Investor BlogsPalm Springs Real Estate Market 2018 – Forecast and Overview by Nasser Mansur March 25, 2018February 15, 2019 by Nasser Mansur March 25, 2018February 15, 2019Is Palm Springs real estate market 2018 a good choice for investing in property?To answer this question, we need to take everything into consideration the general overview of the city and its real estate performance stats as well as its Airbnb laws and regulations.Palm Springs OverviewPalm Springs has always been known for its hot weather, which made it a very popular retirement destination away from the coldness of winter as well as a trending travel destination for younger generations looking to spend some time away from the busy life of metro cities and enjoy the Sonoran Desert region in Southern California.From the Palm Springs Aerial Tramway, through the Living Desert Zoo and Gardens, to the Palm Springs Art Museum, the major attractions in this desert city have been gaining increasing popularity among younger generations, and what was once an area known for its older retirees is now becoming a city that is pulsing with life year-round.Due to its increasing reliance on tourism, Palm Springs offers its visitors multiple attractions and activities to fill their schedule in this beautiful city. To cater for tourists, Palm Springs hosts a number of annual cultural events such as the Palm Springs International Film Festival, the Circuit White Party, and the Annual Homecoming Parade, in addition to a number of ongoing cultural events such as the Fabulous Palm Springs Follies and the weekly Palm Springs Village fest.Note: To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.Since Palm Springs does not host any major universities or colleges. However, residents of the area can enlist their children in any of the available elementary schools, while higher education options are limited to the College of the Desert in the Palm Desert area nearby.Finally, also due to its reliance on tourism, some of the major businesses in Palm Springs are in fact hotels, hospitality centers, spas, and gold courses.Related: The 4 Hottest Cities for Investing in California in 2018Palm Springs Real Estate Market 2018 StatsNow that you have a general overview of the city, it’s time to jump into the Palm Springs real estate market 2018 stats to get a better understanding of the city and how it performs in terms of real estate investing.Here are Mashvisor’s stats for the Palm Springs real estate market 2018:Median Property Price: $459,000Median Traditional Rental Income: $1,583Median Airbnb Rental Income: $4,503Average Traditional Cap Rate: 0.57%Average Airbnb Cap Rate: 5.84%Average Airbnb Occupancy Rate: 55%Here are some additional useful stats that can affect the Palm Springs real estate market 2018 performance:Crime Rate: 2% (safer than 2% of US cities)Walk Score: 35 (highest is 76 in the Downtown area)Transit Score: 26 (highest is 34 in the Tahquitz Canyon River Estates)Cost of Living Index: 112 (12% lower than California, 22% higher than the US)Buyer’s vs. Seller’s Market: The Palm Springs real estate market is generally a seller’s market.Short-Term Rentals LawsNaturally, whenever you’re assessing a real estate market, it is important to take into consideration the laws and regulations affecting short-term rentals.The key points and operational requirements for short-term rentals in Palm Springs include:You must have a City-issued Registration Certificate and Transient Occupancy Tax Permit in order to advertise or operate a vacation rental or a Homeshare in the city of Palm Springs.Vacation rentals are defined as a unit that is utilized for occupancy 28 consecutive days or less while the owner is not present.The City defines Homeshare as a bedroom(s) of a home that is offered for occupancy 28 consecutive days or less while the owner lives on-site in the home throughout the guest stay.Occupancy is limited to 2 adult guests overnight and 1 vehicle per bedroom. Additionally, for vacation rentals, the total number of guest stays are limited to 32 per the calendar year, with additional 4 guest stays during July, August, and September.In Palm Springs, it is required that a “Responsible Person” over the age of 25 sign the contract with the operator, and the operator is required to perform a personal meet and greet of guests and explain the local rules and regulations, in addition to obtaining a signature of the receipt of the Statement of Rules and Regulations aka the Good Neighbor Brochure.Note: This information was obtained from Airbnb’s website.Related: Your Real Estate Investment Guide to Airbnb Rental Properties: Where is Airbnb Legal?Palm Springs Real Estate Market 2018 – Optimal Rental StrategyConsidering the laws and regulations limiting the viability of short-term and vacation rentals as an investment, most real estate investors