First American Core Logic recently released a report which warns against exaggerated housing price optimism in the hard-hit Inland Empire. The region’s sputtering housing market has leaned heavily on government intervention which has artificially supported the recent weak growth in housing prices.
The fundamental housing shocks which rocked the market since the bubble implosion are still not solved, the report warned. Unemployment in the area is still highly volatile, a fact which would greatly tip the scales in favor of a second wave of foreclosures. The report suggests prices will remain low at best or at worst take another dip as soon as next year.
A regional economist does offer some hope: even with the relatively oppressive jobless rate in the region, the median housing price is extremely affordable based on the area’s average income and thus serves as a lure to those average buyers who are looking to get in the middle-of-the-road housing market.
first tuesday take: As California experienced a deeper housing recession than the rest of the nation, (because its housing prices experienced greater increases during the boom) so similarly do the Inland valleys of the state experience a deeper housing recession than the rest of the state.
Despite the hopeful outlook , there will be some downward pressure on the housing prices going forward. This projection is based on the higher jobless rate in the Inland Empire, which greatly exceeds the already worrisome 12% unemployment experienced statewide, to say nothing about the ongoing rate of job loss.
As these trends continue, the foreclosures working through the pipeline will eventually reach fruition, in spite of government efforts to stave them off. It’s only a matter of time. And the sooner the better, as the real estate market cannot commence its recovery until the excess foreclosures are addressed.
Re: “Expected to rise in home prices not expected to last, expert says” from the Press Enterprise