VICTORVILLE – A recent study found that the region’s economy is poised for another year of solid growth, record unemployment rates and limited housing supply that will delay the region’s current upward trajectory into the future.
The economic analysis of the Inland Empire – which covers the majority of San Bernardino and Riverside counties – published by the University of California, Riverside’s School of Business Center for Economic Forecasting and Development, also said that when the next recession hit materialize, it is unlikely to be as severe as the last recession.
The so-called “milder recession” will occur primarily as a result of EI’s economic growth and fundamental changes in the local economy, according to the study.
The report found that the supply of housing is a factor that will ultimately hamper the ability of the economy to grow. Population and employment growth is increasing the demand for housing in the region.
There has been a response to demand, with increased residential construction activity. Building permits activity in the Inland Empire allowed 3,020 residential units to be licensed in the first quarter of 2018, an increase of 4.7% year-over-year and taxable sales revenue in the building and construction category jumped.
The increase indicates that developers are using local vendors. These additions to the housing stock will moderate, but not slow down, the rise in house prices, according to the report.
The municipalities of the Haut DÃ©sert are doing their part to increase the housing supply. In Victorville, the number of permits issued for new single-family homes has increased every calendar year since 2013, according to city spokesperson Sue Jones.
The city has already seen 216 permits issued in mid-2018, up from 170 the previous year. A portion of those permit numbers include homes in the 105-lane housing project being built by DR Horton near the corner of Bear Valley Road and Highway 395.
Victorville issued 116 housing permits in 2016, up from 82 the previous year and far from the 45 issued by the city in 2014.
Apple Valley saw an increase in housing starts towards the end of the 2016-17 fiscal year due to changes to the California building code in effect in January 2017, according to city spokesman Orlando Acevedo.
The city has seen a range of housing starts over the past nine fiscal years, including: 2017-18 – 75; 2016-17 – 275; 2015-16 – 109; 2014-15 – 110; 2013-14 – 113; 2012-13 – 86; 2011-12 – 32; 20111-12 – 59; 2009-2010 â40.
According to the analysis, population and employment growth also inflates house prices and rents.
The median price of an existing single-family home in the Inland Empire rose to $ 352,800 in the first quarter of 2018, a 9.4% jump from the previous year. At the same time, the average asking rent rose to $ 1,319 per month, a jump of 3%.
The median closing value of a home in Victorville is $ 262.00, according to Realtor.com.
Home values ââin the High Desert region have increased 9.9% over the past year, according to Zillow, who predicts that they will rise 5.9% over the next year.
The median price of homes in Hesperia is $ 305,000, with Apple Valley at $ 292,000 and Adelanto at $ 225,000, according to Realtor.com
The number of jobs in the region has grown by “healthy” 3.1% over the past year, significantly outpacing the growth of the state at 2.1% and the country at 1.6%, according to the report.
At the same time, unemployment in the region also fell to an all-time low, although the population grew faster than in the state or surrounding areas of Southern California.
âThe Inland Empire enjoys a range of important affordable advantages over its immediate neighbors and other parts of California,â said Robert Kleinhenz, executive director of research at the Center for Economic Forecasting. âThe natural result is that more people will choose to live and, if possible, work here. “
However, the intensifying labor shortage across the country will make it increasingly difficult for Inland Empire employers to hire the labor they need, limiting the future employment and industry growth, Kleinhenz added.
While recent market behavior may induce flashbacks to the years leading up to the Great Recession, the driving forces behind the current cycle are drastically different and show no signs of a bubble, according to the study.
Main additional findings
Driven by a tight labor market, wages in the Inland Empire increased, increasing 2.5% in Riverside County and 2.3% in San Bernardino County in 2017. Although the growth was modest and lagging behind the state as a whole, sizable wage increases are expected to occur in the region in 2018.
In the first four months of 2018, passenger traffic at the Ontario International Airport jumped 10.7% from the same period in 2017, the best growth since 2010. This is a testament to the strong tourism and tourism activity currently enjoyed by the Inland Empire, with hotel occupancy rates and room rates increasing.
Along with the ongoing economic expansion, the Inland Empire commercial real estate market is on the rise. Permits for new non-residential structures in the first quarter of 2018 were 43.5% higher than during the same period in 2017 and 70.5% higher than during the same period in 2016, reaching $ 648.3 million in total value.
The full analysis can be viewed at www.ucreconomicforecast.org.
Journalist Rene Ray De La Cruz can be reached at 760-951-6227, [email protected], Twitter @DP_ReneDeLaCruz.