The Palm Springs real estate market continues to serve as the jewel of the Coachella Valley. Tucked behind the peaks of San Jacinto, Palm Springs is a popular destination for those looking to escape the cold of the Northeast. That said, it is not your typical Southern California market. It is a popular retirement community and relies heavily on tourism. Buy and hold properties are prominent, but are by no means the only source of Palm Springs real estate investing. For all intents and purposes, this community is thriving.
According to Realtor.com, who pulls data from the MLS, homes in the Palm Springs real estate market boast an average value of $190,125. However, the average sales price is considerably higher. At $417,066; the average sales price in Palm Springs is 54.4 percent higher than the actual value of the average home. Sales prices in Palm Springs are also well ahead of the national average, but that is to be expected of most California markets. Accordingly, the average home price in the state of California is just over $361,000.
Palm Springs real estate has appreciated by as much as 3.6 percent over the course of 12 months, which is lower than the national average of 6.7 percent. However, experts have already forecasted a 4.6 percent increase in the coming year. Appreciation rates are actually slow for a city in California, but Palm Springs is unique in that it doesn’t attract the same demographics as the rest of the state. In fact, many residents are property owners, and many are between the ages of 50 to 59. Palm Springs has become a sort of desert oasis for those that have retired, or are considering retirement. It would certainly benefit investors in the area to recognize that most buyers in Palm Springs fit a specific demographic.
Homes in the Palm Springs market are only a part of the 9,092,375 properties and 153,970 homes for sale in California. As a result, the average home price and average home value of Palm Springs also influence the average home price ($361,123) and average sale price ($581,732) in California. The national average, on the other hand, is approximately $205,156.
With homes selling for well above their actual value in Palm Springs, the area favors sellers. However, there are still deals to be found by determined buyers.
Not unlike the rest of California, the Palm Springs real estate market has seen appreciation chip away at the state of the foreclosure market. Over the course of 12 months, foreclosures have actually declined by as much as 28 percent. In the last month alone, distressed properties dropped 14 percent. According to RealtyTrac, there are approximately 459 homes still in some state of foreclosure in the Palm Springs real estate market (default, auction or bank-owned). As members of the Palm Springs real estate investing community are aware, these properties should continue to serve as a great source of deals.
Distressed properties in the Palm Springs real estate market are fairly evenly distributed between pre-foreclosures, auctions and bank-owned properties. The majority, however, are in a state of pre-foreclosure, meaning they are only at risk of being repossessed. Nonetheless, 41.9 percent of the distressed properties consist of homeowners that have fallen behind on payments. Another 35.5 percent are now bank-owned and sitting on the books of lending institutions as non-performing loans. The remaining foreclosures (22.6%) are going up for auction. Regardless of the state of these foreclosures, each should be viewed as a potential deal for those interested in the Palm Springs real estate investing community.
Of particular importance to Palm Springs real estate investing, however, is the discounted rate each of these properties comes with. According to data on RealtyTrac, foreclosures in the Palm Springs real estate market sell for 24.1 percent less than non-distressed properties. Savvy investors in Palm Springs should be able to take advantage of the spreads these homes offer.
Outside of distressed properties, Palm Springs real estate investors may find buy and holds to be an option worthy of consideration. Palm Springs real estate boasts a competitive rental market. Rental property is in high demand and availability is low. Rent prices have decreased by 2 percent over the past 3 months. This is 39 percent lower than the county average of $3,237 and 92 percent lower than the state average of $4,482. The average rent for unites with 1 – 4 bedrooms is $2,330 a month.
As one of the fastest growing tourism industries, single-home vacation rentals are quickly becoming a popular choice for people visiting Palm Springs. In fact, tourism has really helped the entire Palm Springs economy. With a great deal of money coming in from the hotel industry, Palm Springs is very dependent on outside money. The tourism industry is also responsible for maintaining a healthy unemployment rate. Unemployment in Palm Springs is right around 5.4 percent. At that rate it is less than the county (6.6%) and state (6.1%).
As a popular travel destination, homes in the Palm Spring real estate market with pools have actually outperformed those without them. The median asking price of homes with a pool was higher than the median asking price of all homes in the city. According to RedFin, having a pool in Palm Springs certainly increases the property value. More than 78 percent of homes in the Palm Springs real estate market have a pool. Those with a pool have a median asking price of nearly $25,000 more than those without.
The cost of living in Palm Springs is about $61,600, which is only about 0.3 percent lower than the rest of the state. With cities like San Francisco, L.A. and San Diego skewing the numbers, Palm Springs is relatively expensive to live in.
Palm Springs has certainly differentiated itself from most California markets, in that it caters to an older community. However, it is still a thriving city in one of the hottest housing markets in the country.
Palm Springs Real Estate Market Summary:
- Current Median Home Price: $190,125
- 1-Year Appreciation Rate: 3.6%
- Unemployment Rate: 5.4%
- Population: 46,281
- Median Household Income: $45,198