Desert Investor Quarterly
Your source for High Desert multifamily real estate trends
Brought to you by Wiest Realty, Inc. (DRE: 01183800)
Where are we in the current real estate cycle?
Our experience here at Wiest Realty, Inc. (CA DRE 01183800) has taught us that many “investors” have little or no understanding of real estate cycles. We can’t count how many times investors have asked us:-
“when will the next recession start?” Most of us are concerned about the bottom line which is price movement. When will prices drop (or when to sell) and when will price increase (when to buy). Median price trends don’t necessarily correspond with recession cycles. It’s just as important to know what’s happening as well as why it’s happening.
We don’t expect major median price declines until supply starts pushing the 4.5 to 5 month mark. September 2025 California unsold inventory was only 3.6 months (down from 3.9 months in August). The California August 2025 year over year median price increased 1.8% to $883,640. This is in spite of a very low Q2, 2025 traditional affordability index of 15% and September 30-year rates in the low 6% area.
However, there some red flags as follows:-
“when will the next recession start?” Most of us are concerned about the bottom line which is price movement. When will prices drop (or when to sell) and when will price increase (when to buy). Median price trends don’t necessarily correspond with recession cycles. It’s just as important to know what’s happening as well as why it’s happening.
- 1. Median single family home year-over year price momentum fell below the 0% line back in May and remained below the 0% level through July. August & September showed a slight improvement with 1 year-over-year increases of 1.2 and 1.8%, respectively.
- 2. Supply momentum (on a year-over-year basis) had been increasing through August on a year-over-year basis between 22% (August 2025) and 46%+- (May 2025). September figures show 0% year-over-year supply increase.
- 3. Traditional affordability for Q2 2025 stood at 15% That means only 15% of California households can afford to buy the median priced home with 20% down using a 30-year fixed rate loan. If you read our charts, you’ll know that under normal circumstances an affordability rate of 15% means price declines are normally likely. We believe the only factor keeping median prices as high as they are is due to relatively low supply. At this point, however, and in spite of low supply, we are already seeing either median price momentum flattening or degrading even with supply under 4 months.
- 4. Consumer Sentiment is falling. Although this is considered a leading indicator, by itself, its forecasting reliability is less than perfect. However, it is a factor to weight in your decisions.
- 5. California unemployment is the 2nd highest in the nation (5.5% as of August 2025). Only Washington DC at 6% has a higher rate. Unemployment is considered a lagging indicator; meaning something bad has already happened that is causing the unemployment rate to rise.
People seem to be over-joyed at the recent Fed Funds rate decrease. However, the rate on the 30-year fixed loan started decreasing about 1 to 2 weeks prior to the last Fed rate decision. In fact, 30-year rates ticked up a pick in the last week of October.
The 30-year fixed rate loan is more a function of inflation; not the Fed Funds rate. Even the 10-year treasury is a better indicator as 30-year mortgage rates tent to fall 2% to 3%+- above the ten-year treasury rate.
Momentum data indicates that year-over-year median prices crossed the zero line in May 2025. This is generally considered a sell signal. Downward year-over-year momentum was sustained through July 2025. General median price drops between August and February have been common since 2011, so the small upticks in August and September 2025 median prices were a bit of a surprise. Check out momentum charts on our web site. So far, the general data we have for the state suggest the wealth building stage is over for now.
If you’re thinking of selling, it looks like you’ve missed the peak in our market area. However, the good news is, media prices are still high in spite of price momentum bouncing around the 0% line. Low supply is keeping prices high in spite of low affordability and high interest rates.
If you’re thinking of holding off on selling – remember it took 16+- years (adjusted for inflation) for the 2022 median price peak to equal the 2008 price peak. Do you want to wait that long to sell?
Don’t try to arbitrarily time the market with preset dates or time frames. Look for economic events before making your decisions.
We’re here to help. Feel free to call us for our take on the important economic events that we use for our own investment decisions. Check out our “Leading Indicators” page (and drop downs and “buy-sell” indicators) for information and our observations on key indicators. Or, fill out the “Contact Us” page with your questions or suggestions.
We decided to develop this website as your real estate EKG. We believe any prediction of a recession (or more importantly, median price declines) should be based on events; not on an arbitrary guess at a time frame. Each market is different and should be analyzed separately.
The intent of this site is to provide you with timely information regarding macro/California trends as well as local High Desert trends. Basing your real estate decisions on hard data is preferable to pulling the trigger based on gut feelings.
What are your objectives?
This website is designed for the small or first-time real estate investor. As such, we find that many investors don’t have clear objectives. They simply put one foot in front of the other either” buying and flipping” or doing the typical “buy & hold” scenario. One way to start is to set a goal, put a plan in place and then follow it.
Do you know:
- ▪ What your yields would be on your individual properties if you sold today, next month, next year?
- ▪ What annualized yield you need on your assets to achieve a monetary goal by the time you retire?
- ▪ Where will your yield come from or how it will be divided; cash flow or when you sell?
- ▪ Is it better to sell high prior to an anticipated recession and buy low when prices rebound?
- ▪ What property type is best to meet your life style, management skills, and time constraints?
- ▪ Should you invest locally or out of state?
Historic data like that presented on this website is intended to help you answer the questions above. Making intelligent buy/sell decisions will help to achieve your goals.
So many investors wait until it’s too late to sell and end up chasing a declining market with lagging price reductions. Remember the old saying ” pigs get fed, hogs get slaughtered”? We believe the tendency for sellers to get that last dollar before a down-trend leads to their demise. Isn’t it better to sell a little early and leave something on the table for the next investor than to try to time your sale to the exact moment of an anticipated price peak?
Wiest Realty, Inc is a full-service real estate brokerage providing expert guidance in residential and commercial property sales, leasing, and investment.