(Gross Yields from 21.87%, $359 Average Daily Rate)
This is the latest in our series of investor guides we release for free to our investors and everyone interested in Short-Term (Airbnb) Rentals.
For this analysis, we have used the trailing twelve months (July 1st, 2021 to June 30th, 2022). See our previous post for historical data.
See our post on regulation in these markets.
Active Rentals
There are 3462 active rentals in Palm Springs. Almost 78% of all listings are 1 and 2 bedrooms.
Larger homes catering to bigger parties and families are potentially undersupplied. There are only 539 active 4 & 5-bedroom homes.
Average Daily Rate (Nightly Price)
The Average Daily Rate for rentals in Palm Springs is $395 dollars.
Throughout the year, the rate fluctuates by $59 from that average with the highest Average Daily in April of 2022 ($454) and the lowest in August ($337).
Occupancy Rate
Occupancy Rates in Palm Springs, California are the highest in the winter. The Occupancy Rate at an annual level is 61%.
The lowest occupancy rate was in June 2022 (32%) and the highest was in March (97%).
The average occupancy rate is the highest for 3 and 4-bedroom homes, at 65% and 61% respectively.
Get projections on revenue, average daily rate, cap rates, and a lot more.
High-Performance Properties
Chalet’s research shows that 3-bedroom homes have the highest percentage of homes in the high-yield territory (29.13%) and therefore could be a good strategy for this market.
Studios do not have enough samples to be considered (only 2 active listings).
Chalet considers properties with a gross yield greater than 15% as high-yield properties. Gross yield equals Gross Income/Purchase Price
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Demand
The majority of the Palm Springs short-term rental guests are domestic guests from the United States, though February is when the presence of international guests is most noticeable.
International guests in February barely crossed the 7% threshold of total guests. The majority of international guests visit from Canada, the United Kingdom, Australia, Germany, and France.
The majority of Palm Springs guests come from U.S. cities located within driving distance. Almost 18% of all guests in Palm Springs are from Los Angeles. We expect drive-to locations/cities to continue to do well in the post-covid world.
Annual Revenue
The median revenue is the highest in April of 2022 at $10900 and the lowest in June 2022 at $3300.
Short-term rentals in Palm Springs generate a median revenue of $95,244 annually. The highest median revenue for rentals in Palm Springs is for 5 bedrooms at $467,300.
Throughout the year, monthly revenue fluctuates the most for 5-bedroom homes and the least for 1-bedroom homes. More conservative investors should look into 1 bedroom investment properties as data shows they are the most stable and predictable.
Market Facts
Population – City – 47,897 (2020) according to US Census Bureau
- MacroTrends states that Palm Springs is currently growing at a rate of 1.88% annually since 2021. As a benchmark, FreddieMac states that US cities grow at an average of 0.3%.
- Home to Coachella and Stagecoach Festivals
Cost of Living: Payscale ranks the cost of living in Palm Springs to be 22% higher than the national average. Palm Springs also has 50% higher housing expenses than the national average.
Other Facts
Riverside County has an effective property tax rate of 0.82%. That’s slightly lower than the 1.07% national average. Source: SmartAsset.
According to Zillow, homes in Palm Springs appreciated 25.7% year-over-year (YoY) and the median home price for active listings was $657,171 (as of September 2022).
Homes in Palms Springs average about 48 days on the market according to Redfin.
The BLS reported that the unemployment rate in Riverside County fell to 4.2% in August of 2022, which is higher than the national average of 3.8%.
Short-Term Rental Regulation
See Chalet’s detailed analysis of short-term rental regulation in Palm Springs.
