The Coachella Valley has some of the highest growth rates in Riverside County and California. This population growth is most prominent in the Eastern Coachella Valley Cities due to simple geography and building restrictions enforced in other parts of the Valley. As the population expands in these areas, real estate developers, real estate professionals and municipalities will have to plan to keep up with demand and market conditions when planning for the future.
Where is the Growth Happening in the Coachella Valley?
There is a population explosion happening in the Valley right now and most of it will happen in the East Valley. This, according to Coachella Valley Association of Governments (CVAG) and the Southern California Association of Governments (SVAG), will increase the population of the Valley to an astonishing 884,000 by 2035 (Source: SVAG). This projection is a 99.4% increase from the 2014 population of 443,401 (Source: CVAG) people. This is truly unprecedented growth, but what areas are growing the most?
Indio and Coachella are leading cities in growth and, in recent years, have seen a huge population growth. Indio saw a 17.8% increase in population from 2010 to 2016 ranking the 13th fastest growing city in all of California. Close behind is the City of Coachella seeing 14.9% growth in the same period out-pacing Desert Hot Springs by a nearly a percentage point. La Quinta also fared well in growth ranking 44th state wide with a growth rate of 11.6%. That said, the City of Coachella is predicted to have a massive population boom. While recent numbers have been lower than SVAG’s has predicted in their 2016-2040 RTP/SCS Final Growth Forecast by Jurisdiction they estimated Coachella (City) would jump in population from 42,400 in 2012, to a whooping 73,600 by 2020.
The graph and map below shows the huge population increase in the East end of the Valley with Indio and Coachella showing the largest gains.
Why is East End of the Valley Growing So Fast?
The geography of the Coachella Valley alone may dictate the path of development. If you look at a map of the Coachella Valley it quickly becomes apparent why the East end of the Valley is growing so much faster. The majority of the open land exists on the east end of the Valley making this area prone to quicker development. Also, restrictions on building heights, habitat protection and tribal lands in areas like Palm Springs, Rancho Mirage, Palm Desert and Cathedral City may cause a slow down in total population growth in these areas.
Another reason is affordability. The West End of the Valley has seen home prices rise significantly over the past 8 years while Indio and the East Valley have seen similar growth they stills remain more moderately priced. This coupled with a demand for lower-priced homes have made the East Valley an attractive option for home buyers.
How are municipalities planning for this growth?
The population explosion in the Coachella Valley will put stress on transportation, housing and services infrastructure in the Coachella Valley. Government organizations are working together to plan for future growth and that will surely present some challenges for the future. With population growth of nearly double the national average, the draw on resources from Eastern cities will be immense. The cities may have to annex new areas and invest in new development.
No doubt the population growth in the in the East Valley brings opportunity. The formation of the East Valley Coalition in early 2015 works with business and city leaders to promote economic gains in the East Valley and aims to bring retail and manufacturing businesses into the region.
Cities like Coachella are planning for growth urban areas and have in the works a revitalization of the downtown area and East urban areas. These plans are part of a General Plan that provides a development map stretching out all the way to 2035 and include annexing new unincorporated areas to the East.
What does this mean for Coachella Valley Real Estate?
The real estate market will also shift with the population increase. The population increase will cause real estate inventory to decrease and prices to increase Valley wide. In the last eight years the Coachella Valley has already seen a decrease in inventory from a high of 10 months to a low of 3.5 month supply spurring a 64.2% increase in the median home price in the same period. See the graph to the right to see the steady decline of inventory and how it relates to median home price. (Source: Desert Area MLS)
Real Estate Developers like New West Development have also foreseen an opportunity in the East Coachella Valley. Over the next 20 years projects like the massive La Entrada development within Coachella will provide housing for approximately 20,000 residents and 7,800 homes. This master-planned community said to be a “city within a city” by Las Vegas Developer Terry Manley of New West Development. Approved in 2014 by the City of Coachella, the specific plan for La Entrada includes all the elements that make a community home: schools, parks and recreational fields, places of worship, and opportunities for all types of businesses, from large retail stores to small, family-owned restaurants and shops are all part of the plan. But, do not expect this development to pop up in anytime soon. The Development has yet to break ground and will be built out over the next 20 years. However, based on the size alone of this ambitious development, there is optimism for growth in the East Valley in the business community.
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2016-2040 RTP/SCS Final Growth Forecast by Jurisdiction