By Bruce Cathcart
May is the month that most real estate agents hold their breath and hope that we don’t have an early heat wave signaling the onset of what will surely be a long, hot and dry summer. Dry being the term referring to a lack of sales! Typically we spend the month of May scrambling to get our “seasonal” real estate transactions closed in anticipation of being able to take some time off during the summer and get out of the desert and into some cooler climes. Based on the statistics we have been tracking for the first five months of 2014, it looks like a lot of Realtors will be enjoying “stay-cations” this summer.
For those of you who have not been following this column, this year I have been closely watching the inventory of single family homes and condos (residential properties) in the Coachella Valley through our local Multiple Listing Service (MLS). Each month I have compared the market activity of listings that have opened escrow but not yet closed (pendings) and the listings that have sold (solds) to the previous month and to the same month from 2013. This is the fifth month of tracking this information and this will be the last time I introduce these statistics this way. If you are really into the “numbers” then read the next two paragraphs, but if you just want the conclusions, skip them and go to the paragraph that talks about headaches!
Last month (April) according to the Desert Area MLS (as of 5/31/14) there were 879 pendings of residential properties in the Coachella Valley. There were 892 pendings in May representing a month over month INCREASE in sales activity by approximately 2% which reverses our previous trend. Last year in the month of May there were 1,092 residential solds in the Coachella Valley. There were only 802 solds in May 2014 which represents a year over year drop in closed sales of approximately 27% which is consistent with our trend of fewer solds than last year, but by a higher percentage when compared to the 19.5% drop for the first four months of this year. There were 870 solds in April and so sold activity in May dropped approximately 8% compared to last month. Last year sold activity increased from April to May by 4%.
Overall inventory available to buyers this month was down again (approximately 5%) from 4,144 properties available for sale at the beginning of May to 3,915 properties available for sale at the end of May. This means that the number of new listings that came on the market in May did not keep up with the number of sales. As a reminder, there were 4,318 properties available in February of this year and so current inventory for 2014 is down almost 10% in the last 3 months.
If we think too much about these numbers all we will do is give ourselves a headache. But there are some clear “take-aways” here. Sales activity (both the number of pendings and solds) for the first five months of 2014 is down over 20% when compared to last year. That’s a big number, especially considering that last year only seemed like a decent year because the previous years were so horrendous! Current inventory is down almost 10% over the last 3 months and that is a significant trend that can lead to higher prices in most Coachella Valley markets. The lack of inventory will likely help to limit sales activity and keep the number of monthly sales at a lower number than last year and continue to decrease through the summer months. This IS the new norm with fewer and fewer sales anticipated for next several months.
This month’s top sale was a truly beautiful home in Big Horn Country Club that included 4 bedrooms and 5 bathrooms totaling 6,422 square feet on a 17,000 square foot golf course lot for $4,000.000.00. 63 homes sold in May for over $1 million dollars (only 1 less than last month) and of those only 8 sold for over $2 million dollars (compared to 21 homes last month!).
In case anyone is wondering the Madison Club Mansion is still available for $39,500,000.00 and so is the Bob and Delores Hope Estate for $34,000,000.00. We also currently have 11 homes for under $50,000.00 starting at $21,900.00 for a cement block house in the Tramview Mobile Home Park in Cathedral City proving once again that here in the Coachella Valley we have something to fit everyone’s budget!
Real Estate Tip of the week: Reality TV is NOT REAL! You are not going to be successful in the current market offering 20% less than the current list price. You are not going to buy a home for $100,000.00, put in $10,000.00 in improvements and resell it for $200,000.00. A Zesstimate is just a guesstimate! Listen to your trusted real estate professional. They know the market and can offer you the best advice available.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “Your Friendly Professionals” and can be reached by email at firstname.lastname@example.org or visit his website at www.laquintapalmsrealty.com.