Springs Home: In 2024 a Home went for $1.3 million listed Buy

Springs home: In 2023 a home went for $1.3 million listed Buy

• In 2023, a Palm Springs home went for $1.3 million after being listed for no days. In 2021, it had sold for $611,000 before. How could that be true?

Springs home

• California’s Palm Springs.
• The swimming pool is a brilliant blue in the pictures.
• As it happened, the house viewing didn’t get much better: someone had stolen the pool equipment, which is becoming an increasingly frequent crime in this area.
• The water had actually turned green due to algae.
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• In 2023, a Palm Springs home went for $1.3 million after being listed for no days.
• In 2021, it had sold for $611,000 before.
• How could that be true?
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Springs home

1. The sound of a jetliner roaring overhead signaled the end of our viewing of this once-upon-a-time million-dollar home.
2. We looked up at the airplane, then we looked at each other.
3. The realtor exhibiting the residence was nothing but forthright. He declared, “We’re under the flight path.”
   According to property records, this modest home at 2190 North Deborah Road in Palm Springs’ Desert Park Estates neighborhood was purchased for $611,000 in July 2021 and later sold to a Sacramento-based limited-liability property investment company for $1.3 million in February 2023.
4. How many days are on the market? None.
5. This represents a 113% price increase in a market that had significantly decelerated from the frenzy of the pandemic. Less than a year later, this mother of all house flips ended up as a bank-owned short sale.

Springs home

• At present, the listing price is $625,000. How could a story like this exist?
  Although it is not in one of the greatest neighborhoods, the 1,242-square-foot, three-bedroom house is situated on a quarter of an acre in one of the most sought-after cities in the Coachella Valley of California.
• Furthermore, based on the prices of homes in the neighborhood, the house, even with its new kitchen, bathrooms, and swimming pool, is not worth more than the $611,000 that was paid for it in 2021.
• “I had a buyer prior to our listing.”
  When the property was sold in April 2023, William Green, an out-of-town real estate agent based in San Diego who specializes in selling properties in Palm Springs, represented both the buyer and the seller.

