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Bitcoin Basics in 2021

Bitcoin Basics in 2021

Bitcoin Basics for Real Estate Agents in 2021 ( + Expert Predictions)

At Sheri Dettman & Associates, we have always prided ourselves on being ahead of the curve. Bitcoin, and blockchain, although they have been around for a few years, are still something that is not yet widely understood in the Real Estate world. This article makes it easy to understand! We look forward to using blockchain tech and being your go-to agents with, as always, the latest, and best technology along with the best personal service.

February 4, 2021/Courtesy of Emile L'Eplattenier

One of the most common questions we get from real estate agents these days is when, or even if, bitcoin will finally make its way into real estate transactions.

Of course, if agents are asking us that, it means their buyers and sellers are probably asking them. So it’s only a matter of time before understanding how this technology works will be necessary for any agent who doesn’t want to get left in the dust of yet another disruptive technology for real estate.

The only problem is that bitcoin is—and there’s no other way to say it—confusing. Don’t worry, though. Even people who are so-called experts in the field can have a hard time explaining it.

That’s why we put together this quick explainer on bitcoin for real estate agents and also talked to a few agents and brokers who have already taken the leap to get their take on how they think bitcoin will transform the real estate industry in 2021 and beyond.

Can My Buyers Purchase a Home With Bitcoin Yet?

Coding

Kind of. However, almost all real estate transactions using bitcoin have used a service called BitPay to convert bitcoin to U.S. dollars (USD) to transfer funds to the seller.

As far as “bitcoin-to-bitcoin” transactions go, where title changes hands and the bitcoin is never converted into USD—they still remain very rare. The sticking point is generally title companies and lawyers, both of whom are still somewhat reluctant to use the digital currency.

Douglas Elliman’s Stephan Burke and Carol Cassis sold the first property using bitcoin wallets in 2017, as well as a $6 million transaction after that, the largest fully bitcoin translation to date. Since then, they have closed more than $34 million in volume using cryptocurrency converted to cash.

However, while it has been slow going here, where bitcoin and blockchain show the most promise is for overseas transactions.

Over at the always-excellent Mansion Global, EminGun Sirer, associate professor of computer science and co-director of the Initiative for Cryptocurrencies and Smart Contracts at Cornell University, weighed in on why cryptocurrencies are ideal for foreign buyers:

EminGun Sirer Initiative for Cryptocurrencies and Smart Contracts

“Cryptocurrencies enable the quick, frictionless transfer of value across the globe. This enables someone in Russia to be able to easily send bitcoins to purchase land in Belize.”

Should I Advise My Sellers to Accept Bitcoin?

In today’s market, bitcoin may not be ready for prime time, but there is one thing that is undeniable. Offering your listing for sale in bitcoin will get you instant free press. Remember the first listings that had drone videos? Imagine that times 10. Here’s Seattle Realtor, Sam Debord:

Sam Debord Seattle Realtor“I’ll sell my house for bitcoin” is the latest marketing tactic, and it’s working … at least for publicity.”

In order to accept bitcoin, you can either have the seller transfer into USD, work with a title company that will accept bitcoin, or have a lawyer write up a contract that covers all risks from bitcoin. At this point, most people will avoid actually paying in bitcoin, but the free press might be a good trade-off.

Can My Buyers Get a Loan With Bitcoin?

Yes. Startups like Unchained Capital allow people who hold bitcoin to borrow up to $1 million with no credit check and interest rates between 10% and 14%. However, these are not long-term loans; Unchained offers loan lengths ranging from three months to three years.

While not for everyone, hardcore bitcoin owners use services like this to get quick liquidity without cashing in their bitcoin portfolios. Think down payments, or maybe even bridge loans.

There Must Be a Catch … Is There Capital Gains Tax for Transferring Bitcoin to USD?

Yes. As of January 1, 2018, the federal government considers cryptocurrency as property and anyone selling (or trading bitcoin for U.S. dollars) will be hit with capital gains tax on the amount their bitcoins appreciated since they purchased or mined them.

Are Bitcoin & Blockchain the Same Thing?

No. While bitcoin is a digital currency that you can exchange for goods and services, blockchain is the underlying technology that stores bitcoin or other cryptocurrency transactions in a digital ledger.

Bitcoin

Okay, Then What Is Bitcoin Exactly?

