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)
Thursday, June 22, 2006
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