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Does anyone know how the condo market made out during the current downturn of real estate sales and values?
I like the area but found real estate to be very expensive there. Thanks, Don
Very good question and I am not old and off and on like heat (love the desert heat in small increments sometimes much larger), however i like it enough I will be doing the research for a possible pied-a-terre there after the holidays. So if no one answers now, hopefully in about a month I may have some idea of how the market is starting to shake out. Sorry I can't help now though (holidays call). I will be looking in the La Quinta area mostly, though. There are on occasion real estate agents from the Palms Springs area that do contribute here so it might be good to hear their POV or other real estate agents that can point you to some good resources. Hopefully others that live there will have some comments as well. (I realize this was JUST moved from the LA thread so more should show up to give their input soon.) Welcome to city-data!!
Moderator cut: post you are referring to has been removed
Last edited by da jammer; 12-19-2007 at 05:31 AM..
Starting in the late 90's and going into say 2003-2004, there was a tremendous and quite ridiculous run up in housing prices in Palm Springs and the surrounding cities. The last two years have seen the market stagnate but little downward movement in prices. There is now some softening of those prices. But there are those that think it's still the high point of the market and won't reduce what they are asking under any circumstances.
There was an incredible amount of building that has taken place over the last few years. And inexplicably it continues, due I think in large part to greed of developers and cities looking for quick sources of tax dollars, rather then actual demand. With this glut of inventory it can only mean a good thing for buyers and bad things for sellers wishing to cash in big. With that being said however, I personally believe that real estate in the desert is still greatly overpriced.
Of course, real estate pricing is a very subjective thing. What seems like highway robbery to me might be the bargain of the century to you. I remember what many properties that I looked at sold for. Now I see many of them on the market and laugh at the asking price. They were hardly worth what was paid for them back when the market was tight, and I can't see how current conditions make them even more valuable now.
My one caution to you, or anyone else considering jumping into the Palm Springs real estate market, be it a house or condo, is to avoid like the plague anything that sits on Indian lease land. Yes, these properties are sometimes cheaper but only from the standpoint of what you pay for it. Stick to land that you will actually own and you will be way ahead of the game.
For those looking to purchase a condo, be sure you get ahold of the financial records of the homeowners association, in particular the reserve study. There are some upcoming changes to the law that will require sellers to disclose to potential buyers the actual percentage of funding of the HOA's reserve. In my experience, most HOA's are woefully underfunded. And what that will mean to you is either very high homeowner dues, or hefty special assessments everytime something needs to be fixed in your complex.
If you are serious about looking for property in the Palm Springs or surrounding area, probably the best source would be to go to desertareamls.com. It will give you access to everything that is currently for sale and is very easy to use.
Thanks Goodbye California. Very interesting and informative read and also appreciate the cautions regarding the HOAs etc (I would never purchase land not owned outright. However I have been surprised to see this Indian lease land in specific country club community areas where one would not expect them). So very good of you to bring it up and also as a reminder for me--don't go there. .
I have seen an been inside many of these new homes in golf communities in the last 3 years and honestly am surprised to still see many of them going up. This can not presently be good for developers, but as you said may be in the best interest of people like me here soon enough if the market continues to soften and stay that way. Still not seeing the drops I would like though, but there is more available for my price range then there was a couple of years ago. I can't wait to fish out the comps etc and stats for the area sales for 2007 come January. Thanks for your post. I will certainly do my research regarding the HOAs more so then I was planning on.
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Last edited by da jammer; 12-19-2007 at 05:32 AM..
I am not sure that most people understand or are aware of the Indian land lease situation in Palm Springs. And many realtors don't go out of their way to educate potential buyers about it either. Palm Springs sits on the Agua Caliente Indian Reservation. There is even a sign that indicates that as you drive down Highway 111 into town.
To understand how the land is divided up between fee land and Indian lease land, just imagine a checkerboard. If memory serves, each plot of land is made up of 1 mile x 1 mile x 1 mile x 1 mile squares. The squares then alternate between fee land and lease land. The leaseholders are all members of the Agua Caliente tribe. Each parcel of land is either owned by an individual tribe member or several tribe members.
You have to remember that much of the initial development of Palm Springs took place during the 1950's and 1960's. In many cases, it made sense to early property developers to build on lease land because it cost them, in a sense, nothing for the land. When the leases were signed, they covered a period of between 30 to 50 years before they would need to be renegotiated. Many of these leases are now nearing expiration.
In some instances, most particularly with condo complexes, tribe members have offered to sell the land to the homeowners association. Some HOA's bought out the lease, while others felt it cheaper to keep paying rent. Those that chose not to go for the buyout are now kicking themselves because many are in the difficult spot of trying to renegotiate their leases. And with the rapid increase in property value over the last few years, the Indians are seeking and getting new lease terms far more favorable to them, as opposed to the original leases.
At this time, I know of only one complex that has been offered the option of buying the land. Other complexes have asked to purchase but the leaseholders have declined. I am also aware of another complex whose lease expired about 2 years ago and the HOA and the tribe member have yet to reach an agreement on new terms. By rights, the leaseholder could take possession of the entire complex and do whatever they want with it, and there is little that the individual condo "owners" could do about it.
