Have You Heard Palm Springs is a Seller’s Market?

I was contacted by someone who had a quick question, He wanted to know what I thought of  Palm Springs changing to a “Seller’s Market”?

Needless to say I was shocked by the question.

It turns out that a large number of local REALTORS^® and brokers were complaining about low inventory levels and talking about how most properties on the market are getting multiple offers which turned into bidding wars.

I admit that listing inventory is down and that I had heard of these bidding wars, but personally haven’t been involved in any.  I cautioned them about jumping to the conclusion that we were turning to a seller’s market.  I know why real estate agents and brokers want to call an end to the bottom of the market market, it’s because they’ll sell more properties as those who have been sitting back waiting on the bottom of the market to hit come out of the woodwork.

In my opinion instead of a seller’s market, what the market is experiencing is unhealthy and  unbalanced.

For the record, an unhealthy market is one where external forces are interfering with traditional sales.  REO’s and Short Sales being managed by the banks (slowly released).  Obtaining a mortgage to buy a property is much more difficult then it’s been in the past.  New  appraisals rules have made appraisals virtually worthless, not worth the paper they’re written on!  I have heard about these so called “bidding wars” blowing up when the appraisal comes back  below the agreed upon price.  Why are appraisals coming in below the price agreed to between buyer and  seller? It’s because banks and new appraisal rules have tied the appraisers hands.  An appraiser’s job is to determine fair market value, real estate 101 taught me the fair market value of a home is the price a willing seller will accept from a willing buyer.

Buyers are swarming to one set of properties at a particular price point leaving the higher price points languishing  on the market. In the Palm Springs area market, the sub $100K and the $100k to $200k markets are experiencing a lack of inventory at the moment. Why? Because a smart real estate investor can earn a healthy return on their money, a return they won’t get by keeping their money in the bank.

I believe we’re at the beginning stages of the bottom phase of this real estate cycle.  The bottom of the real estate cycle is rough and shouldn’t be rushed lest we see a fast return to the dark times of which we’re trying to climb our way out.

What’s the timeframe before we emerge from the bottom of this cycle?   I would be surprised if we’re off the bottom in the next 12 months, on the outside it I think it might be as long as be 3 years before we see a glimmer of light from the top.

The key to turning real estate around is slightly relaxed mortgage lending guidelines, added to that banks need to start lending to real estate investors and stop tying their hands with arbitrary quantity restrictions. Investment properties that cash flow are solid investments and as soon as banks realize the performance quality of these loans the sooner we’ll see the market turn around.

Tags: Desert Realty, featured, Palm Springs, Palm Springs Homes, Palm Springs Homes for sale, Palm Springs Real Estate, Palm Springs Real Estate Agent, Palm Springs Realtor

Category: Real Estate