Thursday, June 22, 2006

ALL YOU NEED IS (STEVE & GREYSHA) LOVE - PALM SPRINGS AREA REAL ESTATE

There has been a lot in the media recently debating whether there will be a "bubble burst" or "soft landing' in real estate in '06-'07. Most pundits and economists strongly predict a "soft landing," but believe that there will clearly be differences between geographic areas. The Los Angeles Business Journal on June 21, 2006 said that there is little chance of a full-blown recession like the region experienced in the 1990's. A stabilized manufacturing sector and continued growth in other sectors like professional and business services should offset drops in real estate-related employment. It went on to say "We do not predict a recession, nor do we predict a substantial decline in average nominal home prices," the report states. "There is not enough vulnerability in the usual sources of employment loss to create a recession and the historical record suggests that average home prices do not usually fall without this kind of job loss."

I will follow this posting within the week with several supporting facts and attributions and a discussion about why exotic loans nearing conversion will not affect the market significantly and/or at all in areas like the Coachella Valley. Demand for supply hasn't suddenly evaporated. You will see below that we can anticipate major infrastructure changes through the arrival of business and professional services; i.e., a continuation of the middle-upper demographic migration to the relative affordability and resort lifestyle of this desert area. Public psychology is a primary driver of the current mentality and it will be easy to imagine how any negativity will be quickly reversed. Again, I will provide much support for this thinking.

I am beginning today with a description of the extraordinary growth activity in the Coachella Valley. Several eye-popping facts were presented at the Fourth Annual Real Estate Investors Forum. The consensus amongst the experts is that the Coachella Valley continues to grow at a robust pace despite some downturns elsewhere.

Population And Growth Trends:

February through April 2006: Appreciation in home prices was alive and well even as home sales fell. Median prices rose 11% compared to 17% a year ago, but certainly acceptable.

Currently 400,000 permanent residents, swelling to over 150,000 more during the winter months. 40-50 people move tho the Coachella Valley each day (10,000-12,000 per year).

1,100,000 permanent residents projected by 2060

Palm Springs International Airport served over 1,400,000 passengers in 2005.

Tremendous residential appreciation in land values over the last 3 years: 108% in Coachella (now the fastest growing city in the Valley); 158% in Indio; 163% in La Quinta.

There are 72,465 new units proposed to commence building in 2005 in the Valley with 111 active new tracks comprising over 16,000 units. 8099 of these new units have already been sold as of the forum date.

HIGHLIGHTS ACROSS THE VALLEY:

Palm Springs:
Commercial: Hard Rock Hotel will begin construction; Downtown Mall being totally renovated
Industrial: Near saturation
Residential: Lots in Las Palmas area going for over $1,000,000

Cathedral City:
More builders developing on Indian lease land due to scarcity of fee simple.

Desert Hot Springs:
14,000 homes in pipeline - 2 major golf course projects

Rancho Mirage:
1. Agua Caliente Casino working on master plan (18 months to completion)with addition of a major hotel, retail shops, restaurants and 18-hole championship golf course.
2. Eagle-Sunrise Company just purchased 640 acres of prime land (across from the Annenberg Estate).

Palm Desert:
1. Third municipal golf course going in at Frank Sinatra-Gerald Ford-Cook-Portola)surrounded by office space, retail and residential.
2. University Village - affordable housing for students, with condos, single family, retail, commercial, restaurants.
3. University of California Campus continuing expansion of its Palm Desert campus.

Indian Wells:
1. S.E corner of Hwy 111 and Cook Street - 142 single family detached residential homes starting at $1,000,000.
2. Miles Crossing - Fairmont Hotel, retail, restaurants
3. Indian Wells Tennis Stadium area: Remington Suites Hotel and Condos (500 units), restaurants, retail.

La Quinta:
Exploding! City annexing land for Santa Rosa Development comprising 8000 acres going east from Monroe to Harrison (Avenues 52nd to 62nd).

Indio:
North of I-10 on fire! From Sun City Palm Desert all the way to Fantasy Springs Casino, many new developments with parks and green areas for residents' enjoyment.

Coachella:
1. Highway 86 East - 10 major master planned communities with 30,000 new homes with green areas like Indio.
2. Hwy 86 "comes of age" 14 years ahead of schedule, exceeding traffic expectations, with proposed interchanges off Hwy 86 at Avenues 50, 52 and 56.

Thermal/Mecca:
1. Avenue 62 - New S. Valley Expressway connecting Hwy 86 to Monroe Street to La Quinta.
2. New College of the Desert East campus (Spring 2007)on 100 acres between Avenues 60 and 62nd, est of Buchanan.
3. Mecca - next new master planned city in Coachella Valley
4. Oasis - next new high-end area being built as 3000 acre ranch/resort and 9000 units.

