Business activity in the Inland Empire region expanded by 8% in the second quarter of 2021, according to UC Riverside’s School of Business Center for Economic Forecasting and Development. The growth was higher than the national average for the same period, which roughly stood at 6.6%.
“The Inland Empire’s better relative performance stems both from the fact that many parts of the local economy have shed the effects of the pandemic and because the area fell into a deeper hole during the crisis than the nation overall, leaving more room for growth,”Taner Osman, Research Manager at the Center for Forecasting.
Housing Leads the Way
The housing market led this higher business activity and remained a bright spot in the economic recovery.
According to the report, three factors drove the housing market.
- Typical homebuyers (higher-income earners) less affected by the pandemic-driven labor market downturn
- Mortgage rates are at historically low levels, driving purchase activity
- Inventories are near historic lows
A snapshot of this housing market growth directly reflects in the housing prices. The report sheds light on the uptick in single- family houses.
“From the second quarter of 2020 to second quarter of 2021, the median single-family home price rose 24.7%. This is stronger growth relative to Orange County (22.5%), but trails growth in Los Angeles (27.5%) and San Diego (25.8%) Counties”.
UCR, Center for Economic Forecasting and Development
INLAND EMPIRE SINGLE-FAMILY HOMES
INLAND EMPIRE, 2005 TO 2021
Is Affordable Housing Marketing the Secret to Economic Recovery?
What if fixing the economy where it matters the most was the secret to sustainable economic recovery? That’s what appears to be the case in the Inland Empire’s economic recovery.
The report by UCR calls the Inland Empire region one of the last “relatively affordable housing markets in Southern California”. And, this helped recover the business activity relatively faster than other regions.
A Seller’s Market
Despite strong demand, housing supply remains low in region. It means that it is seller’s market out there in the Inland Empire housing sector.
Take for example the counties of San Bernardino and Riverside.
Both counties have the housing supply less than the demand in the market. “In August 2021, there were just two months of housing supply available on the market in Riverside County and 2.4 months of supply in San Bernardino County. For context, a balanced market typically equates to six to seven months of supply. Moreover, a buyer’s market is considered to be seven months of supply and above, while a seller’s market is six months of supply and under“. (UCR | School of Business Center for Economic Forecasting and Development)
Add to it the fact that building permits for both multi-family and single-family homes have not increased. In fact, permits for single-family buildings have remained flat whereas those for multi-family have declined.