Inland Empire Is Tops With First Time Home Buyers…Is There A Bubble? Why Is There A Bubble?

The Inland Empire being number one for first time buyers, is not a shocking headline. We have all known for some time that you can get way more for your money; the headache of course, was, and is, the commute. What an unexpected ray of sunshine in the midst of the Covid-19 storm, for many long haul commuters to suddenly be able to work virtually from home. As we know, quite a few companies are allowing workers to either stay completely virtual or are requiring just half time or less in the office. This has created fresh legs for the first timers out to the IE. — more for your money and no commute. In fact, this expansion of the virtual workplace is driving sales in pretty much any suburb in America. This gets to the bubble question…with new construction lagging, much pressure has shifted to single family residences and condos, all over American Suburbia as city dwellers escape city centers for more space, better living and shopping conditions, and being able to buy for less than they used to rent. Again, all fueled by major employers accommodating workers, because if they don’t, they’ll quit. All news outlets have written about both employers who are having trouble finding skilled workers, and workers who know they can quit and find employment opportunities elsewhere. This has led to a mass movement outward. So fierce has the competition become, that houses for sale routinely receive 5-15 offers; and most remove the appraisal contingency. 

Now for the bubble— price percentile increases higher than the appraisal rise percentile, mean that buyers are basically paying the difference between the sales price, and what a lender deems is the reasonable value of the home. Now this is an appraisal bubble, not necessarily a precursor to a crash; in fact, that is highly unlikely, as buyers fill in this gap with their own cash. However, the gap between appraisal and actual sales price is widening. Take note:

1) OC – appraisals up 8.8% in price 2021 over 2020 – sales price up 15.5%. 

2) Riverside – app up 10.7% sales price up 19.6%.

3) San Bern app up 8.5% – sales price up 22.7%. 

Food for thought.

Please feel free to contact us at Premier Funding Network if you have questions about buying or refinacing your home. 714-283-9900.