Gallaudet Properties has a new address!

We have some exciting news!  Gallaudet Properties has joined a new real estate company, HK Lane.  This is a locally owned and managed boutique real estate company in the desert.    In the 18 months that it has been in business it has opened 3 offices: La Quinta, Palm Desert, and Palm Springs.  The agents that have been attracted are experienced and successful and we are thrilled and proud to be a part of the excitment.  The company is owned by Harvey Katofsky, a well respected leader in the real estate industry.  Previously Harvey was the owner of Fred Sands Desert Realty which he opened in the Desert in 1994, expanded to 5 offices, and sold to Coldwell Banker in 2004.  We are thrilled to be back with Harvey and a part of this new and dynamic company which is growing in all the right directions, even during these difficult times! Please come visit us in our new office located at 78100 Main Street in Old Town La Quinta.

August 2010 Price Report

Here are the latest sales numbers for all homes sold within the City of La Quinta as well as all Golf Course homes in La Quinta through August 2010.

La Quinta home sales since January 2008
City of La Quinta home sales since January 2008

The blue lines represent 2008 data, the orange lines represent 2009 data and the magenta lines represent 2010 data.

The chart above shows monthly sales of homes within the city of La Quinta*.

As is typical of the hot summer months, the La Quinta home sales for August were lower than July and for the first time since June, 2009, lower than the same month a year earlier. Open escrows in August dropped 6% which is not terribly surprising during the hot summer months but is an indicator of the usual lazy sales for the next few months. Consumer confidence, which seemed to have steadied in the previous few months has turned into a wait and see attitude leading up to the November Mid-term elections. Prices seem to be stabilizing in the under $1,000,000 market. The above $1,000,000 market has not seen the improvement of the under $1m market but this is likely due to the unavailability of jumbo loans. The general attitude of the people we talk to at open houses is that the market has hit the bottom and that is backed up by current prices versus historical appreciation.

Golf Course Real Estate slae in La Quinta
Golf Course home sales in La Quinta

The sales-volume numbers in the higher-end market (which contains many of the golf properties in the chart above) have fallen off as expected with the arrival of the summer heat. The average price per square foot has dropped 11.5% over July’s prices.

Overall, we are still seeing positive signs in the market place. People on the street that we talk to believe that prices have bottomed out. The mortgage industry is the best it’s ever been for conventional loans but the “jumbo” loans continue to be a stumbling block in the higher end market. The bottom line is that at the beginning of the downturn in 2006, there were over 10,000 homes available for sale in the Coachella Valley – a real glut.  Currently, that number is down to under 5,115 with 1,906  (37%) of those currently under contract. As the supply dwindles, the market begins to stabilize and people feel more comfortable to get back into the marketplace.

If buying property is something on your list (especially golf property), why not take advantage of the incredible prices and seller incentives now, when sellers will work with you, instead of in the future, when the demand starts to catch up with the supply? Especially if you’re buying and planning to hold for 5+ years.

Here are some yearly sales figures (units) for the City of La Quinta from 2002:

Year All LQ Golf Course
2002 1,354 259
2003 1,565 652
2004 1,931 813
2005 1,553 657
2006 1,098 491
2007 935 447
2008 1,063 416
2009 1,155 418
2010 YTD 914 390 (August)

* When looking at “sold” data, you have to remember that the numbers are generated on the date that the sale is recorded with the county but that the decision to buy was made about 45 – 60 days earlier.

Figures are from the Desert Area MLS

June 2010 Price Report

Here are the latest sales numbers for all homes sold within the City of La Quinta as well as all Golf Course homes in La Quinta through June 2010.

The blue lines represent 2008 data, the orange lines represent 2009 data and the magenta lines represent 2010 data.

The chart above shows monthly sales of homes within the city of La Quinta*.

