- The Palm Springs real estate market appears content on not following in the footsteps of the rest of California.
- Real estate in Palm Springs looks to favor a buy and hold exit strategy over quick rehabs.
- Palm Springs real estate investing will rely heavily on an influx of renters over the course of the year.
The Palm Springs real estate market represents a strict departure from the rest of the state of California. Whereas the majority of The Golden State appears to be firing on all cylinders, Palm Springs seems fine playing the contrarian role. For all intents and purposes, Palm Springs isn’t content falling in line with the rest of the state, but I digress. Palm Springs isn’t your typical real estate market, and shouldn’t be expected to follow the same path as the rest of California. That said, the Palm Springs real estate market has become synonymous with today’s most popular vacation destinations.
Most people aren’t looking to make Palm Springs their permanent home, but rather a place to visit when the weather is right and a good venue is in town. That’s not to say there aren’t plenty of opportunities for real estate investing in Palm Springs, but instead that investors need to alter their perspective. Namely, Palm Springs looks as if it will heavily favor buy and hold strategies over rehabs for the foreseeable future.
Palm Springs Real Estate Market Overview
- Median Home Value: $396,300
- 1-Year Appreciation Rate: 7.9%
- Median Home Value (1-Year Forecast): 2.4%
- Median Rent Price: $2,400
- Average Days On Market: 77
- Unemployment Rate: 3.5%
- Number Of Foreclosures: 168
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Median Home Price Palm Springs
The median home value in the Palm Springs real estate market is $396,300, according to Zillow. At its current point, despite have appreciated by as much as 7.9% in the last 12 months, the median home value in Palm Springs is considerably less than the $542,900 price point representing the California average. What’s more, real estate in Palm Springs isn’t expected to keep up with the rest of California. As of now, the Palm Springs real estate market is expected to be the beneficiary of a 2.4% increase in home values over the next year, but the California real estate market is expected to nearly quadruple that rate.
As I’ve already alluded to, however, Palm Springs does not conform to the high standards set by California. That said, lower appreciation rates should not scare away investors, but rather convince them to consider alternative exit strategies. That said, while home values may not be as high as the rest of California, rents are fairly comparable. The median rent price in Palm Springs is $2,400, whereas the California average is $2,700. Perhaps even more importantly, the home value to rent ratio suggests Palm Springs would be a great place to buy a rental property. Homes cost less in Palm Springs, yet fetch nearly as much in rental rates as the rest of the state. Therefore, if you are looking to invest in Palm Springs, you may want to consider a buy and hold strategy over flipping or wholesaling.
Palm Springs Foreclosure Trends & Statistics
Having missed the train on the historical appreciation rates sweeping through California, the Palm Springs real estate market hasn’t seen as much equity return to the market as it would have preferred. As a result, the city hasn’t addressed the foreclosure crisis as much as it would have liked to have. In fact, the amount of foreclosure in the Palm Springs real estate market have actually increased year over year. According to RealtyTrac, “the number of properties that received a foreclosure filing in Palm Springs, CA was 4% higher than the previous month and 86% higher than the same time last year.”
It is worth noting, however, that while homeowners are not too fond of the idea of increasing foreclosure numbers, real estate investors are ecstatic over the opportunities they provide. You see, distressed properties represent a chance to acquire deals at a discount; sometimes a significant one. Investors, therefore, view the foreclosure rate in Palm Springs as an opportunity to increase their profit margins.
Distressed properties can often be acquired at a discount, which begs the question: Where can investors find said homes? According to RealtyTrac, some neighborhoods have more foreclosures than others. If you are interested in investing in Palm Springs real estate, trying looking in the following neighborhoods:
- 92262 (1 in every 1252)
- 92264 (1 in every 1612)
According to the real estate data company, these two zip codes have the highest percentage of foreclosures in the Palm Springs real estate market. Perhaps even more importantly, nearly 70% of the foreclosures in Palm Springs are what we in the business call pre-foreclosures, meaning they have received a notice of default, but have yet to enter into the foreclosure process. Investors looking to buy in Palm Springs should, therefore, look to their local courthouse, where each of the aforementioned pre-foreclosures should be available for public viewing. In other words, if you are interested in investing in Palm Springs, the local courthouse should point you in the direction of homes that may be able to be acquired at a discount.
Palm Springs Real Estate Market Summary
The Palm Springs real estate market hasn’t kept pace with the rest of California, but that’s not necessarily a bad thing. IF for nothing else, few cities can keep up with the pace of the entire state. With cities like San Francisco and San Diego leading the movement, it’s impossible to assume any city can even come close. That said, Palm Springs is making a name for itself in a different way. While home prices may not be appreciating on par with the rest of the state, rents are relatively high. Due in large part, to the vacationing nature of Palm Springs, most people going there are looking to rent out properties not buy them. As an investor, you should take note of this. It may be in your best interest to look at properties better suited for buy and hold exit strategies.