By Bruce Cathcart
It is as if summer can’t make up its mind whether to stay or go this year. With the month of October ahead of us and the month of September behind us, we are seeing more and more Realtors smiling again in anticipation of not only cooler weather but hopefully of a hotter sales market! Real estate wise it has been a long, dry summer with the lowest number of sales recorded in recent years. Weather wise, well that is a different story all together as Thousand Palms, Indian Wells, Bermuda Dunes and La Quinta all experienced what is being called the 700 year flood when on September 8th mother nature dropped nearly 3” of rain on them in less than an hour… got flood insurance? First let’s take a look at the data for last month’s real estate activity and then I will wade into the flood issue.
Last month (September), according to the Desert Area MLS (as of 10/01/14) there were 562 pendings of residential properties in the Coachella Valley. There were only 435 pendings in the previous month (August) representing a significant increase in sales activity and signaling the end of the summer sales drought. In August there were 518 solds and in September (as we predicted) there were only 482 solds representing another 7% drop in closings. When compared to last year, we closed 524 homes in September representing a year over year decrease of approximately 9% in home sales. Closing data is always a month behind pending data and so with a 23% increase in openings last month we are about to see our closings start to increase. This is our seasonal sales trend here in the desert and it would be cause for alarm if this didn’t happen. It should be noted however that we are still far behind last year’s number of total closings and even though we have seen modest gains in prices (perhaps averaging as much as 5% for the entire year) that is still not an indication of a market in full recovery. The new term I have been seeing in the mainstream press a lot lately to describe this market is “stagnant”. If we look at stagnant as the new norm I would prefer to call it “stable”. Unfortunately, as I see it, there are too many variables out in the world today that are set to destabilize the market in the downward direction, the most obvious of which is the continued threat of higher interest rates. Again, we will just have to wait and see and in the meantime enjoy the current “stability” in the market.
Adding to that stability, overall inventory available to buyers this month was up significantly (approximately 13.5%) from 2,857 properties available for sale at the beginning of September to 3,242 properties available for sale at the end of September reversing a trend that started back in February 2014. Increased inventory, increased sales activity at slightly higher prices… I can see why Realtors are again.
So you thought your homeowner’s insurance on your house covered flooding? Many valley residents discovered with the recent flood that without a very costly, specific flood insurance policy, your regular homeowner’s insurance only covers certain types of flooding. Like the flooding caused by a broken water pipe in your home or if a tree falls on your roof during a rainstorm and allows the rain inside but not when the water comes from a 700 year storm that sends a flash flood bursting in through your front door! “Natural Hazard” flood insurance is only required by your lender if you are located in a 100 year or greater “flood zone” as determined on the FEMA Flood Insurance map. Unfortunately very few of the homes that flooded were located in the “flood zone” or had flood insurance. If you are fearful that your home may be flooded again, flood insurance is available whether or not you are located in a designated flood zone. While the odds may be against having another storm of the magnitude of this last one for several hundred years, flood insurance still might be something worth considering. In any event, having experienced a 700 year flood sure makes for a great story to tell your kids and grandkids about the next time they complain about a little rain!
Real Estate Tip of the month: If you were one of the unlucky folks who incurred serious flood damage from the recent storm contact your City or Riverside County via their websites. There are special forms there to be filled out describing the damage and cost you incurred due to the flooding. Together the Cities and County are attempting to file a claim to obtain special disaster relief from the state and federal governments. If successful, there may be special grants or low cost loans made available to local governing bodies and victims of the flood.
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.