LA/OC County Renters Flock To The Inland Empire Looking For Affordable Alternatives As They Get Priced Out Of Their Home Markets!
Instead of 30-Year Mortgage Rates increasing, the year started with rates taking a dive and by the beginning of February they were below levels not seen since May of 2015 according to data from ycharts.com! This resulted in homebuyers jumping back into the market in droves sooner than the normal cycle that starts in mid- to late-March. A domino effect began that has led to an increase in home values at an enhanced pace over and above what I predicted a short 6 months ago when I said values would increase "in the strong mid-single digits"- I was expecting a 6-8% jump in value!
Market Recap Through May 2016
With 5 months of data, we can begin to see trends in the market that will continue to play out for the immediate future. The following stats will focus on the overall Moreno Valley ("MV") market and 2 submarkets ("92553" and "92557" zip codes), but the overall trends apply throughout the Inland Empire market with local market adjustments.
Following are some interesting stats as of the end of May 2016. Rolling 3 Month Trends are used to smooth out seasonal cycles:
- Median Sales Price - +10%/average price of $275,000 in MV, +6.6%/average price of $282,500 in 92557, and +10.9%/average price of $254,000 in 92553.
- New Listings - 798 units in MV, 245 units in 92557, and 190 units in 92553.
- Pending Sales - 684 units in MV, 216 in 92557, and 172 in 92553.
- Closed Sales - 535 units in MV, 162 in 92557, and 138 in 92553.
- Average Days On the Market (DOM)- 39 days in MV, 34 in 92557, and 32 in 92553.
- Average Inventory Supply - 2.1 months in MV and 92557, and 1.9 months in 92553.
- Median Price per SqFt - $164 in MV (+11.6% from May 2015), $169 in 92557 (+10.5%), and $176 in 92553 (+13.5%).
New Listings, Months Inventory Supply, and DOM metrics have been trending below levels last seen in 2013 when values rose at a pace of roughly 29% in y-o-y terms. I don't see a return to this level of value increase for many reasons, but it does mean a tighter market that bodes well for sellers that price their homes right.
The above data was pulled on 6/3/16 from Infosparks - a housing market research tool provided to Realtors(R) subscribing to the CRMLS (California Regional Multiple Listing Service) . The data shows a median price in Moreno Valley increase of 10%!
Factors Affecting the Market In 2016
- Low Interest Rates - The unexpected DROP in mortgage rates has been the driving factor behind the market gaining so much momentum this year!
- Affordability and Purchasing Power - Based on 3 Rolling 3 Month data, LA County Median Sales Prices stood at $535,000, and OC stood at $620,000, while Riverside County's stood at $322,500, and San Bernardino County at $289,000. Homes in the IE and Moreno Valley are not only affordable, but the contrast in the age of homes between Moreno Valley and much of the homes in the LA/OC markets is so pronounced that Moreno Valley has become one of the TOP destinations for commuters in the Inland Empire. Potential homebuyers weigh commute times to their LA/OC jobs with what they can purchase at similar price points in each market and Moreno Valley comes out a clear winner. For instance, $400,000 could have bought you a 3 Bedroom, 1 Bath, 1065 sf home built in 1955 on Coney Ave. in Covina, OR you could have bought a 4 Bedroom, 3 Bathroom, 2623 sf home built in 1989 in the Sunnymead Ranch Association in Moreno Valley!
- Lack of Entry-Level New Home Building - New-home building has lagged behind levels necessary to meet new household growth demand, leading to heavier demand of resales.
- Strengthening Local and Regional Labor Markets - Personal sources have told me that it is getting tougher to hire personnel in the LA area. I believe that is also happening in the IE to some degree. This strengthening regional and local economy is allowing more renters to consider becoming first-time homebuyers.
- Foreclosure And Short-Sale "Waiting Periods"- Lending guidelines have prevented potential buyers from financing due to short-sales and foreclosures on their record. Guidelines prevent a buyer from financing with an FHA loan for a period of 3 years after a short-sale or foreclosure, and 4 years for a Conventional loan. Many buyers have now come to the end of their "waiting period" and are anxious to become homeowners again!
What Should You Do?
If you are a current homeowner, now is a good time to look at your home value and consider refinancing into a lower rate or out of a loan that has mortgage insurance, or to consider right-sizing! You can contact me to prepare a market analysis for your home, or submit the request on www.valuemymorenovalleyhome.com and I will personally contact you! If you've been thinking about buying, now is the time to get a FREE consultation to help you determine what the next step is in the home-buying process.
Alex Gonzalez, Broker, CalBRE #01384006, NMLS ID #98329, has almost 10 years of full-time industry experience and specializes in the Moreno Valley/Inland Empire market where he works for Excellence Empire Real Estate. Alex has extensive experience listing properties for equity owners, investors, banks, distressed sales, and foreclosures, as well as with first-time and move-up homebuyers. His experience includes mortgage lending which makes him a well-rounded, experienced real estate professional. Contact Info: 951-563-5093 and agonzalez@thegonzalezteam.com. You can visit his blog at www.TheGonzalezTeam.com.
