I.E. Center of the Universe (Daily Bulletin 08122006) Home's Booming, Unemployment Low, 80K+ W/Collage Degree's moved into the IE...Happy Days are her

Even thought the I.E. is booming, the Home Market is started to get a little sluggesh lately. But when the adjustment has been made to the new increased Interest rate then the home market might pick up again, but I feel that it might have passed us by. We will see. and pray that they lower the Interest rate again.

BSRanch

I.E.' Center of the Universe'
By Michael Rappaport, Daily Bulletin Staff Writer
08122006

For the last few years, it has been almost impossible to overstate exactly how good the Inland Empire economy has been.

Home prices are booming.

Unemployment is low.

More than 80,000 people with college or graduate degrees moved into the two-county area between 2000 and 2004.

Happy days have definitely been here - again.

Just last year, the Inland Empire gained more jobs (56,658) than San Diego and Orange counties combined.

It has been three or four years since regional economist John Husing started calling the Inland Empire the "engine that pulls the economic train in California" and ridiculing Orange County for considering itself the center of the universe economically.

It's different now.

San Bernardino and Riverside counties aren't an engine.

"We are the center of the universe," Husing told an upbeat crowd at Thursday's RealShare Inland Empire Conference at the Ontario Convention Center.

In the last decade, median home prices in the inland counties have nearly tripled, from well under $200,000 to a little more than $400,000 in the Riverside-San Bernardino metropolitan areas.

But the days of 20-30 percent annual price appreciation are gone.

"The market is hitting the wall," Husing said. "We are clearly at the end of this housing cycle."

So what happens now? If housing prices have pumped huge amounts of wealth into the local economy, what happens when every other homeowner isn't refinancing, remodeling or selling to move to a bigger house?

"We are seeing the values of land starting to level off," said Jeff Phelan, a partner in Panattoni Development Co. "If they don't, it just isn't possible for developers to make a profit right now."

Panattoni was speaking of industrial development, but land is land and has all sorts of uses. Expensive land means it costs more to build homes, offices, retail or industrial prospects.

"We're even seeing infill sites take a tremendous growth in value," he said.

Kevin Assef, managing director of the Ontario office of Marcus & Millichap, said that generally, the overall real estate market tends to follow the trends in single-family homes.

"I think we're moving into a more normalized market," he said. "I certainly don't think the market is tanking in any way."

Assef said the most disturbing numbers were a growth in unsold inventory from one month to 4.4 months and the housing affordability index.

"In 1998, 60 percent of Inland Empire families could afford the median-priced home," he said. "In 2006, that number is 20 percent in San Bernardino County and 15 percent in Riverside County."

He added that ever since the '70s, real estate cycles have been induced by government policies.

San Bernardino County Supervisor Paul Biane said the county government should be proactive in this area.

"The biggest role local government has to play is providing the infrastructure for development," he said. "We obviously have not kept up here."

That's in part because some folks have taken the attitude that if we don't build the freeways, people won't come.

Husing says that isn't true, and he loves to show a picture of Asian peasants leading yaks burdened down with their belongings to make his point.

"They'll come anyway," he said.

Why wouldn't they?

After all, we're the center of the universe.

Michael Rappaport is business editor of the Daily Bulletin. He can be reached at (909) 483-9395