Bitcoin is a fully digital currency created in 2009 by an anonymous person who goes by the name Satoshi Nakamoto online.

Like any other currency, bitcoin can be used to pay for goods and services, transfer funds, or as an investment. Currently, over 15,000 vendors accept bitcoin, from Microsoft to small businesses.

The main difference between bitcoin and say, an ACH transfer through a traditional bank is that there is no middleman in the transaction. The entire transaction from buyer to seller takes place on the Bitcoin network. Since a bitcoin transaction bypasses the different bank policies, or different regional banking laws that are part of any other transaction, transfers are much faster.

Since there is no bank or government to get in the way, bitcoin can be a great way to transfer money or make purchases overseas. Foreign buyers may find bitcoin’s speed and simplicity ideal for buying property in the United States.

Bitcoin is an example of a fiat currency; its value is not backed up by gold or other tangible assets. Instead, bitcoin relies on something called blockchain to verify transactions.

Got It. So What’s Blockchain?

Although blockchain is very complex, the best way to describe it to your clients is to compare it to ACH, the technology that lets you “wire” money from one bank to another. The main difference is that blockchain does not rely on banks to verify transactions have been completed. Instead, once a transaction is completed, it is stored in an encrypted digital ledger that is distributed among everyone on the blockchain.

This means that instead of relying on trusted institutions like banks to verify transactions, the verification is done very quickly by algorithms that check the stored transaction data on the millions of users on the blockchain.

What makes blockchain so powerful is that the ledger is stored on every single computer (node) in the system. This makes faking a transaction virtually impossible. Since the blockchain is extremely secure, it has many applications beyond verifying and storing bitcoin transactions. Everything from contracts to voting records can theoretically be stored on blockchain.

Which Technology Will Have a Bigger Impact in the Real Estate Market, Bitcoin or Blockchain?

According to most experts, blockchain will have a bigger impact on real estate than bitcoin or other cryptocurrencies. Here’s why: Transaction speed is not a very pressing problem for real estate transactions, but record-keeping and middlemen are. Here’s Jason Shepherd, co-founder of Atlas Real Estate Group, on why he thinks blockchain technology, particularly smart contracts and other applications built on Ethereum, an alternative to bitcoin, will change the real estate market:

Jason Shepherd Atlas Real Estate Group

“It is important to separate the cryptocurrency from the underlying blockchain technology when discussing real estate disruption. The disruption in real estate will come from the blockchain technology (distributed ledger) and smart contracts like those found on the Ethereum platform.”

So What Are Smart Contracts?

Smart contracts are contracts between two parties that are verified and stored on the blockchain. Today, most smart contracts are built with the blockchain protocol behind Ethereum, another cryptocurrency.

The main benefit behind smart contracts is that there is no need for a middleman in the transaction. Everything is verified and stored on the blockchain.

In the future, blockchain can be used to store records of a transaction all the way from a blockchain-enabled MLS, to escrow, inspections, title, and sales contracts. Leases and other commercial real estate contracts could also be on the blockchain.

While smart contracts haven’t yet hit the mainstream for real estate, startups like Propy and Ubiquity.io are changing that.

To learn more about smart contracts, check out this excellent guide over on Block Geeks.

What Is This ‘Mining’ for Bitcoins I Keep Hearing About?

Man Mining

OK, from here on in, the process gets a bit more technical, and therefore much harder to explain. While it’s unlikely your buyers or sellers will grill you about this, having a basic understanding can help.

Remember how we talked about how transactions on the blockchain are verified by other users? Well, bitcoin mining is the process that verifies transactions and adds them to the public ledger.

Bitcoin “miners” are rewarded with bitcoin for using their computer’s processing power to verify transactions. Before you get too excited and start mining bitcoin out of your broker’s office, understand that in most places, the payment for mining bitcoin will probably be less than the electricity costs to run computers long enough to verify transactions.

What Advantages Do Other Cryptocurrencies like Ethereum, Litecoin & Ripple Have Over Bitcoin?

OK, now we’re getting a little too far into the weeds. Worse, the crypto industry changes so fast that by the time you read this, something will have inevitably changed. If you’re feeling brave, check out this cool infographic from Visual Capitalist:

Infographic Bitcoin Ethereum Comparison

How 10 Real Estate Experts Think Bitcoin Will Disrupt the Industry

So now that you have a basic understanding of bitcoin, here’s how 10 real estate industry experts see bitcoin transforming the real estate market in the coming years.

