Recapping the Fourth Quarter 2022 Coachella Valley Real Estate Market
The final quarter of 2022 presented an interesting turn in the market. Deceleration is the key word, with a slowdown in activity happening across the desert region. Read on to see how the year finished, and what it could mean for the 2023 housing market. Keep in mind the below analysis and numbers are for the Coachella Valley’s primary resort cities, stretching from Palm Springs to Indio. If you are interested in learning more about the market in a specific city, community, or neighborhood, please reach out to your local Bennion Deville Homes real estate professional. We will provide you with the details you need to start evaluating your situation and help you meet your real estate goals in 2023 and beyond.
Tracking the desert real estate market since the summer has been fascinating due to a marked shift in activity. The final quarter of the year solidified the direction that we have been observing over those months, with a slowdown fully emerging. Year-over-year, the quarterly figures reflect drastic drops in activity, massive gains in inventory, more homes coming on the market, an easing of the sale pace, and, despite it all, a modest gain in the median price of a home. These factors make sense when looking at the market’s shift in direction since the winter of 2021, with more homes staying on the market longer and a decline in sales activity. Evaluating the quarter-over-quarter figures, we see a sizable change in direction, too. The number of new listings coming on the market was slightly lower, while the number of homes sold dropped, inventory increased, the median sale price declined, the sale pace slowed, and the listing discount continued to increase. A modest correction to home prices across the quarter reflects stagnating activity, but we don’t expect a major decline in prices.
There are a couple of key things to keep in mind with these numbers and the tale they tell. First, the holiday season is traditionally slow for home sales. The feverish activity in 2021 was an anomaly, with an unheard-of sales pace sustaining until the middle of 2022. Second, despite a quarterly decline in the median sale price, home prices are still very healthy, and inventory remains below historic levels. Below average availability of homes for sale will keep home prices stable, even as more homes hit the market to begin the year. Finally, this shift has been expected for some time, and is viewed overall as a sign of the market finding balance. After two straight years of skyrocketing growth, it was inevitable that we would see the numbers cool. This should be good news for all involved in the market. Buyers have options to consider, and sellers can still realize a strong amount of equity in their homes, especially for homeowners who have been in place for a few years. Those who have been considering purchasing or selling a desert property have a prime opportunity to make their move.
The fourth quarter saw 1,328 homes change hands, a 46.3% year-over-year decline and a 17.5% drop quarter-over-quarter. That sales activity amounted to over $1.5 billion in sales volume, an 11.3% increase year-over-year but a slight 2.3% dip from the prior quarter. Over the 3-month stretch the market welcomed 2,611 homes, a 5% increase from the same period in 2021 but a 0.5% downward nudge from third quarter 2022. Additionally, 1,493 homes reached pending status over the quarter, a 40.5% plummet from last year and a 3.2% decline from the prior quarter. The median sale price of a Coachella Valley home finished at $579,700, a 5.8% increase over 2021 but a 2% drop from third quarter. Likewise, the average price per square foot ended the quarter at $389, an 8.7% increase year-over-year and a 1.4% dip from the prior quarter. The sale pace, noted as average days on market, clocked in at 44 days, a 28.2% increase (slower) from the same quarter last year and a 14.8% increase from the previous quarter. The listing discount, calculated by dividing the sale price by the list price, was 97.7%, indicating a 2.3% discount, a 2.3% decline from last year (which had no discount at all!) and a 0.7% drop from third quarter of this year. Overall, there is a 4.2-month supply of homes for sale on the market to meet demand, a 363% surge from the same period last year, and a 45.3% increase quarter-over-quarter. A balanced market is considered at around 6 months of inventory, which the market is inching toward due to the slowdown in activity.
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