The Redlands Daily Facts picked up a story today about the massively overpriced Inland Empire by Steven Smith:
A combination of first-time and move-up buyers make up the bulk of normal residential activity. Upward of 25 percent of the buyers during this run-up were investors or speculators. Add to this mix the commuter buyers who were coming from more expensive areas to the west and south. All of this was fueled by low interest rates and up to 100 percent financing.
Fundamental supportable demand is largely centered on the household incomes in a given area. In our region, the Housing Affordability Index put out by the California Association of Realtors (www.car.org) has fallen from the 70 percent range to less than 20 percent in most local cities.
Better strap on your best crash helmet.
Will prices fall? Yes. How much depends upon the local area, and where supportable demand levels exist. It is my estimate that the Inland Empire Region will experience 25 percent to 50 percent price declines during the cycle we are now in. It will vary by city and even by ZIP code.
Orange County, San Diego, and Los Angeles affordability has plummeted to single-digits, but we’ll be fine, right?
None of those IE investors were from other SoCal areas, were they?