1. Jason Penner, Douglas Elliman, New York City

Jason Penner Douglas Elliman

“A brief way that I explain bitcoin is, it’s as if technology and finance had a baby. Humans survived for hundreds of thousands of years (if not longer) without money. Money is a relatively new concept to humans, and to think that the current financial system is the peak evolution of money and the storage of value is nothing short of naive. Bitcoin and cryptocurrencies represent that next step in the evolution of storing and exchanging value.”

2. Jim Merrion, Coldwell Banker Realty, Colorado

Jim Merrion Coldwell Banker Realty

“The real estate industry’s appetite for using bitcoin to purchase real estate seems to be coming back in a big way in 2021! Being a Realtor who has helped a buyer purchase developable land using bitcoin converted to cash and marketed several listings willing to accept bitcoin as payment, bitcoin investors are finding me online and reaching out with plans to purchase property using these funds in 2021.

 

“Currently, I have one bitcoin investor looking to buy a 35+ acre ranch property and have spoken to several others over the past few months about how the process could successfully work for them.

 

“And Smart Contracts are starting to be seriously considered by at least one title company in Colorado now. With their inherent security and ability to prevent wire fraud, there is a lot of motivation by the transaction processing entities to find new technology solutions that reduce their risk and enhance the efficiency of the closing process.”

3. Tristan Ahumada, Realtor, Speaker & Co-founder of LabCoatAgents

Tristan Ahumada LabCoatAgents

“So far, most of the bitcoin transactions in the real estate world have had only one party dealing in cryptocurrency and the other one doing it the traditional way. The deal can still take place, but the cryptocurrency has to be turned into cash. I do envision cryptocurrency catching on more, but our society has to start using the bitcoin/blockchain technology more. I do see it becoming normalized—it’s just a matter of people getting used to it. It is just as easy as people using credit cards and Apple pay.

“For now, there are companies like BitPay and some other international banks that allow people to convert their bitcoin into cash.”

4. Jason Shepherd, Co-founder of Atlas Real Estate Group

Jason Shepherd Atlas Real Estate Group

“The disruption in real estate will come from the blockchain technology (distributed ledger) and smart contracts like those found on the Ethereum platform. The escrow process will be replaced by a smart contract, using code as the intermediary to distribute earnest money. Imagine a real estate transaction where all of our inspection and due diligence information can be found in one public ledger on the blockchain—ownership, encumbrances, repair receipts, improvements, liens—all viewable and indisputable on the distributed ledger.

 

“This transparency reduces the need for title insurance and truncates the purchase timeline for a home from 30 days to a few days. Title and escrow will be the first layer of disruption, but increasing transparency will allow the public to access more information and be less reliant on real estate brokers. This won’t replace brokers, but it will warrant a repricing for what brokers can charge their clients.”

5. John Gilbert, Co-founder/Director Prime-EX

John Gilbert Prime EX

“The acceptance of cryptocurrencies into mainstream investment portfolios equals more buyers this year for major ticket items, such as houses. Many purchases are coming from people who have never purchased real estate before. This equals more sales for real estate agents who are willing to learn about cryptocurrencies, more sales for real estate agents who are willing to market to people who are invested in cryptocurrencies, and more sales for real estate agents who are willing to specialize in educating their home sellers on how to accept cryptocurrencies as payment in kind for their real estate.

 

“The cryptocurrency genie will not be put back into the bottle.”

6. Avani Desai, CEO & Co-founder of MyCryptoAlert

Avani Desai MyCryptoAlert

“Crypto will allow a homebuyer to gather funds quickly, sometimes in less than 60 seconds, and into the hands of the seller, instantaneously. All of this is done on the blockchain, so the transaction is recorded in an open distributed ledger using encryption techniques that ensure that a transaction was complete and accurate and can never be retroactively changed. I believe what brokers and agents are going to see aside from transactions being done with crypto are technology platforms that are built on the blockchain. Therefore, understanding the two most known and built on blockchains that are out there—the bitcoin blockchain and the Ethereum blockchain—is crucial. Agents will see everything from smart contracts executed, to title storage, to international money exchanges.”

