How our market has shifted over the summer, and where it’s headed.
While our market has begun to shift in favor of buyers, it’s not a full-blown buyer’s market. Today I’ll update you on the summer market.
Our absorption rate remains low because of our lack of inventory, which keeps our prices strong. July’s median price for a detached home in the Coachella Valley was $710,000, a $10,000 monthly increase and a 19.3% year-over-year increase. We’ve now entered the seasonal period when home prices usually slow or even begin to decline, but we have not seen much of that this year. However, high sales and low inventory, which have driven up prices, are rapidly reversing. We should begin seeing a price correction soon.
On August 1, Coachella Valley had 1,633 units in its inventory, which is 801 units more than last year. Inventory has finally started to grow, and it’s occurring during the season when it normally contracts. It’ll be important to watch these levels this September since it’s the month when inventory normally begins to expand. If this pattern continues, we could possibly renormalize inventory, and reach 2,500 to 3,000 units by January or February.
On August 1, the Coachella Valley’s months of sales ratio was 1.9 months, which is up 1.2 months from last year. Like inventory, this is the highest ratio in almost two years. The ratio remains considerably below the 3 to 3.5 months, which is normal for late summer. However, despite inventories rising and sales falling, the months of sales ratio isn’t back to normal levels yet. If inventories rise as expected, the ratio could reach normal levels by the year’s end.
With inflation on the rise, mortgage rates climbed to over 6% but have since settled back between 5% and 6%. However, this has taken a big bite out of affordability for most buyers, and some buyers have been completely priced out of our market.
What does this all mean? Getting into the market now may be a more affordable option if you’re considering buying in our area instead of waiting for home prices to continue to appreciate as expected. If you’re a seller, projections show there will be more competition and diminished demand due to higher interest rates and fewer buyers. You will have less competition and the potential to get a higher price if you sell now instead of waiting until later this year.
If you have any questions, we’d love to help you. Feel free to reach out to us by email, text, or phone call. We look forward to hearing from you and helping you reach your real estate goals.