homes to choose from.
First time buyers through the first 11 months of 2014 represented 29% of home sales. It is anticipated this will return to its normal 40% percentage of homes sales due to the higher rental costs and potential increase in interest rates. The drop in unemployment, more companies hiring, the stock market at its all time high and personal income up 4.2% this past year, will contribute to a growing and improving real estate market.
The 2015 forecast for new homes construction is expected to grow by 26%. Multi-family units building experienced a 15% growth in 2014 and should remain steady in 2015.
Two new mortgage programs are being offered that will help sales in the Coachella Valley. One is the international 30 year fixed loan. This is important to use because with the weaker Canadian dollar, the number of these buyers dropped significantly. With this loan these buyers can leverage their investment and can coordinate their exchange to US dollars over time. The second new loan program is focused on retirees with strong financial portfolios but no steady income. In the past, these buyers found it extremely difficult to obtain a loan. Renovation loans up to the maximum conventional load of $417,000 will be available and can help buyers buy and renovate a home that needs updating. Job loss insurance for first home buyers will also be available where if they lose their job within the first twelve months after purchase, their mortgage payments will be paid for a certain amount of time. All these will help increase home sales.
The rental market is experiencing a seven year high. With the higher costs to rent along with the lower interest rates and moderate price growth, 2015 is expected to see about a 5.6% national appreciation and increase in the number of homes sales.
California home sales were down 11.9% in November from a year ago. Price appreciation slowed with little to no increase in sales during last three months of 2014. Even with the fewer number of homes sales, the number of homes that sold for more than $750,000 experienced a higher number of sales from a year ago while those selling for less experienced a drop in the total number of sales. There was a 4.4 month supply of homes on the market in November, an increase from 3.6 months a year ago. The median days on market increased from 36.9 days to 43.9 in the past year as well.
The drop in sales in Southern California between October and November was in part tied to the fewer number of business days in November due to the holidays. November showed the median price of $412,000 for all new and resale homes as well as condos in the six counties in Southern California, an increase of 7% since November of 2013. The appreciation of homes in 2014 varied according to prices of homes sold with the lower third of homes showing a price appreciation of 12.9%; the middle third with 6.5% appreciation and the top third with a 2.3% appreciation. Riverside County is expected too see a 6.2% appreciation in home values in 2015.
Distressed sales have continued to decline in our market. Foreclosure resales represented 5.3% of the total sales in November and short sales 6.2%. This continues to remain far below the all time high of 56.7% of the sales being foreclosures in February of 2009. For homeowners who had a short sale in 2014, the Mortgage Debt Forgiveness Act was signed into law by Obama, therefore short sale owners received tax relief from any unrealized gain due to their short sale.
The U.S. Department of Energy (DOE) has placed into effect two new regulations that will affect homeowners. Air Conditioning units energy efficiency ratio requirements have been raised from 13 to 14 effective January 1, 2015 with a grace period to July 1, 2016. When installing new units, they will need to meet the increased ratio standards.
The 2015 DOE Final Rule, effective April 16, 2015, requires high energy factor ratings for water heaters. When replacing water heaters, these potentially taller, wider and heavier water heaters may not fit in the confined space where current water heaters exist and may require structural modifications to the residence. Before replacing your units, be sure to check with the installers to confirm they are complying with the new laws.
The number of million dollar home sales in the state of California are up due to increased demand and a robust appreciation over the past year pushing more homes back over the million dollar line. All homes selling for more than two million were at record highs. There were 265 homes that sold for more than five million; 213 between four and five million; 469 between three and four million; 1,595 between two to three million all record highs. Homes that sold between one and two million (8,381) is still behind the all time high record (9,885) in the second quarter of 2005. Cash is still king. In the luxury market, the higher the sales price the higher the number of cash sales. The median square foot price of million dollar homes sold was $729. The luxury home in the Coachella Valley market shows the number of homes selling for over $2 million are up 9.3% from a year ago, $3+ million up 41%, $4+ million up 50%, $5+ million up 44% and $6+ million up 125%. As a result, 2015 will be a good year to consider buying a home in the luxury market.
Sales of the 21 country clubs I track show 13 of the clubs experiencing increases in home appreciation with seven of the clubs showing appreciations over 10%. Of the homes sold in each country club, six clubs sold more homes in 2014 over 2013.
The Coachella Valley when referring to the number of homes sold by price point shows homes selling under $500,000 continued to drop. This past year these homes represented 77.7% of the sales, down 4.1% from a year ago. Homes selling for over one million represented 5.8% of the homes sold, up 1.2% from 2013. Country Clubs showing the highest increases in average sale prices this year were Indian Wells C.C., Ironwood and Palm Valley.
The Quarterly Home Sales Activity Report for Indian Ridge shows average price per square foot and days on market for the past 11 years. Homes in the HOA were off 31% in 2014 from its all time high in 2005 but up 9.3% from 2013. The PUD was off 40% from its all time high but up 20.3% from 2013 to 2014 with an average sale price over $1 million. Indian Ridge’s PUD was the only golf course community not belonging to the highest tier of luxury golf course communities to average home prices over one million. Seventy four homes sold in Indian Ridge in 2014, down five from the previous year. Primary reason for the lower number of sales was a result of buyers wanting to purchase a home with a different orientation, facing a certain direction as well as prices were higher than the buyers were willing to pay. Move up buyers within the community were willing to pay the going rate for these premium homes and as a result the appreciation in the PUD was higher.
I represented 46% of sales in Indian Ridge this past year with current listings having an average days on market of 68 with the nearest competitor representing 29% of total sales with 108 average days on market. The next competitor represented 17.5% of the market with 341 average days on market. For 2014, I am ranked #1 out of over 650 Windermere agents and #4 out of all the members of the California Desert Association.
New housing trends for 2015 include open spaces with fewer walls separating rooms, free-standing bathtubs, off-the-shelf plans that don’t require custom building, more and more energy efficiency, the use of Quartzite, porcelain tiles, electrical equipment charging stations, multiple master suites, fireplaces and fire pits, upgraded and efficient storage, keyless entry, water conservation, wall to ceiling art, human scale (smaller kitchens), shades of white and outdoor living spaces. If you were able to attend the House Walk in Indian Ridge on January12th, the homes remodeled with these trends received the greatest amount of attention. The homes that showcase these upgrades will be able to compete with the new home construction where many of these recommended upgrades are included.
We anticipate 2015 to be a great year with appreciation and greater number of home sales. The buyers who elect to purchase a home closer to fair market value should benefit from their purchases as appreciation continues to rise.
If you have any questions or concerns, or want a complimentary market analysis, call me. It will always remain confidential. I look forward to hearing from you.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate Luxury Homes and Estates Division