Have we reached the peak in home prices in the desert? That is a question I am asked frequently and the answer seems to be not yet. The California Desert Association of Realtors (CDAR) and the Palm Springs Regional Association of Realtors (PSRAR) released their May 2021 Desert Housing Report. The report states that home prices continue to surge in the Valley with the median price of a detached home rising to $580,000, which is 32% higher than last year.
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For the 11th straight month, the Valley’s median attached home price advanced. At the end of May it stood at $359,000 compared to $289,500 a year ago. This is an increase of 24%, which is slightly less than the increase for detached homes. At the city level median home prices continue to increase year-over-year in the nine major cities of the Valley. Gains range from 41.8% for Rancho Mirage to 8.1% in the city of Coachella. The three-month average of total sales, which shows both the seasonality and shorter-term sales trends, continues to hit all-time highs.
In May total sales hit an all-time high and were averaging almost 1,300 sales a month over the last three months. Two thirds of all sales were single-family residences and one third were attached homes. On June 1st there were 682 units for sale compared to 2,793 units on June 1st of last year. This lack of supply continues to draw home prices higher. Since sales remain high and inventory remains low at just under 700 units, the month of sales ratio is now at 6/10 of a month.
Coachella Valley Housing Inventory
Despite the growing number of new listings, inventory continues to remain low because high sales are rapidly absorbing these listings. On June 1st there were 682 units for sale compared to 2,793 units June 1st of last year. This lack of supply continues to draw home prices higher. As the chart clearly shows we are at the seasonal point where inventory normally declines but this seems almost impossible given the already low number. We continue to believe that new listings will move above normal levels, gradually increasing inventory over the next six months to a year.
The median value for “Sale Price Discount from List” in May was 0.0%, which is the same discount it had the last three months. The reason the median price discount remains at exactly 0.0% is interesting. The median value is the middle number of all sales in the sample and in this current market more homes are selling at exactly list price than above or below it. This causes the median number to be exactly zero.
12 Month Change in City Median Prices
At the city level median home prices continue to increase year-over-year in the nine major cities of the Valley. Gains range from 41.8% for Rancho Mirage to 8.1% in the city of Coachella. Seven cities have gains for detached homes over 25%. Prices for detached homes in every city except Rancho Mirage and Coachella now exceed the historic highs made during the housing boom of 2004 to 2006. Gains in attached home prices range from 30.5% for La Quinta down to 10.9% for Indio.
Every city shows an increase in average sales compared to last year. The largest increases continue to be in the resort cities with milder increases in the residential areas. The chart clearly shows that the largest sales increases are in the cities of Palm Desert and La Quinta. Rancho Mirage has the largest percentage sales increase of 133%.
When we measure sales in the different price brackets, we continue to find the largest sales increases in the middle to higher price brackets. Sales of homes under $300,000 continue to remain low there are fewer homes in these brackets due to the large price increases. Sales of million-dollar plus homes continue to amaze with sales averaging 200 units a month compared to just 54 units a year ago.
Now is a great time to sell your home. The low inventory and high prices will not last forever, and there is a sense of urgency to list and sell your home before inventory rises and prices begin to stabilize. Please call, email or text me right now for a free valuation of your home. Or, you can CLICK HERE to get an instant value of your home.