The Desert Sun – Palm Springs, Calif.
Author: MIKE PERRAULT
Date: May 8, 2011
Section: BUSINESS
While home prices and sales in the Coachella Valley are rising and Realtors say the market is regaining its health, one measure hasn’t budged: days on market.
Across the valley, it took an average of 105 days to sell a single-family home during the first three months of 2011, the California Desert Association of Realtors reported.
That number is higher than in the past two years and is similar to that in 2007 and 2008, when the downturn began in earnest. The average was 60 days in 2004.
Bank-owned and short-sale homes, which dominate some areas of the valley, are especially hard to move fast because of the bureaucracy involved and the refusal of most banks to negotiate on price.
Realtors say that gives individual homeowners an advantage, especially when they can be more flexible on the price and peg it lower than comparable homes.
“I’m seeing the houses that are aggressively priced are selling very quickly,” said Paul Hoffman, with Paul Hoffman & Associates Windermere Real Estate. “It’s a function of the threshold of pain for the sellers in this market.”
An analysis of first-quarter home sales in the Coachella Valley by the California Desert Association of Realtors shows that sellers who closed within 30 days got an average 96.8 percent of the asking price, Multiple Listing Service figures the group compiled by CDAR show.
When homes took more than 120 days to sell in the quarter, sellers received an average 91.4 percent of the listing price.
“Days on market” is a real estate term that represents the average number of days from listing to the receipt of a signed contract.
For most homes, the average days on market in the valley is roughly 90 to 100 days depending on anomalies that affect given months, real estate professionals said.
Nicole Castillo, 30, just sold her Cathedral City home, which is now in escrow. It had been on the market since October, the legal secretary said.
To get any movement on the house, she had to lower the price by about $30,000.
“We noticed that there were a lot of Canadians buying houses,” she said Saturday. “The people who are buying our house are from Canada and they are paying cash.”
So taking an extra week or two to sell a home is not surprising given that many sellers must take a loss or do well just to break even, real estate professionals said.
The valley’s average days on market are in line with the national average.
A national housing report for March compiled by Re/Max International showed the average days on market for homes sold in 54 metro areas was 104, inching up slightly from the average of 103 in February.
The Re/Max Housing Report showed that days on market has remained more than 90 for six consecutive months.
Market improving
The snapshot of the first-quarter days on market trend in the valley illustrates how the trend has reversed compared to the valley housing boom-era. More homes are selling after 120 days rather than within the first 30 days.
Seven years ago in the midst of the housing boom, for in stance, 807 homes sold within a month during the first quarter and 260 closed after 120 days.
During the first quarter this year, 394 homes sold within a month and 533 sold after 120 days.
“In 2008 and 2011, most sales occurred after 120 days on the market because buyers can take more time to look at more houses and sellers are lowering the prices,” said Greg Berkemer, the desert association’s executive vice president.
Often, sellers start out pricing their homes higher, hoping for the best, Realtors said. They end up lowering it little by little, which drags out the number of days on market.
Although it took a little more time to close on home purchases during the first quarter, the volume of single-family home sales jumped to 1,814 compared to 997 in the first quarter of 2008.
The level of single-family home sales has returned to 2004 levels, when 1,843 homes sold during the same timeframe, MLS statistics show.
“The housing market is improving and these numbers are another indication of that,” Berkemer said. “But the pace is less than any of us would like.”
The valley enjoyed six “boom years,” Berkemer said, and now the market is into the sixth year of the downturn.
“What the housing sector and the general economy need most right now are jobs, confidence in the future and the patience to get there,” he said.
Condo sales rebounded during the first quarter in the valley, with 600 selling compared to 429 during the same three-month period in 2008, CDAR reported.
Of the 600 condos that sold in the most recent quarter, 109 did so within 30 days. It took more than 120 days to close on 209 and the rest sold in 31-119 days.
It took an average of 115 days on market to sell a Coachella Valley condo during the first three months of 2011. That’s similar to the previous four years, but higher than in 2004, when the figure was at 71 days.
Stat can be tricky
Deriving meaning from days on market statistics can be tough, cautioned Realtor Bob Horne with Coldwell Banker Residential Brokerage.
Horne said the number of days it takes to sell a home depends largely on the condition, location and pricing of individual properties.
“Well-priced homes that are nicely upgraded and well-located will sell quickly,” said Horne, who, along with son Michael, specializes in properties at Sun City Palm Desert.
It’s also tough to compare days on market during the first quarter this year with the boom era, Horne said.
In 2004, for instance, the inventory of available homes in Sun City Palm Desert fell to 14 homes, and it’s now at 150.
“It didn’t matter what you had, there were three people ready to buy it,” he said.
Nowadays, there’s often a “disconnect” between sellers and buyers, Horne said.
“Sellers think the buyer is trying to ’steal’ something, and buyers think sellers haven’t realized prices have come down,” Horne said.
Berkemer said the average days on market statistics include short sales, which in many cases can be a process drawn out over months as the bank considers whether to accept less than is owed on the property.
Steve Patton, 48, a retired U.S. Marine from Cathedral City, has tried short-selling his house since September. The process has been a nightmare, he said.
“I have had numerous people look at the house, and I have had cash offers. The bank has turned them down,” he said. “It is a frustrating situation because people have come forward with the money, but the bank doesn’t take any action.”
Sid Kirkland, broker associate with California Lifestyle Realty, said the mindset of many valley buyers also plays into the picture, particularly at the tail end of the season as snowbirds leave.
“Buyers have the perspective, ‘If I don’t buy soon, there’s going to be plenty of inventory in the fall,’” Kirkland said.
Conversely, as seasonal sales begin to drop off, some eager sellers felt the need to drop prices even further.
High-end ’sluggish’
High-end homes often are taking longer to sell, Realtors said.
“The higher end is still sluggish, but it has been a better season this year than in the past,” Kirkland said. “The lower-value homes tend to move; you can see that in the figures.”
Investors have accounted for more recent sales, and they often scarf up bargains quickly, often at auctions and foreclosures sales.
Buyers and sellers often need to look at the bigger picture, Hoffman said. If someone cuts 10 percent off a $500,000 asking price, that’s $50,000.
If they turn around and purchase a million-dollar home slashed 10 percent, that’s $100,000, so they come out with a net gain of $50,000.
“It’s a matter of whether you’re moving back into the market and you can afford to take the loss,” Hoffman said.
The reality is many sellers who have owned their homes five years or less should be prepared to break even at best, Hoffman said.
“If the price isn’t correct, it’s going to languish, and that really doesn’t do anyone any good,” he said.
Desert Sun reporter Tamara Sone contributed to this story.
Mike Perrault covers real estate and banking for The Desert Sun. Reach him at (760) 778-4529 or mike.perrault@thedesertsun.com.
Desert’s Days on Market
Single-family homes in the Coachella Valley took longer to sell on average in the first quarter of this year compared to the same period dating back to 2004. Motivated sellers are finding success within a month, though.
2004: 60
2005: 64
2006: 84
2007: 104
2008: 103
2009: 81
2010: 91
2011: 105
Source: California Desert Association of Realtors, Multiple Listing Service
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