The sales for La Quinta in June were the strongest since May, 2006. But… Sales are recorded at the close of escrow and most escrows are 45 – 60 days. As we enter the summer months there has been a 17% drop in open escrows during June over May so we should expect to see a typical seasonal drop in the sales numbers in the next month or so. Last month consumer confidence seemed to follow the stock market into the doldrums as buying activity in June seemed to slow down when compared to May. Personally, our team continues to put non-distressed, “regular” home sales together this year, which has been a welcomed change. Prices have not started to rise, but they seem to be stabilizing in the under $1,000,000 market. The above $1,000,000 market has not seen the improvement of the under $1m market but this is likely due to the unavailability of jumbo loans. The general attitude of the people we talk to at open houses is that the market has hit the bottom and that is backed up by current prices versus historical appreciation.

The sales-volume numbers in the higher-end market (which contains many of the golf properties in the chart above) are the highest since May of 2008 (one shy) but the average price per square foot dropped 6% from May’s figures. The golf course home numbers have been fluctuating all year so this is not a surprising change and the June numbers were very close to Aprils figures.

Overall, we are still seeing positive signs in the market place. Although prices have not yet stabilized in the higher end (over $1 million), prices seemed to have stabilized in the lower market segments. The mortgage industry is still a stumbling block in the higher end market as it seems that unless you can prove that you don’t need a Jumbo Loan (over $500,000), you can’t get one! The bottom line is that at the beginning of the downturn in 2006, there were over 10,000 homes available for sale in the Coachella Valley – a real glut, currently, that number is down to under 5,100. As the supply dwindles, the market begins to stabilize and people feel more comfortable to get back into the marketplace.

If buying property is something on your list (especially golf property), why not take advantage of the incredible prices and seller incentives now, when sellers will work with you, instead of in the future, when the demand starts to catch up with the supply? Especially if you’re buying and planning to hold for 5+ years.

Here are some yearly sales figures (units) for the City of La Quinta from 2002:

Year All LQ Golf Course
2002 1,354 259
2003 1,565 652
2004 1,931 813
2005 1,553 657
2006 1,098 491
2007 935 447
2008 1,063 416
2009 1,155 418
2010 YTD 705 317 (June)

* When looking at “sold” data, you have to remember that the numbers are generated on the date that the sale is recorded with the county but that the decision to buy was made about 45 – 60 days earlier.

WestJet adds direct flights to/from Toronto next winter

WestJet announced that it will add two direct flights to and from Toronto, Canada beginning February 2, 2011. The flights will be in addition to the existing schedule servicing  Calgary, Edmonton and Vancouver. This will be the longest outbound flight leaving Palm Springs…  This will be a very good deal for our valley.

Click here to read the complete story in the Desert Sun

Its a great time to buy!

The Desert is heating up right now in more ways than one!  We all know that the weather is getting hot—100 degrees and rising,  don’t forget that it is a “dry heat” :-). But, in addition we are amazed at the number of buyers that are arriving at this time of year to look at homes.  Rumor has it that there are deals to be had, and that this is the time to come and get them.  And, I must agree.  There is truly great opportunity right now to buy a beautiful home in the Desert for an unbelievable price. We are already noticing that the really nice values in the range of $500,000 and lower are going so quickly that it is becoming a seller’s market! Often with multiple offers!   The high end is still a buyer’s market, but if the home is perceived as a deal, it is being purchased quickly.  The buyers have been waiting a long time for that “perfect deal”, and they are now realizing that even in the high end, their day has come to purchase. Dependent on the area, seller’s home prices have come down 30% to 40% from the all time highs of 2006 .  The summer buys that are available today are the best values that we have seen in years.

What is an average home sale?

I hear the same question from a lot of people: “When are the prices going to get back to where they were now that we are at the bottom?”.  The answer, in our opinion is “a lot longer than it took the prices to drop”.  Since the 1960s, when real estate sales data first started to be recorded, real estate has appreciated at an annual rate of approximately 4.5%. There have been minor fluctuations but up to 2002 sales closely followed the line.

In the period from 2002 to 2006, we saw sale prices jump 79.5%  and from 2006 through 2009, we watched prices drop 48% and since settle back on the 4.5% “normal” line. Since 2006 and especially since September 2009, most real estate sales have been in the lower range, starting with “distressed” (lower priced foreclosures and short sales) and very slowly moving up in price as the lower priced supply dwindled and consumer confidence improved.

