Crossing Their Fingers In Palm Springs
The various media of California are picking through the Data Quick numbers for clues about their local markets. The Desert Sun thinks a slowdown might prevent a 'collapse'. "There are several signs of what observers contend is a healthy cooling down."
"The (Coachella Valley) inventory of unsold resale homes is now around 3,330 - more than twice the level seen a year ago. The total 1,432 properties sold in April marked an uptick from March's 1,385 and was the highest sales count so far in 2005. But it was a drop of 16.7 percent from April 2004, when a record 1,720 properties were sold."
Here is an interesting stat, "(prices for) new-construction homes dropped 8.9 percent to $345,000."
Speculation is evident. "A real estate agent in Indio said a large proportion of buyers are still coming from coastal areas, where they are using sales proceeds from much more expensive properties to purchase homes in the valley. That is creating an affordability crunch for the lower-income east valley buyers."
9 Comments:
Those naughty old Californians are driving up prices in California.
i work in publishing and in our world we have a little number called - sell thru... for instance, if we print 100 copies of our magazine and 70 are sold... that's a sell-thru of 70%... i find it quite odd how the real estate market tends to ignore this very basic business idea...
9:21 anon,
I wonder if the outsiders are spending sales proceeds or extracted equity? At any rate, they are flush with cash and do seem to be paying too much.
I like your thinking Goleta. If the government does decide to do a bailout, they should only do it on owner-occupied mortgages.
("A real estate agent in Indio said a large proportion of buyers are still coming from coastal areas, where they are using sales proceeds from much more expensive properties to purchase homes in the valley.)
Who on earth is relocating from coastal SoCal to Indio? Not likely. Maybe they are so-called "investors" looking for a quick buck. But a wholesale move from expensive coastal LA to Indio? Not on your life.
The Indio area is not commutable to LA. It is savagely hot and dry, has no cultural amenities whatsoever. Maybe 2nd homes? I don't know. But this reeks of speculation not some sort of demographic shift.
My guess is that, given its proximity to Palm Springs (22 miles) and Rancho Mirage (13 miles), there is speculation that Indio will be the next hot desert town. Well, they probably have the "hot" part right.
$$$
These booms/bubbles have a lot of negative unintended consequences. Indio is fairly close to the resort areas of Palm Springs/Palm Desert. But it is a working-class (or poorer) town full of trailer parks, etc. It's where a lot of the gardeners, maids and farmworkers live who service the rich folks in Palm Springs.
By driving up the costs of housing in Indio, these low-income workers get driven out further into the desert. At this point, if they are priced out of Indio, there really isn't anywhere for them to reside, except in their cars by the side of the road.
We're seeing this in many locations and not just in the U.S. It's happening in British Columbia and the resort-y parts of Mexico.
Real estate is often a zero-sum game. One person gets richer while another gets poorer. Too much speculation in real estate is a very big societal negative.
"If the government does decide to do a bailout, they should only do it on owner-occupied mortgages."
IMO, everyone should be responsible for their own decisions, even the so called "less fortunate" or "owner occupiers".
And by the way, the "government" doesn't bail out anything. The taxpayers do. And maybe it's just me, but as a tax payer, I think I am paying my fair share and subsidizing housing indirectly by virtue of renting and not being able to expense my rent payment.
We need a bust. Corrections need to happen regularly and on a small scale or they become busts.
A correction would have re-aligned the markets and refocused our attentions on an old idea called wealth creation, rather than debt creation.
"Who on earth is relocating from coastal SoCal to Indio? Not likely."
No self respecting Angeleno would move to Indio. Ever.
What's next, a housing boom in Blythe??? (town on CA/AZ border where the prison is. It's also a popular place to take a pee on car trips from LA to Phoenix).
Naw... I wait for a few miles and get off at one of Arizona's finely maintained rest areas.
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