7. Alan Lewis, Chief Investment Officer at DiversyFund

Alan Lewis DiversyFund

“We are already seeing real estate sellers finding creative ways to accept crypto from a buyer in order to expand the pool of potential purchasers. As a real estate investment platform, our online customers have prompted us to look into accepting crypto and also launch an Initial Coin Offering (ICO) that is backed by real estate assets, which creates a perfect marriage of old and new asset classes.”

8. Sheryl Lowe, Broker Associate, Kuper Sotheby’s International Realty

Sheryl Lowe Kuper Sotheby's International Realty

“In all of my 33 years of closing transactions, I honestly couldn’t have expected something so unique to go so smoothly. In a matter of 10 minutes, the bitcoin was changed to U.S. dollars and the deal was done!

 

“Of course, it helped to have the right team behind this—Laura Pagnozzi of Independence Title was a key player in keeping everything together.”

9. Hyun Lee, Communications & Marketing Director, Mothership Foundation

Hyun Lee Mothership Foundation

“With Ethereum, there are companies that wish to build smart contracts around existing services, including real estate. This allows for a fully digital real estate transaction. In fact, the first real estate transaction using only the Ethereum blockchain already happened. Michael Arrington, co-founder of TechCrunch, recently purchased a Kiev studio apartment for $60,000 via smart contracts on the Ethereum blockchain.

 

“In this case, the smart contract allowed the sale of the property. If this template was to be copied and applied to all future sales, I would imagine real estate agents would need to pick up on using smart contracts.”

10. Dr. Lucas Lu, Founder/CEO, 5miles

Dr. Lucas Lu 5miles

“Fractional ownership. The high cost of home ownership in more and more markets has priced out many potential homebuyers, leaving them on the sidelines.

 

“Just as USD can be bought and sold in fractions, in a similar way the number of whole bitcoins (BTCs), for example, has a limit and can be used fractionally. This means that cryptocurrency holders can see the value of their currency rise, but also can pool their crypto resources with owners to purchase properties collectively, as investments.”

Bottom Line

No matter how much you fight it, bitcoin and the blockchain technology it runs on will revolutionize the real estate industry. Since your buyers and sellers will be curious about the potential of bitcoin for their transactions, agents need to have a basic understanding of how this technology works. This will not only allow them to represent their clients better, but also help attract and retain tech-savvy buyers and sellers, and create a buzz with marketing.

About Emile L'Eplattenier

As Managing Editor for The Close, Emile is responsible for the editorial direction of the site’s real estate content as well as curating actionable insights from top producing agents and brokerages from across the country. A licensed New York City Real Estate Agent and veteran of the marketing department at Tishman Speyer, Emile has been involved in every aspect of residential real estate from branding new developments to pre-war rentals and resales. Emile also regularly provides market insights and commentary for publications like The New York Times, Realtor.com, Apartment Therapy, Fox News, Yahoo, and US News & World Report. When he’s not writing or editing, Emile enjoys collecting vintage furniture and playing his guitar.

Palm Springs Area Real Estate Market Update

Coachella Valley home prices, sales, and inventory show a healthy real estate market in a time of the COVID-19 pandemic.

Courtesy of Palm Springs Life: STEVEN BILLER MAY 12, 2020 CURRENT DIGITALHOME & DESIGNREAL ESTATE

Photo courtesy of Desert Willow Golf Resort

Home prices and inventory appear stable in the Coachella Valley, and indicators — such as leads, showings, and offers — suggest the COVID-19 pandemic is having little effect on the local real estate market, experts said Tuesday during an industry webinar.

“Ladies and gentlemen, we are not in a real estate crisis,” Brady Sandahl of Keller Williams told the audience of real estate agents and brokers during the Market Watch Spring Webinar, a Palm Springs Life event. “We are in a challenging market. We’ve been in a high tide for the last 10 years, and now there’s a health crisis, an unemployment crisis, and an economic crisis.”

But in the Coachella Valley, Michael McDonald of Market Watch beamed, “Inventory remains contained. There’s no rush to sell or put homes on the market.” On March 1, there were 3,019 available units on the market in the valley. On May 1, there were 2,924. “Inventory is not increasing, yet,” he explained. “If it doesn’t rise, it’s a good sign.”

Likewise, the price per square foot appears stable — $244 a year ago and $238 on May 1. The slight dip coincided with the issuing of California’s stay-at-home order in March.