Sorry to be so long winded about this subject, but I hate to see anyone possibly get taken advantage of because they do not fully understand the pitfalls of lease land. And while there are some good realtors in the Palm Springs area, there are just as many that are more interested in making a buck then protecting their client.
And don't even get me started on HOA's....
Last edited by GoodbyeCalifornia; 12-19-2007 at 02:39 AM..
More to your point of price drops, etc. In some ways the market of the last 6 years reminds me of the market of the early 1980's. There was a period of large scale development that lasted until roughly 1988-1989. Many people bought condos as investments or as retirement homes. By 1990, the real estate market took a major nosedive and for nearly 10 years, you couldn't give property away in Palm Springs. It wasn't until 1999-2000 that people "discovered" the bargains that could be had in the desert and the boom was on. Now, like before, the boom has pretty much gone bust.
People need to realize that the desert real estate market is unique. Because the area is geared primarily to vacationers or retirees, the pool of buyers is restricted. Add in other factors such as weather, and you further cut down that pool. In essence, unless a person has an overpowering need or desire to live in Palm Springs, most will look elsewhere to cheaper and more desirable locations for their purchases. What this means is that people wishing to sell property in the desert will see it languish on the market for months on end, unless they drastically cut their prices.
So in my less then expert opinion, unless you really want or have to buy property in Palm Springs now, wait it out a bit more. You should monitor the market closely, but I personally believe that deeper price cuts will take place throughout 2008. As the market generally slows during the summer months, start looking then. My guess is that late 2008 into early 2009 will be good for bargain condo shopping in the desert.
But again, that's just my opinion and nothing more.
For those looking to purchase a condo, be sure you get ahold of the financial records of the homeowners association, in particular the reserve study. There are some upcoming changes to the law that will require sellers to disclose to potential buyers the actual percentage of funding of the HOA's reserve. In my experience, most HOA's are woefully underfunded. And what that will mean to you is either very high homeowner dues, or hefty special assessments everytime something needs to be fixed in your complex.
As usual GoodbyeCalifornia thank you so much for all of the information and overall sharing of your thoughts regarding Palm Spring's and surrounding areas' real estate!
Four questions. When will the above law, you mentioned, changes take place and how can one access the HOA reserve studies? Is the Indian lease land often seen too in La Quinta? Any recommendation of where I can research the specific secure communities from an insiders perspective or maybe some thoughts in going about researching this? There is some general marketing literature on the web, but I have not come across any sort of reviews etc. Maybe they do not exist. I just wanted something outside the normal ask the local realtors as I know some places have worked out kickbacks so I am always a bit leary when there could be a vested interest otherwise. If you don't have the answers that is cool too. You have been more than helpful :-).
Thanks for the edits da jammer!
Last edited by fairweathergolfer; 12-19-2007 at 03:32 PM..
it really depends on what area you are refering to. the real estate market (in general) in suburban ares has had a dip in prices. there are many great deals out there, you just have to find them. in this market, there are numerous things to look/ask for before entering into a purchase and sale agreement. Moderator cut: soliciting and or advertising not allowed per site TOS
Last edited by da jammer; 12-20-2007 at 05:56 AM..
My apologies for the delay in answering your questions. First off, to clarify, the reserve disclosure I referenced is current law. There is a law that will take effect on January 1, 2009 that will require HOA's to disclose what specific plan they have to bring the reserve up to appropriate funding levels.
Unfortunately, HOA financial documents such as reserve studies and budgets are not public records. The only way you will be able to obtain that type of information is when you enter into a purchase agreement with a seller. I have checked and the specific summary that discloses the actual percentage of reserve funding is listed among the documents that a seller must provide a buyer during escrow.
As to lease land in La Quinta, I did a random search of the MLS and could not find any condo properties that showed up as being on lease land. Of course, I didn't do an exhaustive search so I wouldn't want to say definitively that there is no lease land in La Quinta. However, my understanding has always been that lease land is most highly concentrated in Palm Springs itself, and then scattered here and there in the other cities as you head east toward La Quinta.
Lastly, I do not know of any site that you can go to that would give you the sort of insider's perspective on specific complexes that you are seeking. My only suggestion would be to do a standard online search of each community and see if anything shows up. Beyond that I'm not sure what else you can do.
My only other advice to you would be that if you do buy into a community with an HOA, do whatever you can to attend the monthly association meetings. And believe me, they don't always make it easy for you to do so. Many HOA Boards schedule the meetings at odd times in the day for a very specific reason; they don't want homeowners to show up and question what they are doing.
Also, pick up a copy of a book entitled "The Condominium Blue Book". It contains the entire Davis-Stirling Act and the other statutes that govern how common interest developments (condo communities) can be operated, plus lots of other information. The book is updated yearly to keep it current with any changes in the law. Go to an association meeting, start quoting Davis-Stirling, and you will see a very nervous Board and an unhappy management company representative.
Hope that this information helps you and anyone else that has an interest in condos in the desert. If I can answer anyone elses questions, feel free to post them here or private message me.
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Excellent Overall Input
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