Two new details from the DataQuick report on March home sales shows that Southern California’s inland region may be tip-toeing toward a pressure point on that age-old question: Is it time to buy or rent?
The new March median on home prices for all of Southern California — $400,000 — hasn’t been this high since February 2008. The rocket ride on price began its descent at that time from a median of $408,000.
Prices have been on the rise for much of 2013, helping homeowners regain equity or come up for air on mortgages that took a deep underwater swim on assessed valuation.
This burst in pricing has put the typical monthly mortgage payment in Inland Southern California at $1,591. In March 2013, the monthly mortgage payment was $1,252.
Adjusted for inflation, last month’s typical payment, according to Irvine-based DataQuick, was still nearly 34 percent below the typical payment homeowners made in the spring of 1989, the peak of the prior real estate cycle. It’s also 45.9 percent below the current cycle’s peak set in July 2007.
With home prices and mortgages back on the rise, rent is going up, as well.
In Southern California, renters are sensing a tightening in their discretionary spending as apartment vacancy rates drop and the economy gains footing.
A shortage in real estate property for homebuyers to latch onto is driving up price and bringing a wave of new rental stock into the marketplace: Luxury or “resort-styled” multifamily developments with mortgage-sized leasing rates.
This Sunday, we will showcase one such an apartment complex — Homecoming at The Preserve — in an Inland region where Chino, Eastvale and Norco come together. This mid-spot in Inland Southern California is a pulse point for commuters to Los Angeles, San Bernardino, Riverside and Orange counties and has long been a melting pot for people of all ages and walks of life.
The Homecoming dwellings — from a 1-bedroom loft unit to a 4-bedroom home — are being introduced by Upland-based Lewis Apartment Communities at prices from $1,475 to $2,730.
The Lewis Group says the units play well to “renters-by-choice” and others in transition or down-size mode: They may have lost a home to foreclosure or are gravitating from single-family homes they rented in the downturn. Others may be suddenly single or got a job in a new locale.
The luxury rentals, though catering to a vital component of the marketplace, is bound to heat prices up.
Capital Economics predicted rents could rise 4 percent this year, nearly twice the rate of 2013. At that rate the National Low Income Housing Coalition of Washington, D.C., says many rental units will be out of reach for the typical renter.
The typical California renter earns $18.50 an hour, less than the $26.04 hourly wage needed to afford a modest unit at Fair Market Rent, which is a government-established measurement. With California ranking as the second “most expensive” rental state in the U.S., state Sen. Mark DeSaulnier said middle ground needs to be found.
Bruce Norris, president of The Norris Group, concurs the rental market is a hot topic.
Norris, an active investor, hard money lender and real estate watcher, will share his thoughts on single-family rental market dynamics April 22 at a Mortgage Bankers Association’s summit in Arlington, Va.
He will join Rick Sharga, of Auction.com, and Paul Sveen, of Pantelan Real Estate Services, for a panel discussion on financing options, government policies and future of institutional participation in the market.
Among proposed remedies are public-private partnerships to build affordable single-family homes and apartments each year for Californians in need.
For more information, visit www.mba.org