RivCo's Housing Market Remains 'At A Frenzy' In 2022: UCR Report

RIVERSIDE COUNTY, CA — Rising costs and reduced spending power, as well as a steady decline in supply, are bearing on one of the major drivers of the Inland Empire economy -- housing -- according to a report released Thursday.

In the UC Riverside School of Business Center for Economic Forecasting's latest IE Regional Intelligence Report, highlights point to strengths and weaknesses in the marketplace, with real estate showing signs of distress.

The report noted that, at current prices, only 31% of area households can afford to buy a home in Riverside and San Bernardino counties.

That compares to 39% a year ago.

Lack of supply is one of the principal reasons for prices spiraling higher and out of reach for residents.

According to the report, in Riverside County, there is a 1.7-month housing supply available, with homebuying "at a frenzy," the report states. A "balanced market" exists when a minimum 6-month supply is available, the authors said.

"This is what affordability looks like in California," Center for Economic Forecasting Research Manager Taner Osman said. "Housing prices are at the crux of the state's famously high cost of living and are out of reach to the majority of the population as lack of supply enduringly and severely lags demand."

The report pointed out that, although the labor market is, statistically, at full employment, with the region-wide unemployment rate below 4%, real wage growth has been falling behind due to torrid inflation. The consumer price index for the Inland Empire is at 9.4% year-over-year, according to figures published earlier this month by the U.S. Bureau of Labor Statistics.

Wage growth in Riverside County from the first quarter of 2020 to the third quarter of 2021 was 3%, according to the report. Costs for consumer staples, energy and a range of other needs have been on a steadily upward trajectory.

The authors said that the region's warehousing district remains robust, with no slow-down in the expansion of the sector thanks largely to demand in the e-commerce space.

According to the report, a year ago, the vacancy rate for warehouse properties in the IE was just 3.6%, then signaling accelerated growth. In the first quarter of this year, it dropped still lower, to 3.2%, even as 35 million square feet of new space was added.

The report said that asking residential rents are up 21% in the last year, averaging $1,807 per unit, with the vacancy rate down to 3%.

An economic downturn would impact multiple sectors of the regional economy, and the report acknowledged that the threat of a recession looms, but its potential consequences and duration were not described.

The complete UC Riverside Report is available to read to give a full picture of all of the issues at hand.