Toscana CC 2017 1st Quarter Report
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Several months ago, as we began experiencing an improving real estate market, I predicted that reports would come out indicating that home values were on the rise. Recent reports announced that home values were 9.5% higher than last year. Not all areas in the Coachella Valley are improving at the same pace so this general statistic can be misleading to many. In 2016, 10 homes sold for over $7 million, up from 1 in 2015. The increased demand for the higher priced homes automatically raises average home prices to a somewhat distorted number. The reason I write my reports is to help buyers and sellers see what is happening in the desert real estate market and in the nineteen country clubs I track.
Some country clubs are experiencing an increase in number of homes sold and higher prices while others are selling more homes but for less than a year ago. Fifteen of the country clubs are on track to sell the same or more homes than in 2016. Ten out of the nineteen country clubs show an average price increase higher than last year with 9 showing appreciation greater than the 9.5% indicated by media sources.
Some real signs of a recovering market in the Coachella Valley:
- Distressed sales (REO and short sales) are down to 4.5% in the valley and only 4.3% in Indian Wells.
- The inventory in the valley ranges from a 2.5 month to 12.9 months. Indian Wells has the highest inventory at 12.9 months supply. This is in line with the month’s supply by price point. Palm Desert has a 9.2 month supply.
- There is an 18.7 month supply of homes active on the market for $1 million or higher however, $1 Million+ home sales are up this quarter to 6.9, the highest it has been since 2007.
- Days on market are 6.1 months down from 8.4 a year ago.
- The 4,724 homes are currently on the market, this is 1,100 fewer than a year ago.
- Million dollar home sales are up 31% over last year.
Palm Desert is the leader in total home sales for the first quarter this year, up 34% from a year ago. For single family detached homes, Palm Desert is still off 30.9% in sales price from its all-time high in 2006. Palm Springs is off 2.7%, the lowest in the desert. Palm Springs continues to remain a strong market. La Quinta and Rancho Mirage are both experiencing 39.3% and 35% increases in home sales compared to a year ago and they are 26.7% and 29.7% respectively off their all-time high home values in 2006. Indian Wells is experiencing less than a 1% increase in home sales and still off 32.2% from their all-time high sales values in 2006. All of the nine desert cities experienced an increase in home values this year except for Rancho Mirage which is off 5.9%.
In the Coachella Valley, attached homes remain a tougher market with only four of the nine communities seeing an increase in home values. They are all off 28.3% to 60.8% from their highest home values in 2006. These attached homes are 3.8% higher in value than last year but off 1.5% from three years ago.
The desert has two overlapping buyers. Those that are owner occupied and driven by affordability, wages, employment and population growth; and those that are second home buyers/investors, driven by wealth, expected appreciation gains and expected rising incomes. The second buyer market is optional and predicated on consumer confidence in the economy and increasing wealth that provides these buyers the opportunity to invest in our resort-like market. If we look at Palm Desert as an example, 61.3% are homes are remote buyer owned (second home buyers). Of this 61.3%, 73.5% are condominiums and 46.4% are single-family home.
New homes sales for the valley show 56 active projects with 5 planned projects being added in 2017. Add the high number of vacant lots (4,289) and projected sales of 762, the new home sales market will remain a slower market this year.
In the first quarter of this year, seven homes sold in Toscana, up from six homes sold in 2016. The average price per square foot was $441, down 4% from a year ago. One home is pending and will have closed by the time you read this report. We represented the buyer on this sale. Since the membership initiation fee has been under consideration, buyers have been waiting to learn about the non-fundable initiation fee. This has slowed sales for both buyers and sellers. Sellers who want to sell their golf membership need to determine the price of their home predicated on the actual non-refundable membership initiation fee. Buyers have been waiting to learn about the new program before they buy a home with a golf membership. We lost three sales just in the first quarter as our buyers have been waiting to hear about the new membership program. With the final decision near completion, we expect these buyers will return to search for homes that meet their needs. The seven homes that sold could have been higher in the first quarter if the buyers had known what the new fees would be. We anticipate sales will be much higher once the program goes into effect and should not negatively affect home values or sales in the future.
With a highly qualified and dedicated team, we can easily show our listings to potential buyers or agents with their clients and provide feedback from these showings. We find that personally showing our listings gives us the opportunity to learn what the buyers are saying about the homes and the community, readily clarifying any discrepancy and making sure buyers don’t miss an opportunity to see a home that may better meet their needs if the home they are currently viewing does not appeal to them. We have a team that is easily available. Call our office number (760) 776-7070 and we will always answer or return your call promptly.
If you would like a free market analysis of your home, we are happy to meet with you. We encourage calling to schedule an appointment so we can give you the time you deserve when we meet with you. Our entire team looks forward to working with you.
Diane R. Williams, Associate Broker/Executive Luxury Director
Bennion Deville Homes
Indian Wells Luxury Home Division