2020 the Greater Palm Springs Area Housing Market Forecast
By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession. The U.S. housing market surprised economists by rallying in the midst of a pandemic. But the coronavirus may drag down home values after all. Prices will fall about 6.6% in the year through May 2021, the first annual decline since 2012, as the economic damage from the pandemic deepens, according to a forecast by CoreLogic Inc. Prices nationwide had climbed 4.8% in 12 months through this past May.
There’s at least a 75% chance of price declines in 125 metro areas by next May, led by getaway destinations in states such as Arizona and Florida that “faced the perfect storm of elevated Covid-19 cases and the subsequent collapse of the spring and summer tourism market,” according to the report. The last annual decline was in January 2012, at -0.3%.
The news is worse for the country’s casino capital. Prices in Las Vegas will plunge 20.1% as a plunge in tourism combines with values that were inflated before the pandemic, according to CoreLogic.
Meanwhile, in San Diego—where the market conditions are considered normal—home prices are forecasted to decline just 1.3% over the next 12 months. CoreLogic home-price forecast: LA County seen off 6.3% in a year. OC? A 5.2% loss. Inland Empire? 2.4% decline. The firm projected declines of 11.7% in Boston, 9% in Denver, 7.4% in Houston and 5.9% in New York.
What to watch
- 2020 Election Year and Real Estate: Elections have historically affected house prices with a slightly lower percentage increase in value. According to a movoto.com study of the California real estate market, house prices typically rise 1.5% less during an election year than in the year prior to the election, and 0.8% less than in the year following the election. This may not seem like much, but these percentage differences can add up over time. An election year could potentially cost homeowners thousands of dollars in lost value to their largest assets.
- Mortgage Interest Rates: CALIFORNIA ASSOCIATION OF REALTORS® projects that the average for 30-year, fixed mortgage interest rates will dip to 3.7 percent in 2020, down from 3.9 percent in 2019. And 4.5 percent in 2018 and will remain low by historical standards.
From Real Estate experts to Bubble Pundits, what are they saying about 2020 the Greater Palm Springs Area Housing Market Forecast?(Note: This information was taken on 10/12/2019. Some organizations will update their information frequently).
What will the housing market look like in 2020?
…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…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.
FirstTuesday Journal (Riverside County Housing Market)
Local sales agents can expect sales volume to slow and prices to decline in 2019, the lead-up to the next recession. Still, the damage in 2019-2020 won’t be as hard-felt as during the Great Recession, which saw the housing industry’s collapse after the market was flooded with years of overbuilding and unqualified buyers. The next housing boom will begin to take shape after prices bottom around 2021.
CALIFORNIA ASSOCIATION OF REALTORS®(California Housing Market)
The California median home price is forecast to increase 2.5 percent to $607,900 in 2020, following a projected 4.1 percent increase from last year to $593,200 in 2019. “With interest rates expected to remain near three-year lows, buyers have more purchasing power than in years past, but they may be reluctant to get off the sidelines because of economic and market uncertainties,” said C.A.R. President Jared Martin. “Additionally, an affordability crunch will cut into demand in some regions such as the Bay Area, where affordability is significantly below state and national levels. These factors together will subdue sales growth next year.”
Just when it looked like home prices may have hit a ceiling, low interest rates could give them another boost. Home prices continue to increase on an annual basis with the CoreLogic HPI Forecast indicating annual price growth will increase by 5.4% by July 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.4% from July 2019 to August 2019.
Freddie Mac (National)
Strong data over the last few months gives us reason to believe that house prices will continue to beat expectations in the coming months. We estimate that house prices will appreciate 3.4% in 2019, before tapering off slightly in 2020 at 2.6%. After decelerating earlier in the year, house price appreciation has stabilized near our estimate of long-run house price growth. We forecast that annual house price appreciation will be 3.4% in 2019 before tapering to 2.7% in 2020.
Avenue Properties : Mark Kunce (based on Oct 13, 2019 Data)
Low mortgage interest rates will support Coachella Valley housing market in 2020 but economic uncertainty and 2020 Election distraction will mute sales growth. Palm Springs will continue to lead and amaze in 2020. On December 31, 2019, all existing permitted Short-Term-Rentals in Palm Desert within the R-1 and R-2 zones will terminate. And this could increase the housing inventory, thus less price growth.
- Tips For Home Buyers: As a seller, you will be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home. Prior to the Great Recession, mortgage rates were at 6.35% in 2007. A $625,000 home with 20% down had a monthly payment of $3,111 back then. Today at 3.5%, the monthly mortgage payment is only $2,245, an $866 per month savings! And rates are not going go change much anytime soon. Buyers, do not wait on the sidelines. Instead, cash in on these incredible rates now.
- Tips For Home Sellers: Will the seller’s market continue? Probably (except Indian Wells). The market won’t tank anytime soon, yet we may be nearing price peaks. However It is generally harder to sell homes during election years. Consider hiring a real estate agent with a great marketing strategy to help you get your home sold.
- Tips For Investors: The Greater Palm Springs area is a great place to buy a rental property. Homes cost less here, yet fetch nearly as much in rental rates as the rest of the state. Therefore, if you are looking to invest, you may want to consider a buy and hold strategy over flipping or wholesaling.
In my “Millionaire Investor Seminar”, I always talk about “Five Investing Myths”. One of the myths is that “successful investors are able to time the market”. But the truth is, in successful investing, the timing finds you. So the question is “When will the timing find you?”.
What do you think? Will the median home value in the Coachella Valley go up in 2020?
Disclaimer: This story contains predictions and forecasts relating to home prices and other aspects of the housing market. Those forward-looking views are the equivalent of an educated guess and should be treated as such.
If you would like a FREE CMA or Comparative Market Analysis of your home in Coachella Valley then please contact us so that we can do an accurate analysis on your home. If you’re selling your home you will be glad that you did.
Mark Kunce, SRES®
Co-Owner/Realtor at Avenue Properties