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Foreclosure sales drive valley’s third quarter
Coachella Valley home sales during the third quarter of 2008 jumped 51.5 percent compared to 2007, driven predominately by buyers nabbing foreclosures and other distressed properties that have been sharply discounted.
The rise in sales is a dramatic turnaround from 2007, when third-quarter housing sales were down 23.3 percent from the same period in 2006.
The new housing analysis comes from Real Data Strategies, which provided statistics to The Desert Sun for a comprehensive look at sales from July through September 2008.
While sales are up, average prices are down as banks try to clear out the rising number of foreclosures and other sellers try to compete with the deals offered on distressed properties.
“It’s creating new market-level prices and competition,” said Patrick Veling, president and founder of Brea-based Real Data Strategies.
“Traditional sellers can agree to meet or beat (bank prices) or simply wait it out.”
The quarterly analysis of homes sold through the Desert Area Multiple Listing Service reveals:
A total of 1,935 Coachella Valley homes were sold during the third quarter of 2008.
That’s up from the 1,277 sold during the same three months of 2007 and up from 2006, when 1,665 homes were sold.
The bulk of homes sold are going for less than $500,000, a price point that traditionally has been described as the entry-level market
In 2007, homes priced under $500,000 made up 68 percent of all local sales. In the third quarter of 2008, they accounted for nearly 85 percent.
Traditional entry-level communities such as Coachella, Cathedral City and Desert Hot Springs saw a boom in sales of homes priced under $500,000.
Experts say not all those are traditional entry-level homes. Some are move-up or upscale homes that have seen dramatic price reductions in order to draw buyers.
“You’re seeing condos with a ‘1′ in front of it instead of a ‘2,’” Palm Springs Regional Association of Realtors executive officer Sam Schenkl said. “You’re getting a second chance at a home that may have been priced out of your reach.”
The sales of foreclosures and the resulting predominance of falling prices across the board are having a notable influence on the valley’s market.
In many cities where sales are up, the total volume of sales — the value of all the sold homes’ prices — is on par or even less than years where they saw fewer sales.
Take the 92240 ZIP code of Desert Hot Springs.
In third quarter 2006, 176 entry-level homes were sold equating to nearly $50.1 million in sales.
Compare that to third quarter 2008, when 220 homes were sold — a 25 percent increase — but average prices have dropped about $150,000.
Total sales equated to $29.5 million.
Cathedral City, where entry-level home sales jumped 144.4 percent in third quarter 2008.
Significant number of his buyers are people looking for second homes who are now able snag properties that used to be out of their price range.
“Some of these homes that are selling in the 200 or $300,0000 range were selling for 4, 5, $600,000.”
“They’re priced extremely competitively and aggressively. It’s all a matter of pricing and products.”
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