might think that investing in traditional rentals is the better and more profitable choice when investing in the Palm Springs real estate market 2018.This, however, is not true. In fact, looking at the numbers says otherwise. Short-term rentals in Palm Springs have some of the highest returns out of any type of investment property in the area.Although the city has certain limitations on the operation of vacation rentals, Palm Springs still manages to attract a large number of tourists throughout the year, and especially during the peak season (January-April).This allows owners of short-term rentals to make up for the short period of time that they can rent out their property by enabling them to ask for higher rents during the winter season without losing out on occupancy rates.If we base our opinion purely on numbers, the $4,470 average rental income that Airbnb rentals can generate in Palm Springs seems like a much more attractive number than the $1,681 average rental income produced by traditional rentals in that area.The profitability of vacation rentals becomes even more alluring when looking at the projected returns for short-term rentals in comparison to the returns of long-term rentals. With a cap rate of 5.81%, vacation rentals have a very high potential for profits, while the more modest 0.56% cap rate for traditional rentals might be less than optimal for most real estate investors.The reason why traditional rentals are not very popular in Palm Springs is because most permanent residents in the area are retirees who own homes, while rental properties are mostly used by tourists staying for shorter periods of time, making long-term rentals less than an optimal choice for investing in the Palm Springs real estate market 2018.Related: When is a Long-Term Rental Better than a Short Term Rental?Palm Springs Real Estate Market 2018 ForecastBased on the information above, we can conclude that Palm Springs can be a lucrative choice for investing in short-term rentals to take the most advantage of the vital tourism and winter attractions in the city.But is the time right for investing in the Palm Springs real estate market 2018?In the recent years, home prices in Palm Springs have been on the rise. In 2017, home prices in Palm Springs grew by 4% over the previous year. The Palm Springs real estate market 2018 is expected to see another increase in home prices, with an estimated growth of 4.2% this year.The rental rates in Palm Springs have also been increasing. Following the dip in 2016, rental rates have gone up again in 2017, and they are expected to continue going up in 2018, which is great for real estate investors who already own investment properties that they can rent out in Palm Springs or those who plan to buy an investment property in the coming months.Note: To sign up for Mashvisor to receive our blogs and offers, click here.Palm Springs Real Estate Market 2018 – ConclusionWhen considering investing in the Palm Springs real estate market 2018, real estate investors should not look at the city as a permanent residence but should focus on the short-term potential of the market. Since Palm Springs relies heavily on tourism, the seasonality of the Palm Springs real estate market makes it a fit pick for investing in short-term rentals.You should, of course, take into consideration the laws and regulations affecting vacation rentals and plan your investment around them. In order to make the most out of your vacation rental, focus on renting out the property during the high seasons and during popular events, such as the Circuit White Party, which attracts around 10,000 visitors in April each year.Lastly, if you’re looking to find the most lucrative and profitable short-term and vacation rentals in Palm Springs, use Mashvisor and obtain analytics related to each investment property to determine its profitability and projected returns and to invest in the most suitable real estate properties based on your investment strategy and criteria. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL Airbnb RegulationsCaliforniaLocationPalm Springs CARental Strategies 0FacebookTwitterGoogle +PinterestLinkedin Nasser MansurNasser is an experienced content writer with a degree in English Language and Literature. He loves writing about all aspects of the real estate investing business with focus on market and property analysis and the best sources which every real estate investor needs in order to succeed. Previous Post Investment Strategies: Real Estate vs. Bitcoin Next Post The Best Neighborhoods in California for Real Estate Investing Related Posts Buying a Rental Property The Basics of Real Estate Transactions: A Beginner’s Guide A Step-By-Step Guide to Real Estate Market Analysis What Can a Real Estate Investment Calculator Do? 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