The 2021 Palm Spring Area housing market was one for the history books. Sales prices reached new heights, inventory hit rock bottom, and homes sold in record time, often for well above asking price. Mortgage rates, which began the year at historic lows, remain attractive, and homeowners who choose to sell in the coming months can expect to see plenty of buyer activity due to pent-up demand during the pandemic.
The median price of a detached home in the Coachella Valley ended the year at $615,000, which represents a yearly gain of 18.3%. The median price for attached homes in the Valley ended the year at $402,900, which represents an increase of 22.5%.
At the end of the year price gains for detached homes go from a high of 49.2% in Bermuda Dunes to 22.3% in Cathedral City. The largest price increases for attached homes are 60.4% for Desert Hot Springs, 47.5% for La Quinta and 42.3% for Bermuda Dunes.
On January 1st total inventory in the Valley stood at 607 units, which is the lowest number on record and 900 units less than last year. This is disappointing since we’ve just passed through the three historically strongest months of inventory increase. This continues to highlight the restrictive effects of the COVID pandemic and the new Omicron variant. Other Southern California regions show the same pattern; that inventory is again falling toward historic lows.
With the U.S. economy booming, and with inflation at its highest level in nearly 40 years, the Federal Reserve recently announced the accelerated tapering of their bond purchasing program, now set to end March 2022. A series of hikes in the federal funds rate will likely follow. Economists expect the cumulative effects of these efforts will move mortgage interest rates higher through the end of 2022. Although still low by historical standards, an increase in interest rates may serve to soften buyer demand somewhat as affordability becomes a more influential factor in home purchases. Price growth is expected to slow somewhat as a result, but affordability will likely remain a top constraint for some homebuyers.
What Does This Mean for Buyers?
Just remember, rising rates and prices are a great motivator for you to find the home of your dreams sooner rather than later so you can buy while today’s affordability is still in your favor.
What Does This Mean for Sellers?
Make no mistake – this sellers’ market will remain in 2022 as home prices are projected to continue climbing, just at a more moderate pace. Selling your house while buyer demand is so high will truly put you in the driver’s seat.