Salton Sea:
Today's best kept secret. $30-40,000improved lots. Homes selling for $200-300,000: 2-5 bedrooms. Affordable and first time buyers.

RETAIL HIGHLIGHTS:

Palm Desert: Nordstrom's in 2009.
1. El Paseo continues to attract shops and restaurants to its Rodeo Drive image.
2. Bristol Farms coming in fall of '06.
3. Walmart, Sam's Club opening near Home Depot and Costco
4. University Village at I-10 with Walgreens and Stater Bros.

Rancho Mirage:
1. Unannounced big names coming to Monterey Commons (near Home Depot)
2. New Bing Crosby restaurant under construction near popular Hwy 111 site at The River
3. Hwy 111 Plaza coming across from The River

La Quinta:
1. Hwy 111 corridor (Washinton to Jefferson) on fire! Additional locations for Costco, Sam's Club, Best Buy, Kohls.

Indio:
1. I-10 north of Freeway: Walmart, Lowes, Home Depot
2. Jackson Street and 42nd Avenue: first Target Super Center in California

Thermal:
Airport master plan in place for next 15-20 years. All agricultural goods utilize facility. $9,000,000 in improvements with 87 new hangars built. All are full!

I am looking forward to collaborating with you in targeting your clients who could be interested in second homes and investments in the Palm Springs area (the entire Coachella Valley). We will simply work out a registry and referral agreement. Feel free to forward and/or excert this blog to your clients and/or use it in your own marketing pieces. I am available for any comments or questions.

Regards,

Stephen C. Love
Windermere Real Estate Coachella Valley
Office: 760-340-9253
(Direct/Mobile: 760-668-4460)

Saturday, June 17, 2006

Useful Coachella Valley Statistics & Factoids

This blog is designed to fast become the primary destination for all things real estate in the Coachella Valley - Palm Springs to Indio (and surrounding areas). It's intended to be relayed far and wide to your friends, family and colleagues. Anyone who is interested in improving lifestyle and investment potential will find this blog indispensable. You are welcome to also contribute your ideas and comments about local real estate and our resort lifestyle as this area continues its exponential growth. I am an expert Realtor associated with the Palm Desert office of Windermere Real Estate Coachella Valley (Phone:760-340-9253, ask to be transfered to my mobile phone for quick response). Please visit my website at www.stephenclove.mywindermere.com. I'd be pleased to hear from you for all your real estate needs.

Here are some interesting facts:

Even amid rising prices and slowing appreciation rates, experts at a recent forum proclaimed the Coachella Valley housing market in excellent shape, thanks largely to projected explosive growth and rising demand for houses and land in the years ahead.

The annual forum was presented by the California Desert Association of Realtors, with several corporate sponsors, including The Desert Sun.

The ramifications of a healthy residential market are sweeping for buyers, sellers, renters and investors alike, not to mention the tens of thousands of homeowners in this corner of Southern California who aren't interested in selling, largely because they've seen their equity grow in this era of soaring home-appreciation rates.

What's behind the rosy forecast for the local housing scene? In one word: growth. Citing state figures, Beth Allan-Bentley, marketing research manager for The Desert Sun, said the valley's population is booming. It has grown 59 percent in the past 15 years, to its current 395,700. That growth rate tops those for Riverside County, California and the nation.

The state estimates the local population will pass 600,000 by 2020 and 1.1 million by 2066 - although Bentley noted that based on current growth patterns, the latter estimate may be too conservative.

A big supporting factor for the valley housing market is that many buyers continue to flock here from places where prices are much higher than the local median of $375,000.

The primary force keeping actual building behind the pace of building permits issued is a shortage of qualified construction workers and supervisors, she added.

The valley in-migration has not only boosted home-building, but now sets the stage for an increase in commercial building, particularly in the east valley.

At least one-quarter of all available valley land will be conserved over the 75-year span of the multi-species plan, Havert said.

Patrick Veling, president of Brea-based research firm Real Data Strategies, estimated that the valley housing market should see appreciation of 10 percent to 15 percent in the coming year. That's down from the 30 percent and higher figures seen in 2004 and early 2005, but still higher than returns seen with most other equity vehicles such as stocks, he said.

California Association of Realtors economist Leslie Appleton-Young recently projected valley appreciation between 10 percent and 18 percent.

