Joshua Tree’s housing market during its pandemic surge looked like an investment oasis, but instead it may have been a mirage.
The market in the California desert has dried up after exploding four years ago, the Wall Street Journal reported. Those who bought homes in recent years — which are typically modest, despite some architectural marvels — are facing a difficult dilemma if they choose to sell.
Joshua Tree home values jumped significantly during peak Covid. In July 2020, the typical value in the area was $217,007, according to the Zillow Home Value Index. Two years later, that number had more than doubled to $467,348. But as of February this year, the typical home value fell to $385,941.
Approximately 40 percent of the market’s 199 listed homes have seen price reductions, Bryan Wynwood, a local agent told WSJ. Buyers are also grappling with increased interest and mortgage rates from the height of the pandemic, which is having an impact on markets across the nation.
Wynwood did, however, admit that the price boom was unsustainable.
During the height of the pandemic, homes were often sold in under two weeks. But in February, those that did sell were on the market for a median of 106 days, according to Redfin.
One factor impacting Joshua Tree’s housing market is its popularity as a tourist destination. In 2021, more than 3 million people visited the area, according to the National Park Service. The trickle effect has increased demand — and supply — of short-term rentals, which have nearly doubled in four years, upping competition and dragging down long-term rents.
Investors who bet on long-term rentals are not making as much money as expected, so buyers are thinking twice about the potential payoff they can deliver in the future. According to one source WSJ spoke with, sales may instead be driven by investors looking at short-term rental assets.
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