This morning I checked the inventory of single-family detached homes in some of the popular neighborhoods of Palm Springs, expecting to see higher numbers even for this time of the year. Active listing numbers should be rising soon, but they are still below normal levels in several key neighborhoods.
As of 9/12/18 (current SFR Active Listings):
- Movie Colony East/Ruth Hardy Park- 6
- Vista Las Palmas- 5
- The Mesa- 5
- Sunrise Park- 4
- Movie Colony (proper)- 3
- Little Tuscany- 3
- Twin Palms- 2
- Tennis Club/Tennis Club South- 2
- El Mirador- 1
There are other popular neighborhoods that currently have sufficient inventory, but this is generally because of the following reasons:
There are more obstacles in getting mortgage financing. Most people are used to not paying an additional lease for the land on which their property sits. If the expiration date is less than 30 years away, or if the annual lease is too high, these properties are even tougher to sell. Of course, many properties are sold on leased land, but they will never be as attractive or sellable as fee land property.
Communities Shooting Too High Up in Price
We see it as agents, and buyers see it too- property prices have risen substantially in the past 5 years and “great deals” are no longer available. Prices have risen so much in some neighborhoods that people are reminded of the 2008 crash. Believing that prices are inflated beyond the property’s true worth, these people would rather sit on the sidelines than bet on appreciation. Neighborhoods with ample inventory that is now sitting on the market are proving that buyers are reluctant to spend on a property whose outlook in the near future gives them pause.
Listings Being Priced As If They Were Upgraded/Trying to Hit a Home Run
In a Seller’s market, there will always be aggressive pricing- however, today’s buyer is more informed, and is less prone to an emotional buy. If a home was remodeled 10+ years ago, most buyers will factor in updating expenses. We are seeing homes in neighborhoods with lower inventory being priced as if if they had undergone substantial work, or being priced with a recent sale in mind that is superior in quality, views, etc. We are also seeing properties that were purchased at much lower prices whose owners are not content to receive a lucrative return and are waiting for the “home run” offer. This strategy may backfire, because if the market dips or flattens out they’ll end up chasing the market, racking up days on the market, and quite possibly getting a worse offer than if they just priced the home within range from the outset. These folks think the escalating prices will never cease.