So you are probably wondering what’s going on with real estate in San Bernardino. Actually a lot of things are happening in San Bernardino. From industrial buildings going up for Amazon to the demolition of the old carousel mall in downtown. Also the city has planned to build stores surrounding the Regal Cinema near 5th street. Even though we do see some residential construction sites we are not sure if that’s enough to sustain the growing population of the city.
As I write this the MLS shows inventory supplies to be at 2 months supply. Keep in mind that a seller’s market is less than 5 months and a sellers market is more than 6 months. Months being more of a balanced real estate market. If you have been actively following this year’s inventory of homes i’m sure you will agree that there’s not enough inventory in the city or in the county. What does all mean and what else can affect this and in which way. Even though even though the inventory has increased a bit in the month of October we don’t think that’s going to be enough to help the shortage of housing.
Prices in the Inland Empire of residential real estate have been consistently increasing for the past 5 years and doesn’t to be slowing down. Even though rates have increased recently it doesn’t seem to have made a significant impact on the demand for homes. The news shows that mortgage rates should be increasing soon which can mean that affordability is going to decrease. It’s hard to tell since we have a huge demand at what point will it affect home values. You hear the news of every real estate newspaper or reporter just speculating on what will happen next. The reality is no one really knows what will really happen if interest rates increase. Will it balance the demand? Will prices go down? Will it become a buyers market or will the homebuying frenzy continue since we have a huge shortage of homes for sale.
Rates have been increasing steadily and the fed is considering raising the the rate. Everyone usually thinks since the fed rate increases it will automatically increase mortgage interest rates. Not necessarily. There are other factors that affect the mortgage rates to increase like inflation, GDP, Bond Market and the housing market. Recently many of these factors are not lining up as we would hope they would. So if the Fed rate increases will mortgage rates increase? not necessarily. The OC Register also wrote that the Inland Empire is leading Los Angeles and Orange County in annual job gains.
What I do know is that prices continue to increase in San Bernardino and they do not show any sign of slowing down. We are currently experiencing a multiple offers for homes that are priced at market value. Listings are under contract in less than 3 weeks others in less than 7 days. This weekend our agents conducted several open houses in the city of San Bernardino and all had offers on Monday morning. The traffic was high from locals and others from the Los Angeles area looking for more affordable housing than the LA real estate market.
In 2004 I remember a good part of my business was helping homeowners from the Los Angeles area relocate to the Inland Empire due to home values increasing. We seem to be experiencing that again here in san bernardino. Our open houses are filled with local families and families traveling an hour to look for more affordable homes instead of renting an apartment or studio since rents have increased drastically in California. Increasing prices from Los Angeles county seem to be having a big impact on increasing prices in san bernardino county.
Our only hopes are for some of the huge investor that purchased thousands of the homes and kept them as rental properties start unloading some of them to create more inventory for families to get into. Another solution which seems to be increasing slowly is more new construction. New construction helps with homeowners upgrading to a bigger or newer home and at the same time some end up listing and selling the old home which makes room for another homeowner to move into the area. I’m sure the counties are planning better solutions i’m just wondering if we will be able to catch up with the population.
At the end of the day interest rates are low still. Zillow states that the average price in October 2007 was $295,000 in San Bernardino and this month October 2017 the average home value is $271,000. So prices are still lower than they were at their peak 10 years and they are creeping up closer. Will interest rates continue to stay low? What are the impacts of the huge job growth we are experiencing? How will the minimum wage help housing affordability? We don’t know.