Riverside and San Bernardino Housing: Two SoCal Counties with 4 Million People Experience 60 Percent in Housing Price Declines. And Prices are Still near the Bottom.

The Inland Empire of Southern California has been devastated with the current housing bubble bursting.  A few other bloggers have covered this area in great detail but it is important to examine what is happening here.  The Inland Empire is made up of two large counties, San Bernardino and Riverside.  Before we look at details of this area let us see the overall population of the area:

Riverside:                   2.1 million

San Bernardino:        2 million

This is a large area.  4 million people in Southern California call the Inland Empire home.  Yet the massive over building and fall in housing values has crushed this market.  It is fascinating how Northern California has a similar mirror image.  Sacramento and the Central Valley are experiencing the similar trends that the Inland Empire is facing.  You have stronger counties like Orange, L.A., San Francisco, and Marin and inland prices are hammered.  So what happened with the boom here?  Land early in the decade was cheap in these areas so builder after builder built housing subdivisions at an almost relentless pace.  Land appeared even cheaper as it boomed since buyers were willing to pay the inflated bubble prices.
Yet the massive downfall of these areas was that incomes never kept up.  The story is similar.  Subprime, Alt-A, and option ARM loans were pervasive in these areas.  Prices have now collapsed.  The current median price for both areas are:

Riverside:                   $185,000

San Bernardino:        $150,000

The decline has been painful. What were the peaks?  Let us look at the past history:

Riverside:                   $432,000 (December 2006)
San Bernardino:        $380,000 (November 2006)

So Riverside is down 57% and San Bernardino is off 60%.  Think about this for a minute.  These two enormous counties with over 4 million people are still off by approximately 60 percent from their peak values.  The only reason things seem to be moving in these areas is because investors are buying homes up in these areas.  You also see a good number of FHA first time homebuyers.  But they are not bidding prices up to even come remotely close to the peak levels.

Let us examine one area.  We will look at the city of Coachella:

It really is no accident that sales are moving up as prices have fallen.  Prices are not rebounding but sales are steady.  But look at the price data.  The peak was $357,000 and the current median price is $147,000.  A 58 percent decrease without a doubt will move inventory but does this mean the market is now rebounding?  The California employment report just came out and these two areas are in a very tough economic climate:

14.7 and 13.6 percent unemployment rates are not going to help prices move upwards.  I tend to believe that the Alt-A and option ARM recasts will have some serious ramifications in the market.  How large?  Hard to say since banks are not moving in a normal fashion in foreclosing on homes.

Yet one thing is certain and that is the Inland Empire is going to have continued problems.

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