Flood Plains, High Winds, and Leased Land: How to Buy a House in Palm Springs

As a resort escape, Palm Springs is known for its year-round sunny and warm weather — even when winter is happening everywhere else! It’s a hub for modern architecture, and some of the best known mid-century modern architects have built homes here. The outdoorsy among us also love Palm Springs for its abundance of hiking trails, golf courses, racquet clubs, and natural high-desert beauty.

It’s a hot place to buy a home almost anytime, but buying a house in Palm Springs isn’t as easy as booking your next nine on the golf course. You’ll have to navigate land leases, HOA requirements, and stiff competition from other buyers set on purchasing your picture-perfect property.

Fortunately, we did the legwork for you. We talked to Dan Hamilton, a top real estate agent with 20 years experience, to get the lowdown on buying your ideal home in sunny Palm Springs. Whether you’re looking to invest in a vacation home, set up a sunny and contemporary primary home for your family, or settle into an active retired lifestyle — you’re about to find out what the pros know about getting the best deal on the desert home of your dreams!

Finding your financial sweet spot in the Coachella Valley

Those beautiful modern homes don’t come cheap: The median price for a house in Palm Springs as of February 2021 is $723,750. (That’s more than twice the national fourth quarter 2020 median of $346,800.) If you’re looking at condominiums in Palm Springs, you can plan to spend less, with a median of $270,000 for condos in February 2021.

Part of the reason? A shortage of homes for sale. As Hamilton says, “right now, our inventory is half what it was a year ago, so the number of homes available for sale is really low.”

He also tells us that the COVID-19 pandemic is causing a surge of buyers. “COVID is driving a lot of people to come look for less expensive areas outside of the big cities. So we’ve got low inventory and strong buyer activity.”

Fortunately, there’s hope if you want to buy a house in Palm Springs. Here are four tested tips proven to stretch your dollar and help avoid overpaying.

1. Offer to pay cash (HomeLight can help with that, by the way).
2. Shorten contingency periods, so the seller knows the deal is done sooner.
3. Shorten escrow periods, so the seller pays less in monthly fees.
4. If you’re paying cash, then you can skip the appraisal. (Talk to your agent about whether they think the sales price is fair; an appraisal can protect you from overpaying for a house.)

Desert styles: Housing stock in Palm Springs

The mid-century modern aesthetic is a big part of the appeal of living in Palm Springs. People love the clean lines and natural finishes that provide a backdrop for pops of vibrant colors, and there are a lot of beautiful homes in this style here.

In the old days of movies, stars would build their homes in Palm Springs to be within a two-hour commute of the studios. So it became a film industry hotspot full of celebrities and a magnet for developers working at the forefront of mid-century modern architecture — resulting in an abundance of homes in this style (not to mention all the celebrity presence and history!).

For buyers looking for something more low-maintenance, Palm Springs also has a number of condominium developments that provide security, a sense of community, and minimal upkeep, with exteriors typically maintained by COAs, or condo-owners’ associations.

Flood plains and high winds

In California, sellers are required to provide buyers with a natural hazard disclosure report. This will tell you if the home is in an earthquake zone, fire hazard zone, high wind zone, flood zone, and so on. In Palm Springs, the two to watch out for are flood zones and high wind zones.

If the home is adjacent to the mountains, you have to be aware of runoff and potential flooding. It’ll be especially important to check the home’s FEMA flood zone status. And the north side of the city has some great homes, but you’ll be more susceptible to high winds there.

Get your home inspected

Anthony Morganti, Yelp’s top-rated home inspector in the Palm Springs area, says there are certain home issues that are prevalent because of the desert climate:

“Due to the high highs and low lows in temperature, it is quite common to find issues with the HVAC systems. So it can be helpful to hire a home inspector who does thermal imaging inspections, which can find leaks in air ducts and possible moisture issues within the home.”

And he says it’s not just the inside of the home you need to inspect thoroughly. “Roofing materials can also have issues due to the summer temperatures.”

Morganti recommends looking for an inspector who uses aerial drones for roof inspections. “This prevents causing damage to roofs by walking on them, while providing detailed high-resolution images for further evaluation.”

Buyers in Palm Springs typically consider getting both a general inspection and a termite inspection. (Some people also get a sewer inspection, but these aren’t common.)

A general inspection, like the ones Morganti conducts, will catch most potential issues. If there are any, you’ll want to bring in a specialist (like an electrician or plumber) to examine any issues further before you move forward with buying the house.

Termites aren’t too common, but they do occasionally show up in this climate. Dry rot and fungus are actually more prevalent, and the general inspection should catch those.

Remember, though, that home inspectors can only identify problems if they see evidence of the problem. If you’re concerned about hidden issues, it would be wise to call in a specialist.

