Indian Ridge CC 2016 1st Quarter Report
*To view my entire Quarterly Report including STATISTICAL REPORTS, select “View PDF Document” located to the right of this page under my photo.
Throughout the years of researching and writing these quarterly reports, the market trends have sometimes been easier to evaluate than other quarters. Until I collect the stats for this report, my opinion of what is happening in the desert market based on what is seen in media reports can be different than what I see by just looking at the raw data for our Coachella Valley market. This year I decided to go back and review what the market has done in the state and locally over a longer time frame. I thought it might be interesting and educational to take a step back in the history of real estate to see where we were and where we are headed.
In 1993, the median sales price in California was $188,240. By the year 2000 the prices had risen to $241,350. In 2010 it reached $305,010. (The highest average was in 2007 when it reached $560,270.) Then in 2014 the median price was $447,010. Had we not experienced the crazy market from 2004 to 2007, the actual increase would be in a straight line showing the normal growth in home values. Bottom line, we need to recognize that our market over recent years and today should be looked at as a normal market.
The media reports indicate the desert has lost the Canadian buyers, that baby boomers are not selling and coming to the desert, the remote (second home) buyers are down and the demand for homes in golf course communities is declining. We will need to watch to see how these projections materialize over time.
Here is what I see: We witnessed a decline in the number of home sales in 2014 and we are continuing to see the same market as we have for the past three years. We are seeing remote buyers coming to the desert looking to either purchase or lease a home with the overall anticipation of living here in the desert. However, we re not seeing a growth in the number of those buyers. Additionally a higher number of sellers are putting their desert home on the market. Since there is no increase in the number of buyers compared to a year ago and even the preceding year, we are seeing higher inventories leaving the buyers more choices. In fact, throughout the desert, the number of homes sold in the first quarter of this year is equal to the number sold in the first quarter of 2015 and not far off the number sold in the first quarter of 2014 regardless of whether the homes sold were under $500,000 or over $ 1 million.
For the past three years, the number of sales in the first quarter here in the desert has seemed sluggish compared to prior years and professionals in the industry continue to scratch their head and wonder where have all the buyers gone. The desert market is supposed to kick off right after the Bob Hope Classic, now referred to the Humana. Now Buyers are waiting until the end of the 1st quarter to submit offers and the season for selling is underway for the next six months. For the past two years approximately 24% of the homes sold for the entire year were in the first quarter with about 31% of the homes selling in the second quarter and 23% in the third quarter (54% of homes sold for the year occur in the 2nd and 3rd quarters) and about 22% of the homes selling in the fourth quarter. Based on the buyer interest now, which is very brisk, the market should continue on the same path as we have seen over the past two years. Sellers need to recognize our prime selling season is starting later and continuing further into the year. The current market shows no increase in buyers, as indicated earlier, but an increase in inventory which does affect home prices depending upon the upgrades in the home.
It became a Buyers market a little over a year ago and with the increase in homes available for buyers to consider. This has given buyers a wonderful opportunity to purchase upgraded homes that are move in ready at a good price or purchase homes that are more in original condition with need of some updating for a really great price. Buyers who see the benefit to them in today’s market and purchase a home now rather than waiting have an excellent opportunity to experience a greater upside over time.
Perhaps one reason for a reduction in the number of sales in certain areas here in the desert is the buyer and seller see the market differently for each community. Buyers write low ball offers making it difficult for sellers to take the offer seriously so nothing happens or the negotiations start on a negative note and it becomes difficult to reach a price more acceptable to both buyer and seller. Sellers need to recognize that buyers today are cautious and do not want to leave any money on the table if possible, so they are starting with lower offers. A low offer does not necessarily indicate that the buyer is not sincere, but more cautious.
Of the 19 country clubs I track, (see the Country Club Home Sales Price Change and Appreciation report included in this letter) home sales in nine of the communities were above the 24% average percentage of total yearly sales that historically occur in the first quarter compared to last year’s sales. Five communities are on track to sell the same number of homes this year while the remaining five are running behind last year. All five that are lagging behind are the higher end golf communities. Eleven of the golf course communities show an increase in average sales price compared to the end of the 4th quarter of 2015 with eight selling for less in the first quarter than at the end of 2015. Some of the stats for sales in these communities may not truly reflect the actual value change due to the lower number of homes sold within that golf course community.
In Indian Ridge nine homes sold in the first quarter of this year with ten homes currently in escrow. Last year for the first quarter, eighteen homes had sold with five in escrow. So we are only down four sales from a year ago. So while it appears Indian Ridge is off 50% in home sales for the first quarter, we actually have twice as many homes in escrow than last year so we may have just started the sales year off more slowly and only four behind last year’s pace. With 109 homes on the market, there will be homes that will not sell this year because of price, lack of upgrades the current buyers want or just based on the number of homes on the market versus the demand for homes. Buyers today are showing a very strong preference to buy homes that are already upgraded, and an overall lack of willingness to do upgrades themselves.
In comparing the number of homes sold from October 1, 2015 to March 31, 2016 against the same time a year ago, 19 homes have sold with five of the homes in the HOA and 14 in the PUD. Last year 30 homes had sold within the same time frame and 15 homes were HOA and 15 homes were PUD. We are hopeful the sales will be balanced as they have been in the past going forward.
The average price per square foot in Indian Ridge for homes in both the PUD and the HOA have been fairly consistent over the past two years. The first quarter shows lower prices per square foot but with half the number of homes sold this can skew the numbers somewhat. The average price for a home in the HOA was $688,000, up 9.4% in average sales price with an average days on market of 207. In the PUD, the average sales price was $808,929, off 10.5% with an average days on market of 137. The highest priced home sold since October 1st is $1,030,000. We have had 6 homes selling over $1 million and I have sold everyone of these homes.
Currently there are 109 homes on the market, 51 in the PUD and 58 in the HOA. Asking prices range from $355,000 to $2,495,000. We are not on track to sell 109 homes this season nor have we sold that number of homes since 2005. Last year we sold 60 homes, in 2014 74 homes sold.
You are welcome to stop by the Indian Ridge On-Site Sales office. If you would like a free market analysis of your home we are happy to meet with you. We encourage calling to schedule for an appointment so we can give you the time you need.
Diane R. Williams
Associate Broker/Executive Luxury Director
Bennion Deville Homes
Indian Ridge On-Site Sales Office and Luxury Homes & Estates Division