In today’s report, we are doing an in-depth analysis of the real estate market in San Bernardino and Riverside Counties, AKA The Inland Empire – Our report will analyze the most recent data up to December 2023. We will give you current market values, trends, and other important numbers relevant to your market so you can make informed decisions if you are considering moving in or out of the Inland Empire.
We will also compare the values and numbers of the past month, the past 1 and 3 years. Utilizing data from reliable sources, including the Southern California Multiple Listing Service, Corelogic, and Freddie Mac, we will use statistical methods to examine changes in average sales prices, the volume of new and active listings, pending and closed sales, and the sale-to-list price ratios. All of which you will find simply fascinating, no doubt!!
The report focuses on three significant aspects of the Inland Empire Real Estate Market:
Average Sales Price Trends- An in-depth look at prices now and a historical analysis of the past three years.
Listings and Available Inventory – The supply of homes is one of the most significant drivers of market performance.
Pending and Closed Sales – A granular look at how active the market is, and the underlying causes.
Final Sales Price Relative to Original Listing Price – We analyze the impact of the economic factors that influence seller and buyer position in negotiating buy and sell prices.
Our findings indicate strong growth in property values tempered by recent market coolings, such as decreased listing activities and shifts towards more buyer-favorable negotiations.
Introduction:
San Bernardino and Riverside Counties, essential Southern California real estate market components, have historically been a barometer for regional housing trends. These markets are characterized by diverse housing stock and dynamic demographic shifts influenced by economic growth, population movement, and policy changes. The evolution of these markets can provide insights into broader real estate dynamics in suburban and semi-urban areas.
The real estate markets in San Bernardino and Riverside Counties have faced some challenges and opportunities over the past years; from the rapid appreciation of property values, a spike in mortgage rates has led to a recent cooling trend.
Understanding these fluctuations is imperative for stakeholders who need to navigate an environment impacted by economic uncertainties, changing interest rates, and a global pandemic that has altered housing needs and demands.
Objectives of the report:
This article will dissect and understand the multifaceted trends of the real estate markets in San Bernardino and Riverside Counties. We will shed light on the trajectory of housing prices, inventory levels, market velocity, and pricing strategies, thereby providing a clear picture of market health and direction.
Significance of the analysis:
The study is significant for a spectrum of stakeholders, including home buyers, sellers, investors, real estate professionals, and policy-makers. By providing an empirical analysis of market trends, this paper will aid in informed decision-making, support the development of strategic approaches to market engagement, and contribute to academic and practical understanding of regional real estate markets.
Methodology
Data Collection:
The primary datasets for this study include historical records of average sales prices, new and active listings, pending and closed sales, and sale-to-list price ratios from January 2018 to December 2023. These datasets were sourced from the Southern California Multiple Listing Service, Corelogic, and Freddie Mac, ensuring a robust foundation of market-specific data.
Analytical Framework:
The data were analyzed using a combination of time-series analysis to track market trends over time and comparative analysis to contrast the two counties. Statistical tools, including moving averages and percentage change calculations, were employed to smooth out short-term fluctuations and highlight long-term trends. The sale-to-list price ratio was analyzed to gauge the market’s negotiation dynamics.
Limitations:
This study is bounded by the scope of the datasets, which capture historical market performance but do not account for current market conditions post-December 2023. External factors, such as changes in federal monetary policy, unforeseen economic events, and non-quantitative shifts in buyer preferences, were beyond the purview of this analysis. Additionally, the study’s retrospective nature limits its ability to predict future market movements with certainty.
Market Analysis: December 2023
Average Sales Price Trends
San Bernardino County
Average sales price: $560,471
Monthly Comparison: This is a marginal increase from November 2023’s average price of $559,266, indicating a 0.2% increase.
Annual Comparison: Compared to December 2022’s average price of $524,267, a significant 6.9% increase shows continued market growth.
Three-Year Comparison: In December 2020, which posted an average price of $450,222, the growth rate is a remarkable 24.5%.
Riverside County
Average sales price: $658,260
Monthly Comparison: This reflects a slight decrease of 0.3% from November 2023’s average price of $660,546.
Annual Comparison: This is a 6.4% increase from December 2022’s $618,665. Both counties are doing well in terms of year-over-year appreciation
Three-Year Comparison: Compared to December 2020’s price of $522,612, this is a substantial 26.0% increase.
Pending and Closed Sales Trends
San Bernardino County:
Closed sales in December 2023 were at 1,315.
