January 2020 and Year End 2019 Hi Desert Real Estate Market Update

Happy New Year 2020!!!

This month’s message is a bit longer than normal, but it includes my year end report along with my forecast for the year.

With the Holidays behind us, it is now time to focus on the new year and how our local real estate market will respond. Let’s take a quick look at my 2019 forecast and see how I did.

Here is what I forecast for the year of 2019 (My comments on the year are in red):

• I am trying to stay optimistic even though the end of 2018 could point to a slowdown. I am forecasting sales by unit to remain around 1,500 for this year. Much of this is because the Airbnb buyers and vacation home buyers are still in the under $200,000 but our inventory in this price range is shrinking.   We finished the year with just six more sales than 2018! By November we were down to less than 50% of our sales being below the $200k mark but for the year as a whole we finished at the same percentage as 2018 (66%)
• I expect small gains in price points in both Joshua Tree and Yucca Valley. I’m thinking 3% to 5% in both communities. I believe Twentynine Palms will continue to outpace the other communities. I sure missed it on Joshua Tree. Yucca saw a 3.50% increase, Twentynine Palms saw a 15% but Joshua Tree saw over a 22% increase. I could see Twentynine Palms gaining a 30% share of sales this next year with a 20% increase in sold prices. Twentynine Palms saw a 30% market share. Many Airbnb buyers are moving their searches to the east end of the valley because it is cheaper. I still expect to see Morongo Valley and Landers to gain next year. The outlying areas saw just a 1% gain in market share.
• I think the first quarter of the year could be slow with momentum building in the last 9 months. If I am right, this will put pressure on prices to increase as we are not building enough homes to add to our inventory. I was right on the money with this. The first of the year was slow but the year ended with a huge gain in closed escrows.

 For the new year of 2020 I forecast the following:

• As prices gain, we still lag in employment opportunities in our Hi Desert. I expect Yucca Valley to be flat in sales but see marginal gains in prices. I expect 2020 will be pretty much the same in volume in Yucca, I expect a small drop in Joshua Tree but another gain for Twentynine Palms and our outlaying communities. Look for more buyers coming from the Low Desert (Coachella Valley) as their community’s price points are outpacing wage growth. This could be a return to our traditional buyers who come from blue collar workers wanting a more relaxed community as compared to the Low Desert.
• This could be the year that many of the original vacation home investors begin to sell. Typically vacation homes see a five-year cycle. Vacation rentals are a newer type of ownership so it will be hard to tell. This will become important when we see how they value their business of vacation rentals. When you sell a business, you place value on the income of the business as well as the capital investment. We could see a large uptick in price points as people sell the business of the vacation rental and the real property value. I believe this is why Joshua Tree is outpacing the other communities. People are selling the business and property, so the price points are combined as compared to just the value of the real estate.
• I expect the first part of the year to outpace the end of the year in sales and values. Interest rates are very low but so is inventory. People will have to spend to get what they want. Unless we see a surge in job growth, look for the first nine months to be good and the last three to be flat compared to 2019.

Some of the highlights of the monthly report are:

• 1) Low inventory. In the last two months we have lost almost 100 listings. Our current level of listings has not been seen since the summer of 2017. We need to build inventory to continue expanding sales.
• 2) Last month we returned to almost 2/3 of our sales being below $200,000.
• 3) Days On Market increased in all three major communities but are still within national averages.
• 4) Average prices declined in all three major communities.

As a side note, I have been preparing these Updates since 2013. I noticed that, on average, the value of our real estate in Yucca Valley and Twentynine Palms has doubled since 2013 and the values in Joshua Tree have tripled in that same time.

As always, please feel free to share this Update with anyone you like. If you know of anyone looking to buy or sell, please give them my contact information. I greatly appreciate your support!

JANUARY 2020 MARKET UPDATE
2019 YEAR END SUMMARY
Hi Desert Communities
By Bob Armstrong Real Estate Broker
(760) 221-2999, squabblefree.bob@outlook.com
7245 Joshua Lane, Suite B, Yucca Valley, CA 92284
DRE# 01275801

This monthly report is an attempt to provide you with the mathematical information about the current real estate market in the Hi Desert communities of Yucca Valley, Joshua Tree, Twentynine Palms, and surrounding areas. I do my best to keep my opinion out of the information. If you want my opinion, just ask! I also post market information on my Facebook Fan Page (www.facebook.com/desertrealestate). All information included on this Update is gathered from the California Regional Multiple Listing Service (CRMLS) which is the predominate service in the area. Numbers in parenthesis represent change from last month.

INVENTORY
At this writing (January 06, 2020) we have 395 (-30) residential homes actively for sale in our area ranging from a low price of $19,777 to a high of $4,450,000. There are 71 (-10) properties in “Active Under Contract” status (some major contingencies but in escrow). There are 90 (-26) properties in a Pending sale (waiting on escrow to close). Of the active listings, 135 in the Yucca Valley zip code of 92284 (-12).  91 in the Joshua Tree zip code of 92252 (+05) and 108 in Twentynine Palms 92277 (-08). 

MONTHLY CLOSED ESCROW AND INVENTORY COMPARISON BY YEAR

Last month, in December, we closed escrow on 121 residential properties. In comparison, last year we closed escrow on 103 residential properties in our Hi Desert communities. Below are two, line graphs of inventory and closed escrow by month for the 2015, 2016, 2017, 2018, 2019, and 2020.

LAST MONTHS CLOSED ESCROW INFORMATION
Number of Closed Escrows:
Last month (December 2019) in our Hi Desert communities of Yucca Valley, Joshua Tree, and Twentynine Palms plus outlying areas we closed escrow on 121 homes (-14). 44% of the sold homes were in Yucca Valley, 14% were in Joshua Tree, and 32% were in Twentynine Palms, 10% were from the smaller communities that surround our larger ones. 

