Palm Springs Real Estate: Why Prices Doubled—And Why Some Owners Are Cashing Out Fast

Palm Springs has always been a sought-after desert escape, but since 2020, its real estate market has been on a rollercoaster ride. Home prices doubled—and in some cases tripled—between 2020 and 2024, making it one of the hottest and most unpredictable markets in the country.

Now, some of those who bought during the pandemic are already selling, hoping to cash in on appreciation before the market shifts further. But what drove this housing boom in the first place? And why are so many looking to exit just a few years later?

The COVID-19 Housing Boom: Why Prices Surged

Several key factors fueled Palm Springs’ real estate explosion:

1. Remote Work & Pandemic Relocations

With city dwellers suddenly freed from offices, many sought out spacious homes in scenic, less densely populated areas. Palm Springs, with its sunshine, swimming pools, and resort lifestyle, became a top pick for Los Angeles and San Francisco buyers looking for a change of pace.
Source: LA Times

2. Record-Low Mortgage Rates

From 2020 to early 2022, mortgage interest rates hit historic lows, making borrowing cheaper than ever. Buyers could afford higher-priced homes, leading to bidding wars and skyrocketing prices.
Source: Investopedia

3. Short-Term Rental Investment Boom

Investors rushed to buy homes for Airbnb and Vrbo rentals, seeing Palm Springs as a prime market for vacation properties. With strong tourism demand, buyers overpaid for properties, assuming high nightly rental rates would justify the cost.
Source: Mashvisor

4. Housing Shortages & Buyer FOMO

With more buyers than available homes, competition was fierce. Homes sold within days, often with all-cash offers well over asking price. The fear of missing out led to impulsive buying, pushing prices even higher.
Source: Palm Springs Life

5. Palm Springs as a Luxury Destination

Palm Springs saw an influx of celebrity and high-net-worth buyers, solidifying its reputation as “The New Aspen.”With premium properties selling at record highs, the entire market was pulled upward.
Source: Desert Sun

Why Some 2020-2024 Buyers Are Now Selling

Fast forward to 2024-2025, and many pandemic-era buyers are rushing to sell—some at significantly inflated prices.

1. Short-Term Rental Boom to Bust

Palm Springs introduced strict regulations in 2022, capping short-term rentals at 20% of homes per neighborhood. Many investors who relied on Airbnb income are now struggling to turn a profit.
Source: LA Times

2. Mortgage Rates Have Doubled

Interest rates are no longer at pandemic lows. Many buyers who stretched their budgets in 2020-2022 are finding refinancing too expensive—forcing them to sell while they can still make a profit.
Source: Redfin

3. Overpriced Listings Aren’t Selling

Some pandemic buyers overpaid, assuming values would continue to rise indefinitely. Now, many homes sit on the market for months because new buyers aren’t willing to pay inflated prices.
Source: Desert Sun

4. The Complication of Indian Lease Land

A large portion of Palm Springs real estate is on land owned by the Agua Caliente Band of Cahuilla Indians, which means many buyers do not own the land beneath their homes but lease it from the tribe.

• Lease terms typically last up to 99 years, but uncertainties about future lease renewals can impact property resale values.
• Financing a home on leased land can be more complex, as lenders require lease terms to extend well beyond the mortgage period.
• While properties on leased land tend to have lower purchase prices, resale value can fluctuate due to lease renewals and legal restrictions.

For buyers unfamiliar with the leasehold vs. fee-simple ownership structure, this has created confusion and second thoughts, prompting some to sell.
Source: Desert Sun

Is Palm Springs Still a Good Investment?

Here’s what buyers should know in 2025:

• If you’re looking to live there full-time, Palm Springs still offers long-term value, but prices remain highcompared to pre-pandemic levels.
• If you’re looking for a short-term rental investment, be cautious. New regulations, competition, and rising costs have made the Airbnb market much tougher.
• If you’re considering buying on leased land, understand the terms carefully. Lease durations, renewal risks, and financing conditions can impact your investment’s value.

Final Thoughts: Who Wins and Who Loses?

Palm Springs went from a relaxed desert getaway to one of the country’s hottest real estate markets overnight. But now, as the market levels off, early buyers are trying to cash in, while others struggle to find buyers at their high asking prices.

For those who missed out during the boom, 2025 could be the best time to buy—but only if you shop wisely and understand the market’s unique challenges, including leasehold ownership and short-term rental laws.

The days of easily doubling an investment in Palm Springs real estate are fading fast, but for the right buyer, the opportunity still exists.