Monthly Comparison: This is an increase of 2.2% from November 2023’s 1,287 closed sales.
Annual Comparison: Closed sales have decreased by 13.7% from December 2022’s 1,524.
Three-Year Comparison: There’s a significant drop of 51.9% from December 2020’s 2,732 closed sales.
Riverside County:
Closed sales in December 2023 amounted to 1,827.
Monthly Comparison: This represents a 6.0% increase from November 2023’s 1,724 closed sales.
Annual Comparison: Closed sales have decreased by 3.1% from December 2022’s 1,885.
Three-Year Comparison: There is a drop of 53.4% from December 2020’s 3,923 closed sales.
Listing and Inventory Trends:
San Bernardino County: Active listings in December 2023 were recorded at 3,899.
Monthly Comparison: This is a 15.2% decrease from November 2023’s 4,596 listings.
Annual Comparison: There’s a considerable reduction of 24.9% from December 2022’s 5,190 listings.
Three-Year Comparison: December 2023 listings have plummeted by an extraordinary 80.5% from December 2020’s total of 20,020.
Riverside County: Active listings were at 5,532 in December 2023.
Monthly Comparison: There’s a decrease of 12.2% from November 2023’s 6,300 listings.
Annual Comparison: Listings have decreased by 24.5% from December 2022’s 7,323.
Three-Year Comparison: There’s a dramatic decrease of 53.4% from December 2020’s total of 11,868 listings.
Sale Price Relative to Listing Price
San Bernardino County:
The sale-to-list price ratio in December 2023 was at 97.5%.
Monthly Comparison: This ratio remained the same from November 2023, suggesting stable negotiation conditions between buyers and sellers.
Annual Comparison: There is a slight decrease from December 2022’s ratio of 94.8%.
Three-Year Comparison: The December 2020 ratio was notably higher at 100.7%, reflecting a market where sellers had more leverage to command full asking prices or more.
Riverside County:
The sale-to-list price ratio stood at 97.6% in December 2023.
Monthly Comparison: There’s a minor decrease from November 2023’s 98.0%, which could signal a slight shift towards buyers in negotiation power.
Annual Comparison: The ratio has seen a small decrease from December 2022’s 94.9%
Three-Year Comparison: Compared to December 2020’s ratio of 99.9%, the current figure shows that while sellers are still receiving near-asking prices, the ratio has softened slightly, favoring buyers more than before.
Year-over-Year and Three-Year Trend Analysis:
Comparative Analysis: average sales price
San Bernardino County Average Sales Price:
Year-over-Year: From December 2022 to December 2023, there was a 6.9% increase in average sales prices. This increment suggests a continued upward trajectory in the housing market.
Three-Year Trend: A more dramatic increase of 24.5% from December 2020 indicates sustained growth over the long term, reflecting the aftermath of the pandemic and the subsequent housing demand surge.
Riverside County Average Sales Price:
Year-over-Year: The region saw a 6.4% increase in average sales prices from December 2022, indicating healthy market conditions.
Three-Year Trend: The sales prices have seen a substantial 26.0% increase since December 2020, showcasing robust growth that outpaces San Bernardino.
Inventory Levels:
Year-over-Year: Both counties experienced a decrease in active listings by approximately 25%, showing a tightened market with less available inventory for buyers.
Three-Year Trend: The inventory levels have significantly decreased by 80.5% in San Bernardino and 53.4% in Riverside since December 2020, indicating a severe shortage in supply that could be driving up prices.
Closed Sales:
Year-over-Year: Closed sales in December 2023 decreased by 13.7% in San Bernardino and by 3.1% in Riverside compared to the previous year, pointing to a cooling market.
Three-Year Trend: Closed sales have significantly reduced by over 50% in both counties since December 2020. This reduction could be due to multiple factors, including affordability constraints and lower inventory levels.
Seasonal Adjustments
San Bernardino County:
Seasonal trends impact the real estate market, with end-of-year sales often slowing due to holidays and weather. However, the year-over-year increase in sales prices suggests that other market drivers, such as low inventory and high demand, offset seasonal factors.
Over three years, despite potential seasonal dips, the consistent price increase illustrates a market that has seen more factors at play than just seasonal changes, including economic recovery and migration patterns post-pandemic.
Another factor to consider is the room for price growth in San Bernardino County. With prices being about half of the average price in Los Angeles Counties and close to one-third of home prices in Orange County, San Bernardino County has tremendous upward potential.
