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. October 2025 California unsold inventory was only 3.2 months (down from 3.6 months in September). The California October 2025 year over year median price decreased 0.4% to $886,960. This is in spite of a very low Q3, 2025 traditional affordability index of 17% and October 30-year rates in the low 6% area.
However, there some red flags as follows:-
- 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. However, October median price momentum dropped below the zero line again.
- 2. Supply momentum (on a year-over-year basis) had been increasing through October on a year-over-year basis between 22% (August 2025) and 46%+- (May 2025). October figures show a 3.2% year-over-year supply increase.
- 3. Traditional affordability for Q3 2025 stood at 17% That means only 17% 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 17% 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. Since January 2025, year-over-year consumer sentiment has been negative for nine out of 10 months.
- 5. California unemployment is the 2nd highest in the nation (5.6% as of September 2025). Only Washington DC at 6.2% 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 is California is still arounf the 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 tent 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 sustained through August 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. September median price momentum dropped below the 0% line. We expect that trend to be the case at least through February 2026. 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.
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.