The Inland Empire has been a relative bargain in recent years for home shoppers from other parts of Southern California.
But that may be changing fast.
In early 1996, when residential markets hit high gear after years of recession, a median-priced new home in the Inland Empire was selling for $143,990. But last month, that price reached $189,900 nearly the same amount as it is in L.A. County.
Meanwhile, the stream of new subdivisions coming on line in the Inland Empire has slowed and a dwindling availability of finished lots is raising questions among developers and analysts about the outlook for the area housing market.
For the immediate future, forecasts for 2000 are for sales to remain within 1999's range of 13,000 homes. And prices are expected to increase by just 4 percent.
But in a year or two, observers say, workers in Los Angeles and Orange counties looking for an affordable home will either have to pay more for an Inland Empire residence or commute farther to find a bargain.
"We're moving a little more quickly into a more mature stage in the Inland Empire than most people probably imagined," said Steve Johnson, a partner of the Meyers Group in Corona. "Most of the easy-to-develop lots closer to Los Angeles have been taken. Everything has been depleted in all price ranges."
Demand drives prices
Indeed, construction of new homes in the Inland Empire tailed off in the latter half of 1999. And developers blame the slowdown in planning new subdivisions on slower entitlement processes, increasing fees, and fears of higher interest rates.
"Increases in demand have been able to meet our rising costs," said Bob Evans, a land acquisitions analyst with Centex Homes. "But we don't think that will continue. We're starting to experience affordability issues now. Demand is still good but it's thinning out at higher price points."
As the land closest to L.A. has been snatched off the market, fewer finished lots are left to be filled.
Centex officials say the firm has enough pre-purchased parcels in its inventory to keep a steady stream of projects going for about the next two years in relatively close proximity to L.A. consumers.
But estimates vary widely concerning how much developable land remains available for purchase in the Inland Empire. Few disagree, however, that the push east has already started.
"It's a polarized market right now the move-up market is growing, but the affordable product is being pushed out farther," said Johnson of the Meyers Group.
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