“Prices will likely stay right where they’re at,” said McDonald, who analyzes sales and price data for single-family homes and condominiums in the market. He also predicted that real estate would be among the first industries to recover nationwide because it requires no risky proximity like, say, a restaurant or a movie theater.

Walter Neil of Franklin Loan Center emphasized the need for real estate professionals to discourage forbearance, which went into effect March 18 and allows borrowers to temporarily stop making payments on government-backed loans without risk of foreclosure.

Someone who’s motivated to sell will likely get the asking price in or around the unchanged average length of time on the market. But a seller hell-bent on fetching a premium price might need to be more patient.

Borrowers will not only make good on those missed payments — often in one lump sum — but their credit score will take a hit, as well. “This should be a last resort,” Neil intoned. “Only people who lost a job and have no resources should consider forbearance.”

Otherwise, Neil was as optimistic as Sandahl and McDonald. “I refer to the three-legged stool of recover,” he said. “One leg is monetary policy — the Federal Reserve keeping unemployment low (because unemployment puts pressure on the real estate markets; people need to pay their mortgages) and putting money into the market, which they’ve done with unlimited quantitative easing. The second leg is fiscal policy, which Congress did with the CARES Act. The third leg is COVID-19 containment.”

Neil points to the record-low interest rate, 3.125 percent, as a reason to get into the market, while Sandahl encouraged agents and brokers to listen to their clients. Ask questions. Understand motivations.

“It comes down to whether a home is priced to sit or sell,” Sandahl says. Someone who’s motivated to sell will likely get the asking price in or around the unchanged average length of time on the market. But a seller hell-bent on fetching a premium price might need to be more patient.

Webinar sponsors included Toscana Country Club, Andalusia Country Club, Franklin Loan Center,  Palm Springs Regional Association of Realtors, and the California Desert Association of Realtors.

The fall Market Watch webinar is scheduled for November. For more information on Market Watch, click HERE.

Home Buying and Selling during Coronavirus OCVID-19 – Update in the Palm Springs Area

Dear Clients,

I wanted to reach out and make sure you know my team and I are here for you in this historical time.
To our families with children whose schools have shut down, to our senior citizens, to our heroes at the hospitals, the grocery stores, and our first responders, to our local businesses struggling and to anyone impacted by this pandemic, our hearts go out to you.

For the last 13 years, I have been in real estate right here in the Palm Springs area. My team and I have been in many of your homes, we've seen your families grow, and we feel very much a part of this community. We want to extend an offer to help our community in these times of need. If you or anyone you know need anything, we are fortunate enough to know people who may be able to help with a grocery store trip, watching children, or even getting bills paid.

Again, if you need anything do not hesitate to reach out, it does not need to be about real estate. Many members of this community have reached out this last week. If you are concerned about the real estate market, I have listed some questions I am getting regularly:

How do I sell my home at this time?

Homes are still selling. Our Federal Reserve just dropped their interest rate to near zero to keep the money moving for people buying homes. It’s quite unprecedented.

How do I meet with you and still practice social distancing?

If you are in town, we can speak on the phone instead of meeting. A good percentage of our homes are listed and sold, without us ever meeting our sellers in person because they are not in town to begin with. For our buyers, we can take video if needed, and most of the homes these days have a virtual tour for you to get a better idea of the home. If we've already met with you and know what you like and dislike, we can eliminate homes that we know are not going to check your boxes.

What if I don’t want to show my house to strangers right now?

We may be able to sell it without showings. If we do need to show your home, we’ll provide sanitizer and anything else the CDC recommends for lowering everyone's risk of infection. Safety is our #1 priority for you.

Are housing prices dropping – should we wait to buy or sell? 

Some of the top Google searches now in real estate are “home prices dropping” and “home prices falling”. That’s not the case currently. We still have a housing shortage and need inventory. We'll keep you updated on this.

As we work together a community to slow down this epidemic, the market is still active and we’re here to guide you and make fact-based decisions. We have your back. We're here to help if you need anything!  Let us know and please take care!

SilverRock Development Update

SilverRock Resort in La Quinta

Owned by the City of La Quinta and Managed by Landmark Golf Management, SilverRock Resort's Arnold Palmer Classic Course is a challenging 7,239 yards sprawling over 200 acres with massive native bunkers and stunning water features. Set against the backdrop and natural beauty of the Santa Rosa Mountains, SilverRock is a former home course of the PGA Tour’s Bob Hope Classic from 2008-2011.

