Dynamics change in transportation, real estate

Public Record, The, Nov 09, 2004 by Kleinschmidt, Janice

In 1998, the Coachella Valley Association of Governments projected the traffic count on Highway 111 at Madison Street in Indio would reach 30,239 cars by the year 2020. This year, the count reached 38,980 cars, meaning that spot reached 129 percent of the projection 16 years early.

Among nine Coachella Valley areas considered in the traffic study, three have reached more than 120 percent of 2020 projections and another four are in the 83 to 98 percent range. Traffic in Palm Springs at Indian Canyon Drive and Interstate 10 increased 78 percent between 2003 and 2004 alone, but the area with the most traffic - with 42,500 cars a day - is Washington Street and Country Club Drive in La Quinta.

CVAG Executive Director John Wohlmuth reported these numbers Oct. 26 at the California Desert Association of Realtors' annual seminar to show the extent to which development affects transportation in the desert. Titled "The State of Real Estate in the Coachella Valley," the seminar examined housing market trends and projections.

Wohlmuth, at the meeting to talk about balancing growth with quality of life, said growth in the Coachella Valley differs from other areas of Southern California.

"Because of our geography, ... we have essentially had a connected, urbanized area," Wohlmuth said. "As we grow out from this urbanized area, you won't see the type of sprawl that you would probably see in western Riverside County, but you will see the valley floor develop. Substantially all of the valley floor will develop unless something is done to preserve some of the agriculture in the southeast part of the valley."

Nationwide, the population grew 18 percent between 1990 and 2004. Zero in on the desert and the percentage increases: California has grown 21 percent, Riverside County 52 percent and the Coachella Valley 59 percent.

According to Wohlmuth, the Coachella Valley covers between 1.1 and 1.2 million acres, much of which has been or will be preserved with the adoption of the Multiple Species Habitat Conservation Plan.

"We estimate we will have 718,000 acres conserved," he said. "Currently, we have 538,000 acres (preserved], which leaves us with 183,000 acres to be developed. We are now holding slightly over 350,000 permanent residents on 83,000 developed acres." That, he pointed out, is about the same density as that of 1950s Los Angeles. CVAG estimates "ultimate build-out" of 1,124,579 people will be reached in 2006. "A lot of assumptions go into that, but that's taking a look at land, current densities, number of people per household and using up agricultural land," Wohlmuth said.

CVAG has just completed and will publish within the month an origin and destination study to help prioritize transportation improvements. The last such study was done in 1995.

"In addition to just the growth of the Coachella Valley, our driving patterns are changing as households," Wohlmuth said. The average household is driving more trips per day - in fact, between 1995 and 2004, a 19.3 percent increase. Ninety-two percent of all trips made in are made in private vehicles and slightly more than half of those are by single-occupant cars. The average time on the road spent by nonretired travelers is 62 minutes a day. While Highway 111 will continue to be a major commercial corridor, more arterials and expressways will have to be built or expanded. "Our highest priority is I-10 interchanges," Wohlmuth said.

Brought in to discuss trends in the housing market was Patrick Veling, founder and president of Real Data Strategies Inc., a real estate analysis and consulting firm in Brea. As housing prices have climbed over the last few years, he said, more and more residents have been enticed to put their homes on the market. Meanwhile, the number of people able to afford a house in the desert decreased.

"Prices have climbed so far so fast that buyers have stepped off the curb," Veling said. They've basically said, 'OK, this appears to be a little bit out of our control. I think we're going to slow down a little bit and see what happens."'

At the same time, he continued, sellers throughout Southern California "sensed there was a peak in the market

place that they seem to have missed by about six hours. So what happened is they rushed to market thinking that, 'If I can find someone who will overpay me, now is the time."' That caused a reduced rate of absorption, combined with increased inventory. "As a result, we've seen a very substantial and frankly overdramatized change in the dynamic between the sellers and buyers," Veling said.

Buyers have more options and are taking their time. Some sellers "believe that their sky is failing," the analyst said. "The sky is not failing. The market is simply taking a badly needed breather. ... None of us wants to repeat the 1990s when the market had not taken a breath and then it collapsed under its own weight."

"It is ridiculous for any of us in this room to believe we can sustain 30 and 40 percent annual price appreciation year after year after year after year," Veling said. The fourth quarter of this year and perhaps the first and second quarters of 2005 will be uncertain. The question is how sellers will react. "What we're finding throughout Southern California [is that] even though inventories have increased by two or three times, sellers are not reducing their prices and buyers are surprised by this," Veling said. "So there seems to be a classic stalemate at this point.