November 2022 Hi Desert Real Estate Market Update

Warm Greetings from a Cold Desert, 

Sorry, this may be a bit longer than you are accustomed to. Our temperatures have cooled in our real estate market. Let’s be clear, it’s not blizzard, stay inside conditions in the market. Depending on your view we are either in a Fall or Spring real estate market in our local communities. Sales have cooled from our hot, post Covid market. Inventory is way, way up. At this writing we have around 650 active listings in our communities. We still closed escrow on over 90 properties last month. Prior to 2019, this would have been considered a great month for sales. The Fed’s raised rates again this month which is affecting the mortgage market. Just over a week ago, rates were at 7%. This week I am seeing them down in the low to mid 6% range. Still a good rate for a long-term investment. With more homes available, we should see more opportunities to buy a home below the list price.

Some believe we are in the Fall market, with a doom and gloom winter being forecast for all of 2023. Others believe this is the Winter and by spring next year, rates will stabilize, maybe even come back down into the 5% range by June. I am not sure which to believe. I have always been a supply and demand kind of guy. I lean more towards a bleak winter period with demand being pent up and by next spring, we should see buyers return in full force. Our industry considers it a buyers’ market when there is more than a six-month inventory of homes for sale. It is a Sellers’ market when inventory is less than six months. We have 650 active listings, divided by the 93 sales this last month and we have almost a 7-month inventory, clearly a Buyers’ market. But it is really close.  Prices are forecast to stay within 5% of today’s price points. We may see more of a drop because many of our homes are no longer residents but businesses. Mathematically, short-term vacation rentals skew how our market performs. I expect a 10% to 15% price correction over the next five months with demand staying at about 80 to 100 homes a month. Next May could bring many buyers who need to make a purchase back to the market. If this happens in a burst, we will see inventory fall and prices rise. In my opinion, currently, inventory tells the story. If we fall back below 400 properties for sale, we will return to price increases. If we stay above 600 properties, we should see price hold or maybe drop a bit.Other interesting points in the November Update include-

• As noted above, our current inventory is at 2015 levels.
• Our closed escrows are the lowest since January 2019. If we look at the month, this report is the least October closings we have seen since November 2015.
• Twentynine Palms continues to be a strong market. Average prices are over a hundred thousand below Yucca Valley and almost two hundred thousand below Joshua Tree. Twentynine Palms was also the leader in percentage of local sales with 38% of all sales in that community.
• The over $500,000 market remained strong last month. I believe this reflects buyers from more urban areas purchasing in our communities.
• Only Twentynine Palms saw an increase in average price last month.
• As you would expect, days on market (DOM) has almost doubled in the last few months. It now takes around two months on average to see a listing sell.

I hope you and your family find many things to be thankful for this year on Thanksgiving. As always, I am thankful for the opportunity to provide you with this information. I am thankful for all of you that share it with others. I am thankful to have you on my list.

Happy Thanksgiving.  

Sincerely,

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