CLOSED ESCROWS BY PRICE RANGE:
Of the 121 escrows closed in December, 21 were under $100,000 (+10). 28 were between $100k and $150k (+14). 32 were between $150k and $200k (+07). Combined 67% of home sales were below $200k. 24 homes sold between $200k and $300k (-09) last month. 16 homes sold over $300k (-02). The highest value home sold at $865,000 and is located on Easy St. in Pioneertown.

HOUSING STATISTICS
AVERAGE PRICE OF CLOSED ESCROWS:
In December, homes that closed escrow in Yucca Valley sold at an average price of $225,434
(-$20,892), Joshua Tree averaged $196,935 (-$14,344), Twentynine Palms averaged $125,023 (-$53,498).

PRICE PER SQUARE FOOT OF CLOSED ESCROWS:

In December, homes that closed escrow in Yucca Valley sold for $144.17 per square foot (-$6.67), Joshua Tree sold for $159.51 per square foot (-$33.02), Twentynine Palms sold for $116.26 per square foot (+$0.93). The most expensive home sold by square foot this month is in Twentynine Palms.  This 212 square foot home sold for $278.30 per square foot, is on Los Olivos Ave. in Twentynine Palms, and was built in 1954! The least expensive home sold was $31.85 per square foot and is located in Twentynine Palms on Raymond Dr.

Average Days on Market:
The average days on market for sold homes in Yucca Valley in December was 116 (+16), Joshua Tree was 92 (+40), Twentynine Palms was 91 (+22).

MARKET CONDITIONS

I am sharing with you the Altos Market Trend Report. This is a weekly report I subscribe to that can shed light on the health of our market. I will be using the same week of each month that I prepare my Monthly Market Report to help inform you of the trends in our market. The Market Action Index (MAI) answers the question “How’s the Market?” by measuring the current rate of sale versus the amount of the inventory. Index above 30 implies Seller’s Market conditions. Below 30, conditions favor the buyer. Watch for changes in MAI. If the MAI resumes its climb, prices will likely follow suit. If the MAI drops consistently or falls into the Buyer’s zone, watch for downward pressure on prices.

 

YUCCA VALLEY:
This week the median list price for Yucca Valley, CA 92284 is $271,200 with the market action index hovering around 35. This is less than last month’s market action index of 36. Inventory has held steady at or around 126. In the last few weeks the market has achieved a relative stasis point in terms of sales to inventory. However, inventory is sufficiently low to keep us in the Seller’s Market zone so watch changes in the MAI. If the market heats up, prices are likely to resume an upward climb.

JOSHUA TREE:

This week the median list price for Joshua Tree, CA 92252 is $282,450 with the market action index hovering around 33. This is an increase over last month’s market action index of 32. Inventory has held steady at or around 90. The market continues to get hotter. More sales demand and fewer homes listed have contributed to a relatively long run of increasing prices.

TWENTYNINE PALMS

This week the median list price for Twentynine Palms, CA 92277 is $145,000 with the market action index hovering around 30. This is about the same as last month’s market action index of 30. Inventory has held steady at or around 109. The market has shown some evidence of slowing recently. Both prices and inventory levels are relatively unchanged in recent weeks. Watch the Market Action Index for changes as it can be a leading indicator for price changes.

2019 YEAR END STATISTICS
HI DESERT COMMUNITIES

 

Numbers in parenthesis represent change from the previous year (2018).
Number of Closed Escrows:
Our Hi Desert Communities closed escrow on 1,508 in 2019. +06 homes over 2018 (1502), 1396 in 2017, 1,332 in 2016, 1,158 in 2015, and 1,094 in 2014. 40% of the sold homes were in Yucca Valley (+/-0%), 17% were in Joshua Tree (+/-1%), 30% were in Twentynine Palms (+/-0%), and 13% were from the smaller communities that surround our larger ones (+1%).

Closed escrow by price range:
Of the escrows closed in 2019, 184 were under $100,000 (-87). 314 were between $100k and $150k (-38). 498 were between $150k and $200k (+134). Combined 66% of home sales were below $200k (same percentage as last year)! 435 homes sold between $200k and $300 last year (+79). 189 homes sold over $300k (+30). The highest value home sold at $1,600,000. This 1,349 square foot home is located on 2.50 acres and is commonly referred to as the Black Desert House and is located on Acoma Terrace in the Rock Reach neighborhood in Yucca Valley.

AVERAGE PRICE OF CLOSED ESCROWS:

In 2019, homes that closed escrow in Yucca Valley sold at an average price of $229,019 (+$7,896 or +3.57%), Joshua Tree averaged $246,774 (+$45,379 or +22.53%), Twentynine Palms averaged $145,617 (+$19,659 or +15.61%)

PRICE PER SQUARE FOOT OF CLOSED ESCROWS:

In 2019, homes that closed escrow in Yucca Valley sold for $149.32 per square foot (+$11.64), Joshua Tree sold for $215.21 per square foot (+$43.73), Twentynine Palms sold for $121.34 per square foot (+$15.73).

Average Days on Market:
In 2019 the average days on market for sold homes in Yucca Valley was 85 (+30), Joshua Tree was 68 (+07), Twentynine Palms was 76 (-16).

If you would like to better understand the math and dynamics of our local market, text, email, or call and let’s discuss your questions and concerns. I can find a winning strategy for you in any market.

Sincerely,
Bob Armstrong
(760) 221-2999
DRE #01275801
♻️GREEN Real Estate Group

If you know of someone who would appreciate the level of service I provide, please call or text me with their name and phone number or email address. I’ll be happy to follow up and take great care of them.