Desert's luxury home market shows pent-up demand in 2007 sales

The Coachella Valley's luxury home market priced at $1.5 million and higher is poised for a strong showing in 2007, primarily because buyers who sat on the sidelines since 2005 wary to buy are making lifestyle choices to purchase then-Baby Boomer dream house.

That's why long time luxury home Realtors like Joan Rothermund, of Rothermund and Rudman of Prudential California Realty and a member of the Desert Estates Network, are already seeing closed escrows on trophy properties in 2007. "We just sold a home at $3.1 million at Bella Clancy (the new Tuscany-inspired enclave at Rancho Mirage) and we have homes at $3.6 million and $3.19 million in escrow," Rothermund said.

"What we are seeing is people who are making lifestyle choices about buying the second home in the desert they have been putting off," she said. "Buyers, who sat on the sidelines in 2005 and 2006, concerned that the market may bottom out, are now instead going out to buy for lifestyle reasons. There is so much pent up demand."

According to the Multiple Listing Service operated by the California Desert Association of Realtors, there were 319 homes over $1.5 million that sold in 2006, up over 285 in 2005. The median price of a luxury home sold in 2006 was $2 million, up from $1.9 million in 2005.

"The luxury home market is doing well in the Coachella Valley because there is no recession, the stock market is doing well and personal income has not declined," said Greg Berkemer, executive vice president of the California Desert Association of Realtors. "We don't have any of the negative factors we had a few years ago when the housing market had bottomed out." Berkemer noted that the sale of luxury homes in the Valley has pushed up the median price of a home. "That's just a mathematical anomaly of our market," he said. "But that's not to say that the guy who has a median priced home is getting the price lie might want because prices are backing off somewhat."

A key advantage for the desert luxury home market is that the Coachella Valley's selling season is winter and early spring when the weather is postcard perfect, compared to the snow and cold of most parts of the nation. "As our season kicks in now, I hope more people will see clearly that can buy a home here in stead of leasing," Berkemer added.

Developer Mario Gonzales, a well-respected builder/owner of GHA Companies is also optimistic about the market price threshold of $1.5 million and greater to be a much more active market in 2007 than homes listed for half that price or less.

"We have seen an increase in the quality of buyers since the beginning of the latter part of the fourth quarter of 2006. The multimillion dollar and trophy home buyer market continues to be in demand in spite of the hysteria of a housing bubble," Gonzales said. "This type of buyer is not affected by interest rates but is most interested in a lifestyle and understands the value of real estate, location and most importantly, quality."

Gonzales' company has reported over six sold units in at its most recent Rancho Mirage community, Escala, with an average price of $1.6 million.

Other Realtors, members of the Desert Estate Network, which specializes in million dollar plus properties like Janine Stevens of Dyson & Dyson Real Estate Associates, Louise Hampton of Prudential California Realty and Sandi Phillips, of California Lifestyle Realty Team, say 2007 could be the "lucky" year for selling trophy estate properties. "The market is now a buyer's market so I am finding homes on the market longer and I am advising my sellers to make sure thenhomes are pristine and looking their best I or most exposure to prospective buyers to compete in this market," Philips said.

"We are seeing the Baby Boomers (buyers), wanting a second home to enjoy the sunshine and golf and for what will ultimately be their retirement home. We're starting to see more buyers from the harsh weather states like Oregon and Washington."

Hampton pointed out that the days of investor-buyers rushing in to buy a luxury home and flip it in a sale a few months later to make thousands of dollars in profit "are over."

"I'm seeing buyers all over the board, especially in Palm Springs," she said, "including retired couples, Baby Boomers looking for a second home; gay couples."