Springs home

1. He told MarketWatch, “I had a buyer before we listed, so we didn’t even need to put it on the open market.”
2. Green stated that this is typical.
3. He said, “That’s how buyers get an edge.”
4. “They make contact with all of the town’s realtors. There are numerous off-market deals available.
5. To allow consumers to view the prices at which homes are selling, the majority of dealers do not list them on the multiple listing service, or MLS.
6. It keeps both sellers and buyers informed.
7. In this market, where regulations on short-term rentals and consistently high interest rates have dampened the property market, especially for homes in the price range where buyers normally require a mortgage, local real estate agents claim that buyers don’t need an advantage.
8. In the same Desert Park Estates neighborhood, Green was also listed as the buyer’s and seller’s agent for a different home, 2002 North Whitewater Club Drive, which sold for $1.4 million in March 2023.
9. It’s essentially the same story: in March 2022, the seller paid $750,000 for the property and installed new kitchen, bathroom, and pool.
10. The buyer also defaulted on this property; ironically, it was the same limited-liability company that paid $1.3 million for the house at 2190 North Deborah Road.
11. In January 2024, it was later offloaded at a brief sale for $635,000.
    According to Green, investment companies encounter difficulties when they acquire numerous properties simultaneously.
12. The appraisers on both of these properties were local and chosen at random by the buyer’s lender, he said, adding that he could not recall their names.
13. Just so you know, sales in this neighborhood are still typically between $1.2 and $1.5 million.
14. Desert Park Estates has an average price of $771,955 according to Zillow.
    A city in Southern California known for its mid-century architecture serves as the setting for this cautionary tale, at least for the bank that gave the money.
15. Arriving at Palm Springs Airport is a statue of Sonny Bono, the singer, actor, and politician who served as this city’s mayor in the late 1980s and early 1990s.
16. The glamorous neighborhood was enhanced by the homes that many famous people from Hollywood’s golden era, including Liberace, Frank Sinatra, Lucille Ball, Bing Crosby, and many others, owned.
17. The Coachella Valley is a varied collection of communities, ranging in price from Cathedral City and Desert Hot Springs to La Quinta and Rancho Mirage, which are generally perceived as locations offering opulent, gated communities for wealthy retirees.
18. If you’re a bank lending money to an out-of-town buyer or an out-of-town buyer who isn’t familiar with the neighborhoods, it may seem like a mid-century fantasyland.
19. Upon closer examination, this North Deborah Road property’s promise quickly begins to unravel, even at a $625,000 sale price and a 52% discount from the 2023 price.
20. The dusty remains of a recent, small renovation are all that remain of the furnishings in this desert haven, a spectral reminder of vanished hopes.
21. Is this listing a warning that home prices are being driven insane by 7% interest rates and ongoing uncertainty regarding the sometimes perplexing post-pandemic economy? Or is it, as one analyst dubbed it, a “Airbnb bust” brought on by Palm Springs’ crackdown on short-term rentals and an indication that prices are starting to “free fall” here? Or is there a different reason?
    Two years later, a property that was bought for $611,000 in 2021 could be sold for $1.3 million.
22. According to Green, the buyer had knowledge of the city’s restrictions on short-term rental permits and had decided not to list the property on Airbnb.
23. He stated, “They intended to convert it into a sober-living residence.”
24. They are becoming more and more numerous. Although it’s not a common investing strategy, I’m seeing more of it.
25. During the pandemic, Palm Springs’ real estate values skyrocketed, just 100 miles east of Los Angeles. Zillow Z estimates that prices increased 62% between January 2020 and January 2024 as homeowners sold their properties to retirees and remote workers eager to leave densely populated cities.
26. Coachella Valley broker Stephen Burchard told me that early 2022 was crazy.
27. It brought to mind the San Francisco Bay Area in the heyday of dot-coms. During the COVID rush, property values skyrocketed, reaching up to 60% over list price.
28. Popular with snowbirds, this area offers golf, sunshine, palm trees, and a slower pace of life.
29. Before COVID, there was an eastward migration, according to Burchard.
30. “COVID just amplified that.
31. ” Before the Federal Reserve began raising interest rates in late 2022, early 2023, and late 2021, the demand for real estate tripled.
32. Another broker in the Coachella Valley, Madelaine LaVoie, remembered the pandemic years as an odd period as well. “Some buyers were signing for $600,000 if you had a $500,000 house.”
33. It was a flurry,” she remarked.
34. However, the good times weren’t to last forever: Prices declined by about 25% after reaching their peak in April 2022, according to her.
35. The Palm Springs real estate market was in a slump by April 2023.
36. At that point, the North Deborah Road home sold for 113% more than it had in 2021.
37. Several questions unrelated to the pandemic boom are raised by the sharp rise and fall in the home’s listing price over a three-year period: What transpired less than a year after purchase that led to the buyer, a limited liability company established in January 2023, abruptly defaulting on their loan and forcing a short-sale listing at a deeply discounted price? (The business was not reachable for comment.)
    Or is this a really low price? Prior to the ostensibly senseless 113% price increase, the house was originally listed at a price near its 2021.
38. Even though the current listing describes the house as a “perfect” Palm Springs retreat and says, “Enjoy a stunning backyard with [a] brand new pool and spa surrounded by beautiful landscaping,” the house in March 2024 cannot be mistaken for a $1.3 million property.
39. That’s standard language, suitable for any modest tract home or one of the opulent mid-century mansions in Old Las Palmas’s upscale neighborhood.
40. But the majority of the land surrounding this house is made up of weeds, gravel, or crushed stone also referred to as “desert gold,” and a few small trees and cacti.
41. The messy appearance might suggest that the realtor thinks the price—rather than the extras—will make this house a success.
42. Since the lender of the current mortgage on the property is permitting it to be sold for less than the amount owed, it is, after all, a bank-owned short sale.
43. There will be a $10,000 processing fee for each buyer.
    Don’t spend $1.3 million in this community.
44. When Palm Springs passed Ordinance 75 in November 2022, it placed a cap on permits for short-term rentals. In these neighborhoods, no more than 20% of residences are available for short-term rentals.
45. Although there has been some volatility in the housing market in this region, prices have essentially leveled off.
46. Palm Springs’ median Zillow price decreased by just 1.5% between January 2023 and January 2024.
47. In contrast, according to the National Association of Realtors, prices in this area actually increased by 4% during that time.
48. The North Deborah Road property was sold to an investor in 2021 for $611,000 by Palm Springs real estate agent Alex Dethier, who said he thought that was a fair price for the neighborhood.
49. How would he respond to the 2023 recipient of the $1.3 million payment?
    “I would tell them not to pay $1.3 million in this neighborhood if they were my clients,” he remarked.
50. Potential investors who are considering operating a short-term rental property in this area of town should be aware that there are currently almost twice as many permits issued in this area as permitted by the 20% cap.
51. All purchasers have easy access to this crucial piece of information: On the City of Palm Springs website, there is a clear warning to potential buyers about Ordinance 75 in large, bold, red type.
52. Through online maps, it even offers a thorough analysis of how permit allowances are distributed among neighborhoods.
53. Make your own research.
    Burchard claimed that the dearth of inventory in Palm Springs is a persistent national issue that irritates buyers. This is encouraging some buyers to move further north into neighborhoods that some consider to be less desirable.
54. However, every buyer ought to check the recent sales prices of other homes on the same street.
    Local realtors claim that the circumstances surrounding the property on North Deborah Road are not consistent with what is generally true in Palm Springs.
55. For average-priced homes, where the majority of buyers need a mortgage, prices have decreased or stabilized, but a 113% increase during this more subdued market is extremely unusual and undoubtedly an outlier when compared to the rest of the market.
56. According to Burchard, “the cost of luxury real estate has continued to rise, especially for cash buyers who are not constrained by interest rates.
57. ” Prices haven’t plummeted. This crash has been anticipated by all.
58. That will not take place.
59. He added that seniors in California have incentives to upgrade, pointing out that those over 55 are eligible to transfer their property taxes three times.
60. “A lot of people who are over 55 don’t know anything about this,” he said.
61. The Palm Springs area has a variety of distinct neighborhoods, each with pros and cons of their own, as evidenced by the situation surrounding North Deborah Road.
62. “It’s not the Movie Colony,” remarked a local.
63. According to the California Desert Association of Realtors, the general trend in prices is continuing above the 5.5% annual trend line that has been observed for the previous 20 years.
64. Painting an optimistic picture is obviously in the group’s best interest, but current trends seem to point toward a stabilization of prices. According to Zillow, all prices will be flat in 2024.
65. That data doesn’t explain the startling fluctuations in prices on North Deborah Road.
66. The $1.3 million question for purchasers is: How can you, or your bank, prevent a similar real estate catastrophe? The response is to conduct your own due diligence whether you are a buyer or a financial institution.
67. Make sure there are no unpleasant surprises by doing a thorough investigation of the property and the neighborhood.