In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Sunday, February 17, 2013

Inland Empire: Starting to Recover

by Calculated Risk on 2/17/2013 10:28:00 AM

Southern California's "Inland Empire" was one of epicenters of the housing bust. Now the area is recovering ...

From Alejandro Lazo at the LA Times: Inland Empire housing is more affordable but still out of reach

Bill Sepe has gotten used to rejection.

The 28-year-old Rancho Cucamonga native has put in nearly 200 unsuccessful offers since August on Inland Empire homes, varying from typical suburban ranches to classic craftsman homes.

All this anguish comes in pursuit of a modest home in the exurb of San Bernardino County, the epicenter of the Southern California housing crash. Plummeting values here sparked a vicious wave of foreclosures.
The repeated rejections come despite Sepe's solid qualifications: a stable job as a cell tower technician and a pre-approved home loan. He watches as houses hit the market, then get scooped up within an hour. ...

The Inland Empire has gone from bust to boom with a vigor few could have predicted, mirroring Western regions such as Phoenix and Las Vegas. Surging demand has tightened inventory ... That's great for the real estate industry and helps the local economy. ...

In the Inland Empire's darkest hour, nearly one of five borrowers was behind on a home loan. Foreclosed properties made up more than two-thirds of sales. Work on half-built subdivisions stopped dead, with as construction jobs drying up and the unemployment rate soaring. Last year the city of San Bernardino declared bankruptcy.
But a turnaround is well underway, thanks in part to deep-pocketed investors snapping up bargains with cash. The housing supply is now so tight that it's common for home shoppers to put in 20 or 30 offers before securing a house, real estate agents say.
For real estate professionals, the turnaround is like a downpour after years of drought.

"There is optimism here for the first time in eight years," said Paul Herrera, government affairs director for the Inland Valleys Assn. of Realtors. "For the first time since 2005, we are thinking that next year will be better than this year."
Inland Empire Employment Click on graph for larger image.

This graph shows the unemployment rate for the Inland Empire (using MSA: Riverside, San Bernardino, Ontario), and also the number of construction jobs as a percent of total employment.

The unemployment rate is falling, but still very high 10.9% (down from 15.0% in 2010). And construction employment is still near the lows. But the area is recovering.