You might think Inland-area renters and homebuyers would have a little easier time of it than people closer to the coast. But, as elsewhere, among the top concerns for Inland residents are availability and affordability.
A couple of Inland cases illustrate the situation.
MORTGAGE UNDER WATER
When the housing market went south in 2008 and 2009, thousands of Inland homeowners found they were “under water” on their mortgages — they were paying for the home they bought at a much higher price and interest rate than the home would fetch at sale.
Someone who bought a home for $380,000 before the market collapse would take quite a hit selling the home for under $200,000.
Brooke Elia, for example.
A Riverside attorney, Elia and her husband, Andrew, got into such a home as a starter in Riverside. “I had just started law school,” she said. “(The house) was quite small. We bought at the peak and it had a high interest rate.”
Then came the crash. Elia had heard from friends who began walking away from mortgages or short-selling their homes. “But we didn’t want bad credit,” Elia recalled.
“So the market crashes, and now we have this huge interest rate, high payment, two small children,” Elia said. They were a classic underwater case.
About three years ago, a Realtor friend found a nearby rental that was roomier for the Elia family. They rented out their first home, but for only 50 percent of their payment – because it was appraised for so much less.
“We finally sold the other house this past December,” Elia said. “We still had to pay about $35,000 to get out of it, but we’re out of it. Definitely an uphill battle ... when that happens, you don’t have the savings to put 20 percent down on a new house (to avoid premium mortgage insurance), and homes in Riverside are really expensive.”
LOOKING FOR VACANCIES
Finding an affordable —and available — rental was difficult for Yi Mao, a doctoral candidate in international economics at UC Riverside.
“We called many apartments around the campus,” Mao said. “Some were posted at stores, some online, some advertised. They all say, call again in July, there are no vacancies.”
She would call again. And again. And on the rare occasions she could find a suitable unit, the price was simply too high.
“When I first moved here in 2014, my friend rented a room at a big apartment house on University; she paid $1,000 for a 2-bed, 2-bath. ... Last year I called, they said the price is up, $1,050. Fifty dollars, I think that’s reasonable. But then this year I called, they said $1,550 to $1,850! ... Hundreds? Students can’t absorb an increase like that.”
Mao reckons the price and availability crunch are the product of two things —more students and very little new construction.
The university’s enrollment has been growing — from 20,692 last academic year to 21,539 this year. UC Riverside estimates its enrollment will surpass 22,000 this fall.
As for construction, figures from the Building Industry Association show a significant decline in permits granted in the two-county area. Comparing recent permits with those granted in 2005, before the crash:
Western Riverside County: 22,028 in 2005 compared with 3,234 last year.
San Bernardino County: 16,679 in 2005, down to about 3,800 in 2016.
Mao eventually found a room — an anthropology student was seeking a roommate. They’re paying on a lease for a 2-bed, 2-bath unit that was signed before the big price increases. It’s still a pretty steep price but they are coping with it.
“If they’re this crowded, that’s why they have the confidence to raise rents so much,” Mao said.
By Roger Ruvolo