As I thought about this, I wondered just what was the size and price of the “Average” home sold in the valley? The chart below represents all valley sales from the Desert Area MLS. I did a standard search for residential sales and the only parameter I set was the date so the info is based on all reported sales in the entire MLS area – Desert Hot Springs to Indian Wells to Salton City.

Year Units Sold Avg SqFt Avg Sale Price $/SqFt DOM
2004 12,561 1,891 $397,138.00 $210.01 62
2005 11,126 1,878 $490,825.00 $261.36 71
2006 7,743 1,944 $542,183.00 $278.90 111
2007 6,123 2,034 $545,410.00 $268.15 139
2008 7,435 1,970 $394,831.00 $200.42 128
2009 9,280 1,886 $271,567.00 $143.99 126
2010* 9,140 1,976 $318,461.00 $161.16 128
* Projected total        
           
First 6 months of 2010      
Month Units Sold Avg SqFt Avg Sale Price  $/SqFt DOM
January 688 1,956 $309,900.00 $158.44 123
February 693 1,911 $302,244.00 $158.16 125
March 947 1,934 $300,104.00 $155.17 120
April 917 2,004 $325,520.00 $162.44 132
May 899 2,047 $348,942.00 $170.47 137
June 882 1,990 $319,486.00 $160.55 129
6 Mos 5,027 1,976 $318,461.00 $161.16 128

  
As you can see, the sales price per square foot ($/SqFt) from the high in 2006 – $278.90 dropped to the low in 2009 – $143.99 (-48.4%) but has rebounded in 2010 to $161.16 which is 42.2% from the 2006 high. Remember that these numbers represent all the homes in the valley so it is skewed by the “distressed” property sales. I feel that prices in the more affluent communities has dropped about 35% from the 2006 high. Some of the higher priced homes, ($1,000,000+) have still not seen much interest.

This, now, makes me wonder just how different some of the local cities stack up against one another. I included, in the following chart, the cities of Desert Hot Springs and Coachella which clearly show the affects of distressed property sales as compared to more affluent cities in the valley.

2006 Units Sold Avg SqFt Avg Sale Price $/SqFt DOM  
DHS 663 1,575 $285,136.00 $181.04 119  
Coachella 182 1,592 $324,223.00 $203.66 76  
Palm Springs 1,565 1,652 $483,783.00 $292.85 113  
Rancho Mirage 631 2,763 $872,763.00 $315.88 122  
Palm Desert 1,177 1,948 $602,591.00 $309.34 106  
Indian Wells 196 2,987 $1,146,332.00 $383.77 111  
La Quinta 1,098 2,354 $771,522.00 $327.75 117  
             
2010 Units Sold Avg SqFt Avg Sale Price $/SqFt DOM % Drop 06-10
DHS 421 1,542 $94,793.00 $61.47 82 66.0%
Coachella 201 1,876 $142,058.00 $75.72 74 62.8%
Palm Springs 850 1,769 $315,595.00 $178.40 133 39.1%
Rancho Mirage 342 2,632 $575,157.00 $218.52 184 30.8%
Palm Desert 676 1,898 $369,961.00 $194.92 141 37.0%
Indian Wells 126 3,052 $830,372.00 $272.07 217 29.1%
La Quinta 705 2,388 $519,612.00 $217.59 158 33.6%

The chart above also uses data from the Desert Area MLS and shows the change from 2006 to 2010 by city. Although the 2010 numbers only represent 6 months of data, the current sale price info is still relevant. 

But I digress, (sorry), back to the original question. If the home sale prices continue to appreciate at the normal 4.5% rate, home sale prices should get back to 2006 levels in 2020. In other words, keep breathing .

My first trip to Sacramento

I joined our local board of Realtors in January of this year as a Director and as a member of the MLS & Technology committee.  It’s been a great learning experience to serve on these committees for a couple reasons:  it’s been interesting working with my colleagues in a committee setting where we take votes and discuss issues on a group level.  It has made me focus on articulating my points as well as figuring out when to dig my heels in and when to shut up and compromise (Compromises aren’t always my first choice…) It’s also been interesting to see how local policies are made.  My position as director has put me in front of the association budget and all decisions that each committee makes must be finalized by the board. Pretty cool; it’s been a much more fun endeavor than I anticipated it would be. They asked me to come on board last fall to offer some of my technical experience and I think (more than anything) pump some more young blood into the organization. We all know the desert needs as much of that as possible!  🙂

