Are you planning to buy a home in the East Bay region sometime during 2022?…
This blog post is part of a series that examines real estate conditions in major cities across California. Today, we will be looking at the latest housing market trends and forecasts for Riverside, California, stretching into 2021.
Riverside, California Housing Market Forecast
In 2020, the Riverside real estate market is being influenced by two primary factors. Supply and demand. That’s usually how it works within housing markets. But in the Riverside-San Bernardino area, those two factors tell a story of extremes.
This is a real estate market with very low level inventory levels and strong demand resulting from steady population growth. Those trends have created a skewed or imbalanced supply-and-demand situation, which in turn puts upward pressure on home prices.
Let’s start by catching up with home values in the area.
According to the real estate information company Zillow, the median home price in Riverside rose by about 2.5% over the past year or so (as of July 2020). Looking forward, the company’s analysts offered a somewhat negative forecast for the Riverside real estate market stretching into 2021. By their estimation, home values in the Southern California city will actually dip over the next year.
According to a late July statement on the company’s website: “Riverside home values have gone up 2.5% over the past year and Zillow predicts they will fall -2.3% within the next year.”
But when you look at the current supply-and-demand situation within the Riverside real estate market, the above prediction might seem overly pessimistic.
There are quite a few home buyers in the market right now, shopping for homes all across the Riverside-San Bernardino metro area. But there aren’t enough properties on the market to meet that demand. This imbalance could help sustain home values through 2020 and into 2021.
Based on current trends, it’s entirely possible that Riverside house prices will hold up throughout the coronavirus crisis.
We talked about supply and demand, and how they are affecting housing market trends and forecasts for Riverside, California. Let’s drill down and take a closer look at those two influencing factors.
Very Low Inventory as of Summer 2020
As of June 2020, Riverside had less than a two-month supply of homes for sale. In theory, that means it would take roughly two months to sell all homes currently for sale, if no new properties came onto the market in the meantime.
What home buyers need to know about this statistic is that it shows a very low level of inventory. The Riverside real estate market is currently well below what is considered to be a balanced market. So, even though the local housing scene has slowed down during the coronavirus crisis, sellers still have negotiating leverage due to a limited supply of homes.
In July, a report published by the California Association of REALTORS® singled out Riverside and San Bernardino as having a significant drop in real estate listings.
To quote that report:
Southern California had the biggest drop in [housing] supply, with for-sale properties plunging 47.3 percent year-over-year. While all counties in the region dropped at least 40 percent from a year ago, both Riverside and San Bernardino plummeted more than 50 percent in active listings.
That covers the supply situation within the Riverside real estate market. Now let’s shift gears and look at the demand among home buyers.
Steady Population Growth in Riverside
Housing demand in the area is currently being driven by two overriding factors. The first is steady population growth.
According to the U.S. Census Bureau, the population of Riverside, California grew by 9% from 2010 to 2019. That was quite a bit higher than the national average for that same nine-year period. And, of course, those new residents need somewhere to live. Population growth tends to increase demand for housing on both the purchase and rental side.
The Riverside real estate market is also getting a demand boost from historically low mortgage rates.
Last week, the average rate for a 30-year fixed mortgage loan fell below 3% for the first time in history. That’s a significant development, and it hasn’t gone unnoticed by home buyers. According to the Mortgage Bankers Association, purchase loan volume rose 19% during the week of July 17, 2020 (compared to the same week last year).
The Riverside housing market is experiencing a modest influx of new residents, some of whom have relocated from pricier and more crowded coastal markets like San Diego. And this comes at a time when inventory levels remain low by historical standards.
Given all of these factors, one could make a counter-argument to the Riverside real estate market forecast above. It would not be surprising to see home values in the area hold their ground over the next year or so.
One of the ‘Most Recovered’ Housing Markets
In closing, we would like to cite a report published in July by the housing research team at Realtor.com. According to that report, home-buying demand (measured by sales and other indicators) has increased quite a bit in the Riverside area. In fact, that report listed the Riverside-San Bernardino metro area among the “most recovered markets”.
To quote that July 2020 report:
In the ‘housing demand’ component … The most recovered markets for home-buying interest include New York, Sacramento, Riverside-San Bernardino, Seattle and Buffalo, with a housing demand growth index between 133.3 and 138.5.
Disclaimer: This article includes real estate market forecasts for Riverside, California extending through 2020 and into 2021. Those predictions were issued by third parties not associated with our company. We’ve presented them here as an educational service to our readers. Housing market forecasts are the equivalent of an educated guess and should be treated as such.