Where is the California Desert real estate market heading in 2012?
Everyone, and I mean everyone, ask me the same question. No one wants to be a sucker or make the mistake so many made over the last 7 years by jumping into the real estate market. People constantly ask me “Are we at the bottom”? “When should I get back in to the market”? “Should I get in the market”? “Is now a good time to buy income property”? My answer to all of these questions is a loud and confident YES!
Here is how I see the year unfolding for the desert real estate market in California:
1) A large group of would be buyers don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back. The unemployment numbers have been dropping for the last six months. As people go back to work, their confidence grows. Watch the unemployment numbers. As we get close to 10% look for more buyers to jump into the market. This will cause a major stabilization of prices and mark the beginning of the market upswing.
2) Many would-be buyers are worried about buying today if prices are going to be lower tomorrow. Banks and other mortgage investors own around 440,000 foreclosed properties (nationwide), but there’s another 3.4 million loans in foreclosure or serious delinquency. This number can be a little misleading. I think our desert area is flushing these properties quickly. I think the Palm Springs and Coachella Valley in California are stable and will remain that way through the year. If you are looking for value in the Coachella Valley look to North Indio. In the Hi Desert areas of Yucca Valley and Twentynine Palms I see more price correction. I think this area has a large shadow inventory of homes that will have to be released this year. With little to no industry to fuel jobs, I see an additional 10% to 15% decrease in home values in homes above $125,000. The bottom priced homes are most likely to stay stable at around $60 per square foot.
Next week part two….
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