As the third-largest state in the US, the California housing market provides a vast amount of real estate opportunities. One of the state’s best (and perhaps most underrated) rental markets is the Palm Springs real estate market. Should you invest in Palm Springs real estate in 2020? Absolutely! Keep reading this blog post to learn why!
Palm Springs Real Estate Market: Mashvisor’s Data
The best way to analyze the Palm Springs housing market, or any real estate market for that matter, is to use its investment data. If you don’t know where to find this type of data, then worry not. We’re here to provide the investment data of the Palm Springs real estate market. This data was computed and analyzed by Mashvisor’s investment property calculator. If you’re interested in learning how our calculator works, then click here.
Here is the real estate data for the median Palm Springs investment property:
- Median Property Price: $517,443
- Price per Square Foot: $286
- Price-to-Rent Ratio: 17
- Rental Income: $2,528
- Cap Rate / Cash on Cash Return: 2.4%
- Rental Income: $3,912
- Cap Rate / Cash on Cash Return: 5.0%
- Occupancy Rate: 60%
Clearly, there is a lot to be said about the data of the Palm Springs CA real estate market. Let’s take a look at a few reasons why you should invest in this city in 2020 based on Mashvisor’s data and other real estate market trends:
Why You Should Invest in the Palm Springs Real Estate Market 2020
There are five reasons why you should be investing in the Palm Springs real estate market in 2020:
It’s no secret that investing in California real estate is ridiculously expensive. According to Mashvisor, the median property price in the state is well over $693,000. This state median is more than double the national median property price, currently set at $328,400. Investing in Palm Springs real estate, however, is relatively affordable compared to the rest of the state With a median property price of $517,443, buying a Palm Springs real estate investment is very feasible in such an expensive state market.
High Appreciation Rate
Property prices are influenced by a variety of factors, chief among them is the real estate appreciation rate. The Palm Springs real estate market benefits from a positive appreciation rate. The expected appreciation rate in 2019 is 2.04%, according to NeighborhoodScout. This rate is projected to increase to 3.6% in 2020. If you are an interested investor, we recommend you purchase soon before Palm Springs house prices begin to rise in the upcoming year.
One of the key indicators of a successful residential real estate market is a robust and growing economy. As you would expect, the Palm Springs real estate market excels in this regard. The city’s economy has shown great strength over the last year, as it increased by 2.2%, which is 0.6% higher than the US average. This trend is estimated to continue over the next ten years. During this time, the city’s job market growth is expected to increase by 38.5%.
You might have noticed that we included Mashvisor’s data on the Airbnb Palm Springs market above. This begs the question: Is Airbnb legal in Palm Springs?
Is Airbnb Legal in the Palm Springs Real Estate Market?
Fortunately, the answer is yes. Palm Springs vacation rentals can legally be used for Airbnb investing. However, there are many Airbnb regulations in Palm Springs that investors need to be aware of. The most notable ones include:
Palm Springs Airbnb rentals are classified as one of two types. Airbnb non-owner occupied rentals are considered vacation rentals. These properties can be rented out for 28 days or fewer. Owner-occupied rentals and portions of rented property are classified as homeshares. Just like non-owner occupied rentals, homeshares are rented out for 28 days or fewer.
In order to operate an Airbnb rental in the Palm Springs real estate market, investors need to follow certain requirements. Most notably, investors need a Vacation Rental/Homeshare Registration Certificate and a Transient Occupancy Tax Permit. An Airbnb Palm Springs real estate investor will also be required to have a “responsible person” over the age of 25 to perform the following duties:
- Sign a contract with the operator
- Meet and greet guests in person to explain the rules and regulations
- Obtain a signature of receipt of the Statement of Rules and Regulations/Good Neighbor Procedure
Transient Occupancy Tax
As previously mentioned, Palm Springs Airbnb laws require a host to obtain a Transient Occupancy Tax permit. The Transient Occupancy Tax is listed as 11.5%.
Finally, Airbnb Palm Springs hosts must include their four-digit City ID number when advertising the rental property. The following format is used: “The City of Palm Springs ID #XXXX”.
So the Palm Springs real estate market is successful for two main reasons: its friendly Airbnb regulations and its tourism statistics. We’ve covered the former, now it’s time to discuss the latter. Palm Springs vacation rentals benefit from the city’s tourism tremendously. Tourism is the largest industry in the city, with 1 in 4 jobs being tourism-based. Airbnb hosts welcomed over 600,000 visitors in Palm Springs vacation rentals during the last year. By all estimates, this Airbnb success will continue for the Palm Springs housing market 2020.
Warming Rental Market
As it pertains to being a buyer’s market or seller’s market, the Palm Springs real estate market has begun warming up to a seller’s market. While the market was recently neutral, its shrinking supply has shifted the equilibrium to a slight seller’s market. Therefore, real estate investors should definitely consider buying soon before Palm Springs strengthens as a seller’s market.
How Mashvisor Is Here to Help
While the Palm Springs real estate market is expected to be a top-tier market in 2020, entering the market will be slightly more challenging than before. With a shift towards a seller’s market and rising Palm Springs house prices, investors should consider searching for Palm Springs houses for sale soon. However, no investment should be made in haste. Instead, we’re here to make sure you find profitable and affordable Palm Springs properties efficiently and effectively. For more details and hands-on experience with Mashvisor’s tools, click HERE to start your 14-day FREE trial!