January 2023 Hi Desert Real Estate Market Update and 2022 Year End

Greetings Real Estate Fans,

A new year, a new market. Needless to say, things have slowed way down in the last six months in our Hi Desert real estate market. Word around town is many Short Term Vacation Rentals (STR) are vacant with little future bookings. Since a large part of our market was dominated by these buyers, I would expect to see both a slowdown and a raising inventory. We are seeing both. The weather has been colder and wetter than the last few years. I expect this is also having an impact on our market.  For me, two items in this report tell the tale. First, until January first, we had over 650 active residential listings. Many sellers have their listings expire on the last day of the year. This way they can regroup, maybe hire a new Realtor, and get back active by spring. Last year in April we had less than 200. This is a huge gain in inventory which tends to put downward pressure on price points. The second item is closed escrows for December. December 2021, we closed over 220 escrows. For December 2022 we closed 75. The last year we saw this few closings was December 2015!

Back to the STR’s. Look for many of them to switch to monthly rentals which will flood our rental market. I expect the cost of monthly rents will decline this year with more available units for rent. I also expect inventory to stay in the high 600’s as more of these properties try to sell.

Last year, 2022, we closed 1,696 escrows. In 2021 the amount was 2,066. A loss of 370 sales. I expect this will be a challenging year for sellers and Realtors. I believe we will see a decent spring season (if interest rates don’t spike again). By decent, I expect to see closed escrows to be in the 125 to 150 range by May. I don’t see prices dropping significantly unless the STR owners panic. Maybe a 5% decrease in the average price.

I think investors should be watching Twentynine Palms. Prices are still affordable, the community is investing in the new Freedom Plaza and several new businesses. The City has outsold, by percentage, our other communities for several months now.

Thank you again for the opportunity to supply this information. I look forward to your comments and questions.

Sincerely,

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