Development Overview

The City, in conjunction with SilverRock Development Company, LLC, has created a development program for SilverRock Resort. The program includes a luxury hotel with branded luxury residential, a lifestyle hotel with branded lifestyle residential, a conference and shared services facility, a mixed-use village, resort residential village, renovation of the existing Ahmanson Ranch House, construction of a permanent golf clubhouse, and associated road and utility infrastructure.  This $420 million dollar project specifically encompasses:

  • A 140-room, 5-star quality luxury hotel and spa and a 200-room, 4-star quality lifestyle hotel;

  • A 71,000 square foot conference center and shared services facility shared by the luxury and lifestyle hotels;

  • A resort village with 150,000 square feet of resort residential units and up to 40,000 square feet of retail space with recreation areas;

  • 35 luxury and 60 lifestyle branded residential homes that are associated with their respective hotels;

  • 160 resort style homes for private ownership with the option for owners to offer as short-term rentals;

  • Renovation of the Ahmanson Ranch House facility as a public event center and to serve as an amenity to the resort; and

  • 5,000 square feet of temperature controlled space with large outdoor patios and event lawn.

To keep up to date visit:
http://www.laquintaca.gov/our-city/city-departments/facilities/silverrock-golf/silverrock-frequently-asked-questions


New Hotel Complex in Development for Indian Wells

A new hotel development that marries homes, condos and conventional hotel rooms is planned for Indian Wells.

Developers announced a proposal to build roughly 300 units – in the form of multi-bedroom villas as well as hotel rooms – in a project aimed at attracting multi-generational travelers who are looking for the space and privacy offered by a short-term rental with the careful standards seen in hotels.

The project, located near the Indian Wells Tennis Garden, is also planning the development of 60 to 80 condos, which can be managed by the hotel as vacation rentals.

“When we look at the way people are traveling, when we look at the evolution of the travel space, when we look at the rise of multi-generational travel, we think we’re on the cusp of another change in hospitality,” Phil Bates, a partner with TMC Group, a real estate development firm from Irvine, told residents in Indian Wells on Tuesday.

RELATED HOTEL DEVELOPMENT COVERAGE: Montage breaks ground on luxury resort in La Quinta

An architect's rendering of a new development planned for the corner of Highway 111 and Miles Avenue in Indian Wells. The project would build roughly 300 hotel rooms, along with condos and villas. (Photo: Submitted photo: TMC Group)

TMC Group officials, along with representatives from Fogelson Group, a Chicago-based real estate development firm, held a community meeting Tuesday at the Indian Wells Golf Resort to unveil the plans for the development proposed for the corner of Highway 111 and Miles Avenue near the Indian Wells Tennis Garden. The project would occupy about 10 acres.

The development team anticipates construction beginning early next year, with completion in 2019 or 2020.

The hotel building with its 300 rooms could be up to 85 feet tall, and is proposed for the back of the site away from Highway 111. Its height was of a concern to some of the roughly 100 residents attending the forum Tuesday.

HISTORY: First airport in Palm Springs was built for El Mirador Hotel guests

“I have a problem with 85 feet,” remarked Andy Elchuck, who lives nearby.

When asked about views of Eisenhower Mountain and other areas, Bates said, “some will be compromised.”

Development plans for the site go back more than a decade when the Fogelson Group proposed building 129 residences and villas. The Fogelson Group is headed by Jerry Fogelson, well-known for his local philanthropy and generous contributions to the Palm Springs Art Museum. He also serves on the board for the Desert Town Hall speaker series.

The property's future was put into question again in 2014 when Phoenix developer Denny Ryerson was unable to finalize an agreement with YAM Capital that would have provided the money he needed to buy out Fogelson and meet critical deadlines connected to his proposed condo development in Indian Wells.

READ MORE: Jerry Fogelson's Indian Wells project faded over decade

The project announcement comes as officials in La Quinta broke ground Monday at SilverRock, marking the start of development on a luxury resort that brings the Montage brand to the Coachella Valley. The project includes two luxury hotels which are scheduled to open simultaneously in October 2019.

