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Sun City Palm Desert

  

Sun City Palm Desert experienced a remarkable 1st quarter in home sales. The number of escrows closed in the first quarter of 2010 was slightly more than double the number in the first quarter of 2009. This is an extraordinary number but one must remember that in the first quarter of 2009 followed the market crash of the prior fall and we were still in the midst of a global financial crisis that seemed indefinable at the time.  This does not mean the numbers are misleading. In fact, to find a first quarter with sales volume better than this year?s we need to look all the back to 2006. 

            Like the 1st quarter, the 2nd quarter of 2010 out-performed all previous 2nd quarters going back to 2006. Compared to 2009, 2010 showed a more modest but respectable improvement of 10%. In total, 139 homes sold in the first half of 2010.

            So all this additional sales volume has translated into higher sale prices, right?  Unfortunately the answer is ?not really?. We have seen a partial stabilization in prices.  A case can easily be made that it is the lower prices combined with lower mortgage rates, great currency exchange rates from a Canadian perspective and the high risk or weak returns of other investment devices that are driving the market. The same factors that have been pressuring prices lower for a couple of years now are still in play.  When compared to the same quarter in 2006 prices in 2010 are down an average of  23% and 24% in the 1st and 2nd quarters respectively.

            It seems that for every piece of good news, there is a corresponding piece of bad news. For example: The total number of homes available is at one of the lowest levels it?s been in years. However, the percentage of homes for sale that are distressed is hovering at or just below 10%. Distressed properties by their nature will keep downward pressure on prices.

            Well upgraded homes in good locations are tending to hold priced better than those with the opposite qualities. Buyers are simply willing to spend more when they get more. Granite and tile flooring are still very desirable but we would not recommend a homeowner make these upgrades prior to putting their house on the market. 

            Finally, we are asked often by Sun City homeowners if it is a requirement that a home have a weep screed for it to be sold. A home is not required to have a weep screed in order for it to be sold, however a weep screed does make a home more desirable. Additionally, because of the lawsuit it must be disclosed when a home does not have a weep screed.

 

Sun City Shadow Hills

 

Sun City Shadow Hills experienced a remarkable 1st quarter in home sales. The number of escrows closed in the first quarter of 2010 was slightly triple the number in the first quarter of 2009. This is an extraordinary number but one must remember that the first quarter of 2009 followed the market crash of the prior fall and we were still in the midst of a global financial crisis that seemed indefinable at the time.  This does not mean the numbers are misleading. Nor is this solely a product of the community?s growth over the years.  In fact, to find any quarter with sales volume greater than 40 homes we need to look back to Q3 2006. 

 

            Like the 1st quarter, the 2nd quarter of 2010 out-performed all previous 2nd quarters. Compared to 2009, 2010 showed a more modest but respectable improvement of 5%. In total, 90 homes sold in the first half of 2010. 

            So all this additional sales volume has translated into higher sale prices, right?  Unfortunately the answer is ?not really?. We have seen a partial stabilization in prices.  A case can easily be made that it is the lower prices combined with lower mortgage rates, great currency exchange rates from a Canadian perspective and the high risk or weak returns of other investment devices that are driving the market. The same factors that have been pressuring prices lower for a couple of years are still in play.  When compared to the same quarter in 2006, average prices in 2010 are down 32% and 30% in the 1st and 2nd quarters respectively.

            Unfortunately, it seems that for every piece of good news, there is a corresponding piece of bad news. While sales volume is strong, distressed properties (foreclosures and shortsales) continue to take their effect on values. The percentage of homes for sale that are distressed is hovering at 7%. More ominous, the percentage of first quarter homes sold that were distressed was 19%. 

            Distressed properties sell for lower prices than traditional sales. First, the seller is now selling an asset and not a home. In the case of a foreclosure there could be serious deferred maintenance making the home lose value.  Short sales have earned a reputation for being long and troublesome to complete and need lower prices to attract potential buyers. Looking at homes not on the golf course, the average price per square foot for homes sold in the first half of the year that were not distressed was $163; for distressed properties the price was $126 (23% less).  There was only one distressed sale on the golf course but it tells the whole story.  This San Rafael sold for $385,000. Two other San Rafaels also sold on the golf course at prices of $445,000 and $475,000.  The effect that this one distressed sale can have on comps and appraisals can be devastating to those looking to refinance or sell at higher prices to buyers getting loans. 

            As homes in Shadow Hills were delivered similarly upgraded by Pulte, it is the homes location and the upgrades added by the owner that make a home more marketable.  Homes with pools, as you would expect, sold for more on average than homes without pools.  Homes with and without pools spend on average the same number of days on market and sold at a volume in line with the number available on the market.

 

Rental Update

 

            The rental market in Sun City remains strong. We had a 100% success rate with our listings consisting of over 62 leases in a 9 month period. New rental listings have been coming from investors who are buying properties to be used as either long term or vacation rentals and current homeowners who would like to sell but would like to wait a while in hopes that the market will rebound some in the not to distant future.  To seasonal and long term renters, Sun City remains very attractive.  Unlike country clubs in the desert, renters in Sun City get full use of the facilities and clubs allowing them to enjoy the lifestyle that home owners enjoy.