Patios and yards are big home improvement zones

“Because our weather during the wintertime is so wonderful,” says Hamilton, “and because outdoor living here is part of the reason people come down to visit or to live, a lot of people are investing in their outdoor spaces.”

Detached casitas are popular: Imagine if a three-bedroom home had a fourth bedroom, self-contained as a small separate structure on the lot, with its own entrance, its own bathroom, and a bedroom that can be used for guests or family.

Hamilton says they’re also an attractive option for remote workers. “Especially now with COVID, a lot of people want to work from home. So it’s become a trend over the past year for homeowners to convert existing space — or add on additional space — for home offices.”

Buying on leased land: The ins and outs

About 40% of homes in Palm Springs are located on leased land.

“When you buy a home on leased land, you do not own the land — you’re buying the structure and you’re leasing the land,” explains Hamilton.

“Some people will shy away from leased land, but some of the nicest properties in Palm Springs are on leased land.”

The good news for bargain-hunters is that a house on leased land will be about 20% to 25% cheaper than the same home on a lot that comes with the property would normally be.

If you’re taking out a loan to buy a house on leased land, lenders will require the lease to extend five years beyond the loan’s term.

For example: If the land lease is scheduled to expire 20 years from now, banks will only give you a 15-year loan on the property. If you’d like a more typical 30-year mortgage loan, you’ll need to make sure your land lease extends for 35 years or longer.

Leases almost always get renewed; many lenders will give you a loan for a property on leased land, and if you know the ins and outs of it, you can get a little more house for your money.

Keep in mind: The land you’ll be leasing is owned by American Indian landowners — so the deal has to be approved by the Bureau of Indian Affairs.

If you buy a house on leased land, it adds an extra step to the process: Your documents for the mortgage loan, home inspections, and so on will be submitted to the Bureau of Indian Affairs, which will review and approve them. It can lengthen the process, but it’s fairly simple.

After you buy, you’ll also have to keep the Bureau in the loop about updates to your loan, like refinancing.

Getting the lay of the resort landscape

It’s easy to identify the neighborhoods in Palm Springs — just list the celebrities who have lived there! From Frank Sinatra to Suzanne Somers, almost every area in Palm Springs has been home to a few stars. Historic houses abound.

• The Movie Colony neighborhood is especially famous for its role in Hollywood history — hence the name. Within it is the Twin Palms area, with a lot of mid-century modern homes. And in Movie Colony East, visitors to the Robolights sculpture garden and light show number in the tens of thousands each December.
• El Rancho Vista Estates has historic homes adjacent to downtown — the city’s center of upscale dining, boutiques, and cultural attractions like the Palm Springs Art Museum and the Palm Springs Walk of Stars.
• The Tahquitz River Estates neighborhood is right next door to the Mesquite Golf and Country Club. This architecturally diverse area is known for its laid-back village vibe, sporting an abundance of restaurants and vintage shops.

HOAs in Palm Springs

Half or more of Palm Springs homes are part of a homeowner’s association (HOA).

When you buy, you’ll want to pay attention to whether the home is in an HOA area or not, and what amenities and CC&Rs (covenants, conditions, and restrictions) come with it.

The HOA will typically restrict what you can do to the exterior of your home, including paint colors, building extensions, exterior walls … even, in some cases, the color of your patio furniture!

So if you’re looking to do major modifications to a home’s exterior, you may want to avoid a home that’s part of an HOA.

Outside the HOA, you’ll only have to deal with city regulations — mostly around things like wall heights, which are restricted in most cases.

The best time to buy

There’s a “high season” in Palm Springs where the population triples — November through April — then a lower season from May through October.

There are more options of homes for sale during the high season, but prices stay consistent.

You might think that means more home sales during the high season. But because a big part of the market is vacation homes, selling is season-to-season, and sales are consistent year round: Half of homes sell in the high season, and half sell in the off season.

“Sales are consistent all year round now,” says Hamilton. As a result, prices don’t fluctuate much, which frees up your options on when to buy.

There are more homes available for sale during the high season — the inventory is higher. But activity is a constant all year round.

Find a top Palm Springs agent

For many buyers, Palm Springs is a hidden paradise: It’s sunny and warm all year round, the homes are beautiful, and it’s got plenty of culture and outdoor recreation to keep you busy.

A top agent can help you navigate the competitive market here, and they save buyers an average of $23,000 per home purchase. That’s quite a few rounds of golf!

Agents here get the best deals by finding out what motivates sellers, how much interest there is in the property, and how many comparable properties are on the market.

They’re able to tell you how to best search based on that info, and help you use every bargaining chip to get you the property of your dreams.

Connect with a top real estate agent in Palm Springs now to start manifesting your own movie-star life in the high desert.

Header Image Source: (Justin Scocchio / Unsplash)