SAN BERNARDINO, CA—John Burns Real Estate Consulting LLC has upgraded the Riverside-San Bernardino MSA to a “hot” housing market based on strong sales and rising home-price appreciation, the firm’s VP and chief demographer Chris Porter tells GlobeSt.com.
According to San Bernardino County’s Economic Development Agency, there are a number of housing units planned in the region. Some areas include:
- Rialto—The residential component for the 1,500-acre master planned community, Rialto Renaissance, will include a mix of rental and for-sale housing for approximately 1,300 housing units.
- Ontario—Development of Ontario Ranch, an 8,200-acre master planned community, is underway with 46,000 homes and millions of square feet of commercial development.
- Rancho Cucamonga—More than 1,200 housing units are in planning or in progress throughout the city.
John Burns provides independent research and consulting services related to the US housing industry. We asked Porter, co-author of Big Shifts Ahead: Demographic Clarity for Business, to share why the firm has now classified the San Bernardino County housing market as “hot.”
GlobeSt.com: Why did John Burns Real Estate Consulting recently upgrade the San Bernardino County housing market to “hot”?
Porter: We upgraded the Riverside-San Bernardino MSA to a “hot” housing market based on strong sales and rising home-price appreciation. In our rating system, warm market conditions reflect builders selling at a market’s historically normal sales rate per community, typically two to three per month, with slightly rising net prices. To be considered a “hot” market, market conditions need to exceed these criteria, which they are doing right now. The areas of the MSA that border Orange and Los Angeles Counties appear to be the strongest, but we are seeing better-than-average performance further inland as well.
GlobeSt.com: How are demographic shifts impacting housing demand and migration into San Bernardino County?
Porter: The large number of young adult households that are and will continue to be forming are most likely to rent first, which provides an upside to the rental market, but a portion of this group will eventually turn to owning, which benefits the for-sale market. Both sides of the industry will experience growth.
Here’s why, based on recent Census Bureau for San Bernardino County information:
- Births are starting to tick up again, and children are a trigger for people to change their housing preferences.
- Immigration from other countries is relatively flat in the county, but still contributes positively to the overall growth in the county.
- There are still more people moving out of the county to other parts of the country than are moving in from elsewhere in the US, but that number moving out is getting smaller. As we see a greater number of people leaving the coastal counties than in years past, migration patterns may turn positive once again, due in part to better affordability in San Bernardino County compared to coastal markets.
GlobeSt.com: Where are the biggest demographic opportunities for San Bernardino County?
Porter: Both newly formed, young-adult households and the growing retiree population are going to be big opportunities to keep an eye on. For the younger-adult population, homeownership is still a goal, and San Bernardino County offers relatively better housing affordability in relation to incomes than other parts of Southern California.
GlobeSt.com: What are some major trends that are impacting today’s housing market that will shift the paradigm of home buying?
Porter: The sharing economy that has emerged includes more opportunities for people to rent or borrow than ever before—and this includes housing. The tradeoff that many young adults are willing to make is to rent a home or an apartment for longer and spend their resources elsewhere. Older adults are increasingly renting as well. Some will prefer the flexibility that renting offers, some will like the lower home-maintenance lifestyle that comes with renting, and some will cash out on the home they currently own to ensure that they have sufficient savings for retirement.
Along those lines, the single-family rental home continues to grow in popularity. For families with kids who want to be in a good school district and want to have a yard, renting a single-family home often makes sense, especially for those who can’t come up with a down payment or whose credit prevents them from purchasing a home.
The suburbs are going to experience the greatest share of growth in the next decade, but we see a trend that we call “surban” living continuing to emerge. Essentially, it is bringing the best elements of urban living to traditionally suburban locations, including small downtowns, with housing that is walkable to retail, restaurants and entertainment and places where you might not need a car during the week—but you might like to have one for the weekends.