Posted on 03/24/2005 11:35:38 AM PST by Smogger
Zoom, zoom. Inland Empire home prices continued their climb in February, with five of the biggest percentage increases in the state recorded by local cities, according to a report by the California Association of Realtors.
Adelanto (up 81.8 percent from February 2004), Hesperia (up 67.4 percent), Twentynine Palms (up 64.2 percent) and San Bernardino (up 54.5 percent) paced San Bernardino County, while Norco (up 55.7 percent) led Riverside County.
Most of those cities were "affordable" alternatives to the Riverside/San Bernardino area, which had a median price for a single-family existing home of $342,120 and is itself the "affordable" alternative to Los Angeles ($473,550) and Orange County ($663,600).
If all those numbers seem a bit confusing, the situation itself is quite simple. Anyone who doesn't already own a home - even if he or she has money - is part of too much demand in a situation with too little supply.
"There are two things still contributing to strong sales," said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. "Mortgage rates are still at reasonable levels, and the local economy is quite healthy. There is a lot of demand and not much supply, so prices probably are going to continue to rise."
Much of that growth is now in the High Desert. Adelanto, little more than a wide spot in the road from San Bernardino to Bishop a decade ago, has seen its median price climb from $143,250 to $260,500 in just 12 months.
One reason the outlying areas are so hot is that the West End has become prohibitively expensive. Bill Velto of Tarbell Realtors in Upland said a developer recently paid $1.2 million an acre for the land for an apartment project in Rancho Cucamonga.
"When you look at the fact that historically, land is about a quarter of the purchase price. That's just incredible," Velto said. "More and more people are getting priced out of the market."
Demand is a major problem. As of Wednesday, there were only 89 homes on the market in Upland, 203 in Rancho Cucamonga, 255 in Fontana and 123 in Ontario.
"You would ordinarily see a minimum of 250 in Upland and 600-650 in Rancho Cucamonga," Velto said. "Nobody is selling right now, so prices are going to continue to go up. It's all about supply and demand."
In the Inland Valley, prices range from a low of $285,000 in Rialto (still up 40.4percent from a year ago) to $599,500 in Norco.
Statewide, the inventory problem isn't as bad. The CAR Unsold Inventory Index was 3.9 months in February, compared to 1.8 months a year ago. That number measures the number of months needed to deplete the supply of homes on the market at the current sales rate.
The California median price of $471,620 is up 20.4 percent from a year ago, although it's down 2.9 percent from January's $485,700.
"February typically accounts for the smallest monthly share of annual sales in any given year, so we expected to see a slight dip compared to January," said Jim Hamilton, CAR president. "Year to year, the median price continued its upward climb, and while the number of homes for sale has improved, short supply contributed to price appreciation."
Mortgage rates remain low (a 5.63percent average for a 30-year fixed), almost identical to the 5.64 in February 2004. But "Fed-watching" -- wondering what Washington will do -- has become a major part of the picture.
"Upper-end markets may soften as affordability concerns impact households trying to stretch their purchasing power with adjustable rate loans," said Leslie Appleton-Young, CAR vice president and chief economist. "But job growth in California was stronger than originally projected, and a strengthening job market this year should have a positive impact on household incomes and housing market activity."
-------------------------------------------------------------------------------- Median home prices in Inland Valley cities in February 2005 and the percentage increase from February 2004
• Chino: $410,500, up 24.0% • Chino Hills: $525,000, up 26.2% • Claremont: $484,500, up 10.4% • Corona: $470,000, up 23.0% • Diamond Bar: $460,000, up 30.0% • Fontana: $361,000, up 36.5% • Montclair: $323,000, up 28.2% • Norco: $599,500, up 55.7% • Ontario: $325,000, up 29.0% • Pomona: $327,000, up 36.5% • Rancho: $417,500, up 28.5% • Rialto: $285,000, up 40.4% • San Dimas: $434,500, up 12.9% • Upland: $445,000, up 17.4%
— Sources: Numbers courtesy of California Association of Realtors and DataQuick Information Systems
260K for Adelanto. Incredible.
Agreed!
ping
der pingle
All of those are more than my area, and I'm in an 'expensive county' in Michigan.
Unbelievable. What about the Riverside/San Bernardino prices? Merciful heaven.
Good I hope the leave. I will consider that a buying opportunity. As will most.
It is incredible and almost surreal.
Here is the problem. The illegals will keep coming in, but that will not lead to a collapse. It is a supply and demand issue. If there is a demand for housing, prices go up.
LOL! Detroit. Your kidding right? I think I will stick to my beaches, mild weather, and picturesque landscaping.
The only issue I have with this article is:
Mortgage rates remain low (a 5.63percent average for a 30-year fixed), almost identical to the 5.64 in February 2004.
Current 30 yr fixed loans are somewhere between 6% and 6.25% and has something to do with the lull in homesales all over the country. Things should pick up in May and June as is the norm.
Damn....I sold way too soon...my 3,000 sq foot house would be worth some big money now!
On Bear Valley by the 395....in Eagle Ranch...I loved that house....could entertain a crowd...and we did a few times.
I imagine if you say that long enough, one day it might.
Actually, Yahoo shows the current 30 year mortgage average at 5.68%.
Wow, so an increase in demand combined with low supply actually leads to DECREASES in prices? Who knew?
That happened 25 years ago. What you have in California are affluent whites and Asians, along with poor and working-class Mexicans. Whatever lunch-pailers/"werkin' men" that used to live in California left along time ago.
Housing prices will continue to increase as long as interest rates remain low.
Of course you know for demand to exist (economically speaking), you not just have to *want* to purchase something, you must actually possess the means to do so.
Somehow I doubt illegal immigrants right over the border are going to be able to afford to buy > $400k houses.
Don't know if it will be because of illegal aliens but I agree that it will collapse soon. It happens about every 10 years, prices spike way up, it can't be sustained, things start to flatten out, people get scared, some sell hoping to get out with the money they thought they were sitting on and others get foreclosed.
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