The engine that has driven the real estate market in the Inland Empire for decades has been affordable housing. With home prices skyrocketing in the coastal regions, the difference in home prices between the coast and Southwest Riverside County are greater now than they have been in the past. The same size home on a smaller lot in Irvine is selling for two times more than what it sells for in our Southwest Riverside County market.
There are many factors currently indicating that buyers are starting to come out of hiding:
• Low interest rates
• An urgency created by the limited supply of resale and new homes
• The improving personal balance sheet and credit profiles of consumers
• A solid employment picture
• Strong consumer confidence
• A robust stock market
• Increasing equity in personal residences
From a national perspective, the gap between demand and supply continues to widen. In the United States, because of population growth, we create a demand of approximately 1.7 million homes annually. In the past 10 years, we have been building less than 1.2 million homes annually. That has created pent-up demand for five million families who have not achieved the American dream of home ownership.
This all adds up to tremendous demand. Now, all we need is more supply. Gene Wunderlich, Vice President of Government Affairs for Southwest Riverside County Association of Realtors, sums up the issues of supply extremely well in his recent report on the housing market where your investment is located.
Click to download the April 2017 Housing Report
In regards to commercial and industrial properties, they normally flourish as residential rooftops appear. The commercial market is starting to see life and should see buyers for those properties as well. Interestingly, the industrial market has been very strong and in fact has led the market recovery.
During the recession, our Rancon team kept very busy preserving and completing all the entitlements, where necessary, on each and every property we manage, making sure they are in a position to sell as buyers enter the market. In addition, we completed marketing brochures, sales materials and made sure all our properties were well advertised for sale.
With the increase in demand and shortage of supply, we should see more properties sold in the next several years than we have experienced in the past decade. Our resident expert on the Inland Empire Economy, John Husing, PH.D., gives an update report on what he sees happening in the near future.
Click to download the Quarterly Economic Report
There are a number of major projects recently completed or currently under construction in our market area worthy of notice:
• The interchange at I-215 and Newport Road is completed and open for business.
• The Pechanga Resort Casino is under construction on a 568 room expansion, making it the largest Casino Resort in the state of California.
• Temecula Valley Wine Country is experiencing unprecedented growth. Six wineries are making major upgrades to their facilities to handle the increase demand and another six new wineries are in the planning stages to start building in the near future.
• Hospitals are coming up everywhere. The new Loma Linda and Temecula Valley hospitals are completed and in full operation. For decades, Southwest Riverside has had only two hospitals and almost overnight we have five. In addition, Kaiser Medical Complex in Murrieta is currently under construction and scheduled to be completed next year.
• Conestoga at Winchester Ranch has completed its $38,000,000 infrastructure project and, as a result, has offers on two tracts totaling 224 lots. This is the culmination of 14 years of work. By the first quarter of next year, we will finally see homes built in the Winchester Valley.
• Rancon successfully closed escrow on El Dorado, a 124 residential lot subdivision, located in Menifee. Within days of the escrow closing, the buyer was under construction on new model homes.
• Rancon successfully purchased a 6.9 acre parcel fronting I-15 in the Temescal Canyon area (between Corona and Elsinore) and is currently entitling this property for a self-storage development. As soon as Rancon completes its research on the development of a self-storage facility, we will form a partnership to build these facilities.
We are positioned and optimistic that with all these stars in alignment, we will have success selling many of our properties in the near future.