Skip Descant is The Desert Sun’s tourism reporter. He can be reached at edescantjr@palmspri.gannett.com and @TDSskip

Existing Homes Sales Continue Sales Growth

The Financial news website CNBC reported this week that resales of homes in the U.S. rose to the highest level in nearly 8-1/2 years. On an annual basis, existing home sales increased 3.2% to the highest level since 2007.

These numbers seem to indicate that the U.S. economy is looking pretty good despite a drop in retail sales, and a slowdown in job growth during June.

Remember, Palm Springs Real Estate Is Local

This national real estate data is interesting and important, but as I always say, real estate is local, right down to the Palm Springs area golf & country club neighborhoods. For desert area homebuyers here’s what’s important right now:

  • The Price Segment
  • The Location
  • Finance
  • Community Or Property Back Stories

Golf Course Luxury Home At Andalusia, La Quinta

Price Segment

Every price segment in the Palm Springs area real estate market can be different. The sales comps for $400,000 condos in the desert have little significance on the buyer or seller of a $1 million country club property. And frankly, similar homes in different developments can often be worlds apart in sales trends.

Locations

A home or luxury condo in golf community “A” could be trending up in sales and value. By comparison, a similar property in another golf community just down the road can be trending in the opposite direction. We see this almost daily, and this makes real estate here in the desert local.

Finance

Cash is always king for buyers. The second best thing is having your finance ducks in a row before you discover you place in the sun here in the desert. Get pre-approved (not pre-qualified) by a local mortgage provider. Lot’s of mortgage providers including big national banks can make promises they can’t keep. Local specialists know the market and generally won’t deliver unwelcome surprises just days before closing.

Back Stories

Most every property, including our own Featured Properties, and certainly every development in the Palm Springs real estate market will have what I call a backstory. Backstories can include the owners reason for selling (lots of moving up this year), and information about adjacent listings and recent sales.

Top agents network with other top agents to research backstories. Knowing today’s sales comps is great, but it’s important to discover the real estate backstory for every home and community as well.

Backstories are much more unique to a large portion of the Palm Springs real estate market than most metro areas because this market has a so many niche developments. The Palm Springs area has a high concentration of master-planed, gated communities. Two of these communities in the same price range, and within the same city can have two entirely different backstories (and different sales and pricing trends) even though they are just blocks apart.

Busy & Experienced Is Also Important

 

At the end of the day, the most experienced, busiest, and thus, most successful Realtors likely know the comps and backstories that can best help their buyer clients find their home in the desert sun. Our Sheri Dettman & Associates team of specialists completes 10 times more transactions than the average Palm Springs area real estate.

Vacation Home Sales Up 57% Over Previous Year

Palm Springs Area Second Home Sales Update

Sales of second homes or vacation homes rose 57% in the U.S. last year compared to 2013 according to The National Association of Realtors (NAR). During 2014, 1.3 million vacation homes were sold which is a new record.

And according to this NAR survey, vacation homes accounted for 27% of all real estate transactions last year. The survey also found that 85% of vacation homebuyers think that now is a good time to invest in real estate.

These trends appear to parallel what we are experiencing here in the Palm Springs real estate market. 2014 was a record year for Sheri Dettman & Associates, and so far 2015 is tracking well ahead of last year.

Several Reasons Second Home Sales Are Strong

Palmilla Luxury Homes in La Quinta

Baby boomers remain a driving force behind second home sales. Many boomers have enjoyed a six-year market rally, and some of these boomers are now taking some of those gains out of the market and investing in second homes.

Related Articles: Information For Buyers

Many of our current boomer clients also tell us that as they move closer to retirement they are investing in second homes that they’ll later make their primary residence.

Desert Buyers Taking Advantage Of Today's Low Interest Rates

In past years, we saw a mix of about 50/50 cash versus loan purchases. This year however we’re seeing more buyers taking advantage of today's low-interest rates and conserving cash. That said, many mortgage experts expect interest rates to start rising sooner rather than later.

Canadian Buyers Coming Back Into The Palm Springs Market

As the Canadian Dollar retreated against the U.S. dollar last year, we experienced a pullback in second home purchases by Canadians. U.S. homebuyers, especially from within the State of California stepped up in large numbers to keep our market growing.

Now however we’re starting to see a lot of Canadian buyers jumping back into the Palm Springs area market, and in all price segments from affordable to luxury. We have also seen quite a few Canadians with existing Palm Springs area homes trading up this year.

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