Palm Springs sees home prices plummet as market finally cools off

Home prices are beginning to soften in one of California’s hottest luxury markets as the desert real estate market starts to cool off.

Two upscale homes in Palm Springs most sought-after neighborhoods have recently undergone notable price cuts of about $70,000, signaling even luxury sellers are adjusting their expectations after years of soaring demand.

One recently built custom home saw its asking price trimmed by $30,000, dropping from $1.585 million to $1.555 million.

Built in 2023, the 2,907-square-foot residence features three bedrooms, four bathrooms and sits on an oversized 0.41-acre corner lot with mountain views.

The listing boasts 18-foot ceilings, three grand primary suites, custom furnishings, a professionally designed outdoor entertaining space with a barbecue bar, putting green and water feature, along with smart-home features.

The fully furnished property is also marketed as Airbnb-friendly, with short-term rental licenses available.

Another Palm Springs luxury home underwent an even steeper reduction, with its asking price falling $40,000 from $1.638 million to $1.598 million.

The remodeled mid-century modern home spans 1,887 square feet and includes four bedrooms and three bathrooms.

Originally built in 1961, the residence features walls of windows overlooking a south-facing deck and swimmer’s pool, as well as three bedroom suites in the main house and a detached guest wing complete with its own kitchenette and bath.

The listing also highlights owned solar panels and a brand-new roof.

The price cuts come as Palm Springs’ once booming housing market settles down after the buying frenzy during the pandemic.

Back then, low mortgage rates and more remote work led to high demand for second homes and vacation properties.

These factors drove home prices up quickly and created strong competition among buyers.

Today, the market is showing signs of balance. Zillow estimates the average Palm Springs home value is about $619,600, down 1.7% over the past year, while homes are now taking roughly 56 days to go under contract.

Inventory has also grown, giving buyers more options than they had during the height of the market.

Redfin similarly describes Palm Springs as a “somewhat competitive” market, with homes typically selling for around 3% below their asking price and taking about 70 days to sell.

Just 9.6% of homes are selling above list price, reflecting a market that has shifted away from the bidding wars that once defined the desert oasis.

Although these two listings are just a small part of the market, their combined $70,000 in price cuts highlight a bigger trend.

Sellers are adjusting their expectations, and buyers now have more room to negotiate in one of Southern California’s best-known luxury areas.