Highlights from this report:
- Housing forecasts for the Inland Empire predict smaller price gains in 2020.
- Home-price growth has slowed in Riverside, San Bernardino, Ontario, etc.
- Of all cities in this region, San Bernardino could see the biggest gains next year.
Inland Empire Real Estate Market Forecast 2020
Like many real estate markets across the country, California’s Inland Empire has begun to cool down a bit. Home prices are rising more slowly today when compared to previous years, and properties are taking longer to sell (on average).
It’s a bit too early to call it a buyer’s market. But there is a definite shift occurring within the Inland Empire housing market, and for the nation as a whole.
Fast facts: The “Inland Empire” is a metropolitan area located in Southern California. It includes the cities of Riverside, San Bernardino, Fontana, Ontario and Temecula, among others. According to the Public Policy Institute of California, this area is home to more than 4.5 million people (or more than 11% of the state’s population).
According to the housing research team at Zillow, home prices in Riverside, San Bernardino, Ontario, and other Inland Empire cities are expected to rise more slowly over the coming months.
In July 2019, the company’s economists issued the following real estate price predictions for these three housing markets:
- Riverside home values have increased by 4.1% over the past year and Zillow predicts they will rise 1.7% within the next year.
- San Bernardino home values have gone up 7.1% over the past year and Zillow predicts they will rise 4.2% within the next year.
- Ontario home values have risen by 3.8% over the past year and Zillow predicts they will rise 1.8% within the next year.
Note: These forecasts were issued in July 2019, so they extend into the summer of 2020.
Based on this analysis, the San Bernardino real estate market has outperformed other cities in the area. And it could do so in 2020 as well.
Granted, these kinds of predictions are the equivalent of an educated guess. So we shouldn’t get too wrapped up in the exact numbers being predicted here. The key takeaway is that analysts expect to see smaller home-price gains for the Inland Empire real estate market, as we move through the end of 2019 and into 2020.
Housing Supply Remains Tight
While home-price appreciation in the area is expected to slow over the coming months, house values will likely continue to creep upward to some degree. And inventory has a lot to do with that.
Southern California housing markets like Riverside, San Bernardino and Ontario (among others) still have a shortage of homes for sale relative to demand. That has been the case for quite a while now, and it could carry into 2020 as well.
According to recent data from the real estate brokerage Redfin, the Inland Empire real estate markets of Ontario, Riverside and San Bernardino all had just over a two-month supply of homes for sale as of May 2019. That was lower than the national average for the same period (2.9-months), and very low by historical standards.
A “balanced” market has somewhere around a five- or six-month supply of homes, according to many economists. So the inventory situation is still pretty tight across the Inland Empire housing market. Home buyers will want to give themselves plenty of time to find a suitable property that’s within budget.
A Slower Market in 2019?
Interestingly, the median number of “days on market” (DOM) tells a different story. All of these real estate markets had a median DOM that was higher than the national average in early summer. Riverside was the highest, with a median DOM of 55 days in May 2019.
Elsewhere in the country, the hottest housing markets have a median DOM down in the 10 – 15 day range. So the Inland Empire real estate market is more sluggish, by comparison.
That’s something of a paradox. Normally, low inventory levels tend to increase competition among home buyers and “accelerate” the housing market. But that’s not really happening in places like Riverside, San Bernardino and Ontario.
One explanation for this is that home buyers today might be shying away from higher home prices, after years of steady gains. In other words, a lack of affordable housing options could be holding these markets back and slowing sales to some extent.
It will be interesting to see if sales continue along at this pace as we move into the latter part of 2019, and into 2020.
Population Growth Bringing More Buyers Into the Market
Population growth is another key trend affecting real estate markets across the Inland Empire region of Southern California. Over the past few years, many folks have fled higher-priced coastal cities and moved inland to places like Riverside and San Bernardino. It’s part of an ongoing “exodus” of bargain-hunting home buyers.
In April 2019, a U.S. Census Bureau report showed that Riverside was one of the fastest growing counties in the United States. During the 12-month period from July 2017 to July 2018, Riverside County gained 33,534 new residents.
In Ontario, California, the population increased by more than 10% from 2010 to 2018. The population of San Bernardino has also increased over the past few years, but to a lesser degree.
Population growth tends to increase the demand for housing, on both the purchase and rental side. This in turn puts upward pressure on home prices.
Disclaimer: This article contains home-price forecasts for housing markets in San Bernardino, Riverside and elsewhere across the Inland Empire. Those predictions were issued by third-party sources not associated with MetroDepth.