Veling told his audience that despite his own bullish forecast, real estate agents need to be sure their selling clients have realistic expectations of what their homes will fetch. Currently, sellers are having to lower their asking prices as unsold resale inventory has risen to more than twice year-ago levels. That has occurred even as sales prices overall have not dropped significantly, and on average are still appreciating at around 20 percent from a year ago in most valley communities - led by gains in new-construction homes.

Veling said the valley has a number of bubble-proofing factors in its favor, including continued demand for local homes among retirees, the fact that most owners sell their homes because they want to - not because they have to - and an overall supply of homes that continues to lag demand.

Generally, Veling said the local housing market is not in danger of bursting a bubble as long as there is no natural disaster that affects the area, no drastic drop in job creation and no major jump in mortgage rates, among other factors.

Regional experts say the Coachella Valley is not in immediate danger of seeing a sharp downturn in the local residential real estate scene - known in economic circles as a housing bubble - mainly because local population growth remains relatively high compared to other areas. In turn, that is driving the demand for valley land and houses. Aging baby boomers who are selling homes in other parts of California and the country and investing their equity in the desert are contributing to the vibrant housing scene, experts say.

According to Pat Veling, an analyst with Brea-based research firm Real Data Strategies, these things would have to happen before the valley reached bubble-popping territory:

# Rapidly falling demand

# Job losses

# Unaffordable high mortgage interest rates

# Large numbers of motivated sellers

# Leveraged builders with too much product

# Psychological factors, including buyer fears and a rise in sellers who think the market has peaked

For now, the valley has these factors warding off a bubble-bursting:

# Rising demand amid population growth

# Demand for homes among retirees

# Buyers selling homes in more expensive areas and investing proceeds here

# Owners selling because they want to, not because they have to

Source: Real Data Strategies, Inc
Here's a summary of points made by speakers at Tuesday's annual State of Real Estate in the Coachella Valley forum:

"Current plans create a good degree of certainty that 27 at-risk species are protected in the coming 75 years, while still allowing for long-term development outside conservation zones. At least one-quarter of all available valley land will be conserved."

*Bill Havert *
Executive director, Coachella Valley Mountains Conservancy

"Noted that more than 60 percent of the 9,300 new housing permits issued in 2004 were in the east valley. An estimated 75,750 new valley households over the next 15 years, will bring the need for new schools, retail outlets and other services."

*Beth Allan-Bentley *
Market research manager, The Desert Sun

"Indio and La Quinta remain hot growth areas, and an area off Highway 86 in southeastern Coachella is just on fire with proposed commercial projects. Developers are addressing aesthetic concerns by boosting parks and green-space areas linking their projects."

*Susan Harvey *
Desert Pacific Properties

"The valley should see housing appreciation from 10 (percent) to 15 percent in 2006. But current sellers will need to lower asking prices due to a growing unsold resale inventory. No housing bubble is imminent as long as job growth remains strong, no natural disaster occurs and interest rates don't spike too sharply."

*Patrick Veling *
President, Real Data Strategies Inc

*Facts about the Coachella Valley's Growth *

# In the past 15 years, the valley's population has grown 59 percent, outpacing Riverside County (52 percent), Los Angeles (12 percent), California (21 percent) and the U.S. (18 percent).

# Between 2005 and 2020, a projected 212,100 permanent residents will move to the valley.

# The valley's population is expected to double in the next 25 years to about 800,000. By 2066, it should surpass 1.1 million.

# As of January 2005, more than 395,700 people were living on the developed 83,000 acres of land in the valley.
# That's a density of 3,051 people per developed square mile - up 13 percent from 2,710 in 2004. By comparison, Los Angeles had a density of 7,872 as of 2000.
# Over 60% of the 9300 new housing permits issued in 2004 were in the east valley (La Quinta, Indian Wells, Coachella).
# Valleywide, 96 projects will add a total of 17, 019 new homes once completed.
# New home sales are expected to exceed last year's levels by 19%.

# The valley has about 183,000 acres of land that could be developed. That's more than twice the space that's already been developed.
# Between 2005 and 2020, 212,100 permanent residents will move to the valley. That's 75,750 new households equaling 5050 new homes built yearly for the next fifteen years to meet this need. Additional schools and retail outlets will also need to be built. Many national "big box" retailers, including Walmart, Sam's Club, Best Buy, Home Depot, Costco, Petco, Staples and Lowes are already present, often in multiple locations throughout the valley.

*Sources: *California Department of Finance, Southern California Association of Governments, Coachella Valley Multiple Species Habitat Conservation Plan, California Desert Association of Realtors "State of Coachella Valley Real Estate 2005" presentation, November 16, 2005.