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Five Reasons You Should Invest in the Palm Springs Real Estate Market

The Palm Springs real estate market is hotter than ever and quickly becoming one of the best places to buy rental property in California. It’s one of nine cities that make up the Coachella Valley, and it’s one of California’s most underrated rental markets. The answer to, “is Palm Springs real estate a good investment?” is a resounding yes!

But all real estate investors can agree on one thing – purchasing a California investment property is expensive. But that isn’t as true in Palm Springs. Compared to larger west coast markets like Sacramento and Las Vegas, Palm Springs is a relatively affordable place for California investors.

Real estate investors have a lot of reasons to branch into the Palm Springs submarket, so let’s look at five reasons why investors should consider this California resort city.

1. Despite rent increases across the country, Palm Springs remains affordable.

California is one of the most expensive states in the country when it comes to purchasing real estate. It isn’t uncommon for homes in markets like Los Angeles and San Francisco to sell for well over seven figures. That’s why Palm Springs is appealing.

Not only is it cheaper for investors to purchase property in Palm Springs, but it’s also cheaper for renters to live in California's Golf Capital of the World.

The average rent for an apartment in Palm Springs is $2,158 a month, compared to $2,555 state-wide. Nearly 60% of Palm Springs renters pay between $1,501 and $2,000 a month, and renter-occupied households account for 35% of the population.

Many people see Palm Springs as a vacation destination, but locals, residents, and even investors have found the hidden value in the city. At the onset of the pandemic, many California residents traded in urban dwellings in places like Los Angeles for larger properties in low-key cities like Palm Springs.

The potential for larger properties, affordable housing, and the growing popularity of Palm Springs has many investors considering the area. With more people looking for places to live and the high tourism appeal of the area, 2025 may be the best year to buy a house in Palm Springs.

2. The Palm Springs real estate market is thriving, but within reach.

The Coachella Valley’s housing market remains strong and stable as 2024 ends and 2025 begins. The valley was gaining steam before the pandemic. During the pandemic though, people left their densely populated cities to work and learn in safer, wide-open places like the California desert communities.

This created a second wave of buyers in Palm Springs, and unprecedented effects on the local economy. Despite the housing market overall cooling since the pandemic years, the average price of Palm Springs’ properties was still up a modest 2% in October 2024 vs. the year before. 

While Palm Springs isn’t the cheapest place to invest, Redfin data shows that with a median price of $605,000 Palm Springs property is still significantly cheaper than the state average of $838,000. 

That’s why Palm Springs is so appealing to investors, compared to other California areas, buying a Palm Springs investment property is feasible. 

3. Jobs are making a comeback.

Palm Springs successfully navigated the pandemic and positioned itself to make a brilliant post-pandemic comeback in 2022.

At the height of the pandemic (May 2020), Palm Springs’ unemployment rate reached nearly 20%. By October 2020, it had dropped to 8.6%, and by May 2024, Palm Springs’ unemployment rate fell to 3.7%.

Meanwhile, the Coachella Valley overall is building out infrastructure to support a further boom. From new flights and tourism, to new colleges and medical centers, the area is developing at a fast but sustainable pace.

4. Palm Springs is a resort city.

Palm Springs has been a popular resort city for many years, known for its natural hot springs, hotels, restaurants, and golf courses. It's been a favorite destination for Hollywood stars since the 1930s, and many celebrities maintain homes in the area. 

Until recently, many Palm Springs hotels, restaurants, and attractions closed during the hot summer months. Now, the city draws tourists year-round due to increased offerings. As a standout example, Coachella Valley’s eponymous festival in April causes short-term rental surges that are virtually unmatched across the U.S. 

Palm Springs and the nearby communities are also increasingly home to year-round residents as well as snowbirds and second homeowners. Palm Springs properties are now hotter than ever, with investors considering purchases of real estate properties in the desert city for rental and vacation homes purposes. 

5. Palm Springs still has an Airbnb market.

Starting in late 2022, Palm Springs and the other cities in the Coachella Valley began to place strict regulations on short-term rentals less than 30 days (i.e. Airbnb and Vrbo). Before this, many investors considered Palm Springs one of the best cities for Airbnb investment. But now, things have changed. 

However, despite limitations on how many short-term rentals one person or company can own, what kind of dwelling is eligible, and how many times it can be rented out per year, the Palm Springs market still exists for these properties. Four of the 9 cities in Coachella Valley have stopped issuing new STR permits, but Palm Springs has not. So those looking for short-term lodging in the area (say for Coachella) must increasingly turn to Palm Springs. Additionally, long-term and seasonal rentals in Palm Springs continue to thrive. 

Conclusion: What This Means for Investors

Palm Springs is still the city to watch in the Coachella Valley. The market is growing, and investors are taking advantage of the numerous investment options available.

With the area’s rapid growth, investors need to move quickly with rental property loans. It’s important to have the right lending partner in place to capitalize on the industry’s most competitive rates and terms.

When investors work with Lima One Capital, they have access to a robust suite of products. Our clients have different investment strategies, so we have designed our loan options to allow us to cater to their individualized needs.

From private lending to rental property loans, to investment property loans in California, Lima One is here to help.

As experienced lenders in the private lending space, we’re able to move quickly when you find the right opportunity, while providing you with the best options for those looking at California real estate investing. Contact us today to discuss your next deal, or if you have a deal in hand, speed up the process by applying now.

Editor’s note: This blog was originally published in May 2022 and has been updated as January 2025 for comprehensiveness