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?
Last update: July 31, 2026 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 expect general California continued median price flattening or declines since supply has tightened a bit from the mid 4-month area to 3.1 months as of June 2026. Median price trends support this opinion since year-over-year median price has been above the zero momentum since February 2026. Traditional affordability has been rising slowly since mid 2025. Historically, median price drop and supply increases when affordability is this low. Therefore we think the only thing supporting current price levels is low supply. The 30-year fixed rate loan stood at 6.66% nationally as of July 31, 2026. It remains to be seen how this rate level will affect the affordability index. Typically, traditional affordability hits a bottom and bounces back to an uptrend.
Where we’re at:
- 1. Median single family home year-over year price momentum fell below the 0% line back in May and remained below the 0% level except for four months which showed only small gains. The "wealth phase" appears to be over for now. In fact, median prices are approaching the the short term "normal line".
- 2. Supply momentum (on a year-over-year basis) had been generally increasing between May 2025 and February 2026 although later months (September 2025 through February 2026) showed single digit increases. With the exception of May 2026, year-over-year median price stayed just over the zero percent line.
- 3. Traditional affordability for Q1 2026 stood at 22% That means only 22% 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 20% means price declines are likely when supply is rising. We believe the only factor keeping median prices from falling further is relatively low supply (below 3+- months). At this point, California median prices are taking only small hits with supply at 3.1 months as of June 2026.
- 4. Consumer Sentiment has been generally falling. It hot a record low in May 2026. Although this is considered a leading indicator by itself, its forecasting reliability is less than perfect. However, it is a factor to weigh in your decisions. Since January 2026, year-over-year consumer sentiment momentum has been negative for every month.
-
5. California unemployment is the 2nd highest in the nation (5.2% as of June 2026). Only Washington DC at 6.0% 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 seemed to be over-joyed at the last Fed Funds rate staying even in July. However, the rate on the 30-year fixed loan is still around the mid 6% APR mark.
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 tend to fall 200 to 300 basis points+- 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 generally sustained through January 2026. 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. The figures for June 2026 showed only very small year-over-year median price momentum gains. We expect the median price softening trend to extend at least through the next quarter. Check out momentum charts on our web site. So far, the general data we have for the state suggests 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. Supply is keeping prices from falling hard 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?
What are your objectives?
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?
Wiest Realty, Inc is a full-service real estate brokerage providing expert guidance in residential and commercial property sales, leasing, and investment.