Inland Empire Rental Market Trends Outpacing Coastal Areas

More multifamily and single-family housing needed to support growing jobs base, new analysis says

More housing is needed in the Inland Empire, according to a report released today by UCR’s School of Business Center for Economic Forecasting and Development.

RIVERSIDE, Calif. (www.ucr.edu) — The Inland Empire’s robust residential rental market is outpacing neighboring coastal areas with less vacancy and greater or equal growth in rent prices, according to a new analysis released today by the UC Riverside School of Business Center for Economic Forecasting and Development. The region’s tight apartment supply and rapidly rising rents underscore the need for additional multifamily housing, say the report authors.

In the 4th quarter of 2016 (most recent data available), only 2.4 percent of rental units in the Inland Empire were vacant compared to 3.3 percent in Los Angeles County and 3.2 percent in Orange County. At the same time, the cost of rent grew by 5 percent in the Inland Empire, matching growth rates in Los Angeles County and outstripping Orange County, where rents rose by just 2.4 percent.

Moreover, price appreciation for single-family homes in the Inland Empire, while cooler than in recent years, still outpaced home price growth in the state overall. The median price for an existing single family home in the region jumped by 7.3 percent from the 4th quarter of 2015 to the 4th quarter of 2016, compared to 5.8 percent in the state.

The Inland Empire’s regional affordability advantage is helping fuel homebuyer demand while low numbers of existing homes for sale and low levels of construction have depleted inventories, putting upward pressure on prices.

“The Inland Empire has seen consistent growth in economic activity and employment in recent years and with that growth have been population gains that are outpacing neighboring counties in Southern California and putting pressure on both the IE’s rental market and the market for owner-occupied homes,” said Robert Kleinhenz, executive director of research at the Center for Economic Forecasting and Development. “There is a genuine need for more housing across much of California, and nowhere is the severity of the situation more apparent than in the Inland Empire.”

Other Key Findings:

  • The California EDD’s recently released benchmark revision shows that job growth in the Inland Empire was higher in 2016 than previously estimated, jumping from 2.8 percent to 3.5 percent for the year.
  • Rising job counts and incomes have paved the way for more consumer spending in the IE with local taxable sales rising by 3.3 percent compared to 2.1 percent in the state overall from the 3rd quarter of 2015 to the 3rd quarter of 2016 (latest data available). Spending grew faster in Riverside County (5.4 percent) than in San Bernardino County (1.3 percent).
  • In commercial real estate, 2016 nonresidential building permit activity was 6.3 percent below 2015 levels, but up from 2013 levels by more than 20 percent, highlighting the continued investment developers are pumping into the region.

The new Inland Empire Regional Intelligence Report is available online.

 

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Victoria Pike Bond, Director of Marketing & Communications, Center for Economic Forecasting
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