Anyway, as part of serving on the board of directors, I just traveled up to Sacramento to take part in CAR’s (California Association of Realtors) Legislation Day. Realtors’ associations are organized at 3 levels: local, state and national levels. This was a state level meeting and focused on educating our legislators on current issues that are effecting consumers in buying, selling and/or maintaining their homes.  There were 3 key issues we discussed:

1. Appraisals:

Appraisals are a nightmare right now.  Here is a bit of background on the issue:

The Home Valuation Code of Conduct (HVCC) is the result of a settlement between the New York Attorney General and the GSEs (Government Sponsored Enterprises – Fannie and Freddie) that he had threatened with liability for allowing inadequately underwritten loans to be made and resold. The HVCC has no force of law and was not enacted by Congress, but because the GSEs are so dominant in the marketplace, their internal rule has effectively pre-empted practice across the country. A New York lawsuit has thus changed the way that California lenders (and the appraisers they hire) do business.

The stated purpose of the HVCC is to create a separation between a loan officer, loan broker and the appraiser retained to provide the appraisal. Teh need for separation has fueled an explosive growth in Appraisal Management Companies (AMCs) whchi act as the intermediary that receives the assignment from the lender and then hires the appraiser to complete it. With limited exceptions, the HVCC calls for no contact between the lender and the appraiser. Compliance with the HVCC became mandatory June 2009.  This is a problem for the following reasons:

  • Appraisals cost the comumer on average of $75.00 more (typically $200 more in the La Quinta area).
  • Time to complete an appraisal doubled.
  • 61% of all appraisals are completed by out-of-the-area appraisers (sometimes even out of state.)
  • 63% of all appraisals came in below the purchase price

The last 2 bullet points are really crucial. When reading the last point, you might think “Well, we’re in a declining market, so I can appreciate appraisals coming in lower.”  That’s not the true picture though.  Because there are so many out of the area appraisers (who have to cover a bigger geographical area to make the same living they used to because the AMC’s now take a cut from the appraisers pocket too), they don’t know our area and often do not provide accurate appraisals because of this. If an appraisal comes in lower than the offer price and the buyer is getting a loan, the bank won’t provide the loan and the house won’t sell which further drags down prices. The point isn’t that the prices are low or getting lower (or higher or whatever), the point is that they are often incorrect and do not provide fair comparables for the rest of the marketplace.  This creates tons more problems for everybody that’s involved — including for the buyer that WANTS the property at his offer price, but now can’t buy it because he can’t get a sufficient loan.  These problems happen all the time.

2. Anti-Deficiency Protections:

Current law says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself. This law has been around forever (originally created in the 1930s.)  However, if you refinance the original debt (the same debt used to purchase the home and nothing more), the borrower becomes personally liable for this amount. There is a bill on the table called SB 1178 that C.A.R is sponsoring to change this policy. This bill removes the liability for the original debt that has been refinanced to take advantage of a lower interest rate or something of this nature.  It does not deal with liability on any money-out refinances or home equity loans.

3. Proposals to Address State Budget Gap

The state is trying to bridge the budget gap by trying to force “overwithholding on independent contractors”, “Tax on Services” and change the  “Mortgage Interest Deduction” for primary and second homes.  These are all bad things for independent contractors, home owners and consumers.  By withholding money from independent contractors, the Government would not be solving a problem — they’d just be holding onto contractors money until they filed their taxes at year end.  Provided contractors didn’t owe any additional money, the Gov’t would give it back. Also any tax on services would raise expenses for everyone involved in that service– most importantly the consumers paying for those services. Lastly the Mortgage Interest Deduction is a HUGE tax relief benefit to all home owners. By removing this, it would significantly increase the cost for primary and secondary home owners to own their homes.

These are the contemporary issues that are affecting all of us in today’s real estate marketplace.  It was productive to meet with the law makers in Sacramento and discuss these issues.  They understood where we were coming from and will hopefully move forward in a direction that will benefit the majority of the people.  If you’ve made it this far; I can’t believe it.  Thanks for reading!