Just a couple of years ago I remember opening the local newspaper and reading an article about how the average median price of a home in the Palm Springs area had SOARED to $432,500. Far out of reach of the average working family in the Palm Springs area. Just this past week I read the same newspaper and was surprised to find that housing sales were down 27% and the average median price of a single family home had PLUNGED to $425,000!
Somewhere in all of this soaring and plunging - beyond the hype of the media adjectives we find the truth of this whole situation. From 2004-2006 prices in the Desert rose 100%. So when the media reported on the rise in housing prices they were not wrong. However, now that the numbers are adjusting the drama with which the media portrays the drop seems out of proportion to me. The truth of the market is that good homes in good areas are still selling for fair prices. The difference between $432,500 and $425,000 is just not that great. We are experiencing a correction in the market. In fact most cities in the valley are in the single digits for price declines.
The reason that there are lots of homes on the market is that some people made bad decisions and bought the wrong home for the wrong reason. Many "flippers" have been caught at the tail end of the rising price cycle and are anxious to get out of what they got into. Some builders also overbuilt they were caught with excess inventory as credit restrictions tightened.
We have to look at the bigger picture and realize that prices could not have continued only to rise- who could have afforded a home when prices were rising three times as fast as incomes - on average? Banks could not continue reckless lending practices - the day of reckoning always comes when you throw caution to the wind as some of them did.
I was struck but the numbers in the two stories and think that it points out, rather clearly, the reality - rather than the hype- of the current situation we are in.