Riverside County:
Seasonal influences typically lead to a deceleration in market activity toward the year’s end. However, the relatively small decrease in year-over-year closed sales suggests that Riverside County’s market may be more resilient to seasonal slumps, potentially due to its attractiveness as a location and possibly more aggressive pricing strategies.
Over the last three years, despite expected seasonal fluctuations, the significant rise in average sales prices and the drop in closed sales volumes suggest a market influenced by factors such as limited supply, increased migration to the area, and perhaps changing consumer preferences post-COVID-19, which might have included a desire for more space or a different lifestyle.
Analysis of Seasonal and Long-Term Trends
The year-over-year and three-year trends present a complex picture where short-term market fluctuations can be both amplified and mitigated by seasonal patterns, while the longer-term trends point to more fundamental market shifts.
For stakeholders, understanding these trends is crucial for timing the market, whether for listing, buying, or developing real estate strategies.
While seasonal patterns provide opportunities for tactical decision-making, the longer-term trends underscore the need for strategic planning to address issues such as inventory shortages and affordability, which will likely have lasting impacts on the Inland Empire’s real estate landscape.
In summary, the comparative analysis across different time frames reveals a market that has been shaped significantly in the post-pandemic period. The analysis underscores the importance of considering year-over-year changes and longer-term trends in conjunction with seasonal adjustments to comprehensively understand the real estate market’s trajectory.
Market Dynamics:
Interest rates have been pivotal in shaping buyer behavior and market dynamics. The lowering of rates from their peak in October 2023 has likely supported the continued buyer interest and contributed to the price strength. However, the high rates compared to historical standards have also tempered demand, as seen in the reduction of closed sales volumes.
Economic shifts, including the transition to remote work and the increased desirability of suburban and semi-rural living, have also influenced market trends, particularly in these counties known for offering more spacious properties at relatively affordable prices compared to urban centers.
Policy changes, especially those related to housing development and mortgage regulation, could be significant contributors to the observed market trends. The inventory shortage points to a need for policies that encourage new housing developments, especially affordable housing, to meet the demand.
Implications for Stakeholders:
Buyers: With prices continuing to rise, buyers may need to act swiftly to lock in purchases before prices potentially increase further. However, they should also be mindful of the interest rates and their long-term impact on mortgage repayments.
Buyers may find opportunities in the seasonal market fluctuations and should be prepared to negotiate assertively, leveraging the slight softening in the sale-to-list price ratio to potentially secure properties at a slight discount from the listing price.
Sellers: The data suggests that sellers still have leverage due to the low inventory levels, but they should not be complacent.
Pricing strategies need to be smart, reflecting a balance between the strong market position and the need to attract buyers who are facing higher mortgage rates.
Sellers should also consider timing their listings to coincide with seasonal demand peaks to maximize potential offers.
Real Estate Professionals: Agents and brokers should advise their clients with an eye toward the nuanced market conditions. For sellers, the focus should be on marketing properties effectively and pricing them in line with the current market to avoid overpricing and subsequent price reductions.
For buyers, professionals should emphasize the importance of pre-approval in a competitive market and assist them in navigating mortgage rate implications on their purchases.
Developers and Investors: The data underscores the need for increased housing inventory. Developers and investors have an opportunity to fill this gap, particularly in the affordable housing segment.
Strategic development that focuses on the demands of a post-pandemic buyer, such as more space and amenities conducive to remote work and lifestyle, could be particularly successful.
In summary, the interpretation of the data reveals a complex interplay of market forces that stakeholders must navigate with strategic planning and informed decision-making.
The health and direction of the Inland Empire real estate markets will likely continue to be influenced by broader economic conditions, policy decisions, and evolving consumer preferences in the post-pandemic era.
Summary of Findings for December 2023:
The data for December 2023 indicated a market that is still relatively strong, with average sales prices showing an annual increase in both counties. However, there’s a marked decrease in inventory compared to three years prior, a significant drop that could contribute to the sustained prices due to lower supply.
The closed sales figures suggest that while there’s been a drop from the highs of 2020, there’s still activity in the market, albeit at a slower pace.
As evidenced by the sale-to-list price ratios, the negotiation environment indicates that sellers are still in a relatively favorable position while the market isn’t as heated as it was three years ago. However, the softening ratios could also indicate an opening for buyers to negotiate better deals than they could have in the immediate post-pandemic market.
This detailed snapshot of December 2023 highlights a real estate market that is adjusting from the rapid growth of the preceding years to a more balanced state, with implications for both buyers and sellers in terms of pricing strategies and market expectations.
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