Understanding Riverside County's RE Market

Our open thread this weekend contains a brief analysis of the Riverside County housing market. All of Southern California’s real estate markets are interconnected by commuters. What happens over the hill impacts pricing here in Irvine.

Here is a great article from the LA Times: HUD’s Dollar Homes falls short of mission.

I would like to share with you some interesting blog posts I read this week at The Housing Chronicles Blog,

Declines in the Case-Shiller Index not uniform

Apartment rents falling in Southern California

“Shadow inventory” of foreclosures remain hidden from the market

And related to today’s topic:

Signs of life in the hardest-hit housing markets

They say an end can be a start
Feels like I’ve been buried yet I’m still alive
It’s like a bad day that never ends
I feel the chaos around me
A thing I don’t try to deny
I’d better learn to accept that
There are things in my life that I can’t control

If I Ever Feel Better — Phoenix

Will prices ever stop falling in Riverside County? Will their real estate market in the Inland Empire rise like a Phoenix from the ashes? Prices will not rise any time soon, but there will be an increased activity among cashflow investors absorbing the inventory of foreclosures. Eventually, all of the houses from the bubble will be recycled, and the new homeowners will not have near as much debt as the previous ones. The economy will recover, and life will go on.

Cashflow Investing

Riverside County and parts of San Bernardino County are collectively known as the Inland Empire. It is a mess. Unemployment is high, house prices are already down 50%, and they are still falling. Prices will continue to fall until real estate savvy cashflow investors loaded with cash enter the market and begin absorbing the inventory. Call it opportunistic, vulture investing, value buying, or whatever term you think appropriate, but the people who invest in this manner are the ones who will create the bottom with their buying activity.

In every disaster there is opportunity. Uncertainty in any market negatively impacts pricing; however, there is a price point where investors believe they are being properly compensated for the risks they are taking on. Even now, there are properties in Riverside County that warrant serious consideration from cashflow investors.

Think about it, let’s say you find a property where the cashflow value with a 10% return is $180,000. However, you are worried that you will have difficulty finding tenants for the next two or three years. How much income might you lose? $10,000? $20,000? Discount the property to account for the difference. There is generally a price point where an investment makes sense.

Cashflow investing is a process of determining value, evaluating risks and discounting as appropriate. Whoever has the most aggressive set of assumptions will acquire a property in the open market. Those who are too aggressive will lose money, and those who are too conservative will never transact. That is how markets work.

The Inland Empire

I want to thank Boyd Martin of Market Profiles for providing the information presented today. He provides an analysis of New Home prices in various sub-markets across California. Like many in my industry, I receive his quarterly updates. I called him on Thursday to obtain his permission to reproduce his study from the 4th quarter of 2008 for the Inland Empire.

Market Profiles



I mentioned a couple of weeks ago the BIA website NewHomesMatch.com. They have every floorplan of every new home in Southern California in their database. It is a really cool service.

All of the data presented today is accurate for new homes. These prices are not reflective of resale home prices. New home prices are a much better indicator of market strength and direction. The active builders do not live in denial because they must sell their inventory to stay alive. If that means prices must be lowered, then they will lower prices. At whatever price levels new home bottom, resale homes will bottom out even lower usually 2 or 3 years later because the less expensive new homes puts tremendous pressure on resale prices. This deep recession may put our resale market bottom back from 2011 to 2012 or 2013.

The Inland Empire’s Local Markets

Market Profiles 4th quarter new home sales prices

Above is the grahpic from his update. I have used his graphic to provide a general overview of the Inland Empire markets:

As you might expect, the sub-markets in the Inland Empire can be broadly grouped by their proximity to Orange and LA Counties. The growth in these markets began as a “cost push” of housing as people sought less expensive homes. This still goes on today.

The first of these sub-markets is the eastern edge of Orange County and Corona. The next level is the Riverside and Lake Elsinore Markets. Further inland you arrive at Moreno Valley, Perris, and Murrieta. The extreme fringe of this market is Banning, Beaumont, San Jacinto and Hemet.

The further out on the fringe you go, the less expensive pricing becomes, and the more risk you take on as an investor. As prices crash, people migrate to the west. This leaves the eastern fringe markets with excess supply and problems with vacancy. Properties on the eastern fringe require major price reductions to compensate for the risks of vacancy and declining incomes. These are also more difficult to manage. Since the extreme eastern markets are also the markets that saw the most construction during the bubble, there is a huge turnover of homes due to foreclosures. However, this is also an opportunity; this is where you can pick up a house that is less than 5 years old for prices well under construction costs. In short, they almost are giving them away.

East OC and Corona

OC Edge Corona

As you can see from the graphic, new home prices in Corona declined in price about 10% last year. They are also still building a lot of McMansions (3,409 average square footage). What do you think this does to pricing in Orange County? Some people are going to go to Corona and buy a new McMansion for $150/SF, particularly when the Irvine Company still wants to get $385/SF. (Here is one for $109/SF) There is no way OC pricing holds up when new homes are available that close for that much less. Yes, I know, none of us want to go live there, but we are the Irvine Housing Blog; we do not represent a typical market cross section. Many people will go over the hill to buy these houses. Prices there have probably not bottomed, particularly for new homes, but their market is closer to the bottom than to the top.

Riverside and Lake Elsinore

Riverside Lake Elsinore

This next market segment could probably be separated into two different markets as Riverside and Lake Elsinore have very different market dynamics. Riverside has more of an economic base than Lake Elsinore does because it is a more established community. Lake Elsinore more than doubled in size during the bubble whereas Riverside saw a much smaller percentage increase in its population. That being said, I lump these together because they both represent an additional 20-30 minute drive from the OC and LA markets.

As you can see, the pricing in Lake Elsinore is getting hammered. If you really want to see carnage/opportunity, take a look at nearby Wildomar. How does $31/SF for a 2006 home grab you? (Most are near $70/SF) There isn’t a pooper-scooper big enough for some of these markets. The general pattern to look for in Riverside county is to find concentrations of houses built during the bubble, and you will find entire neighborhoods of REOs and very low prices.

I consider these markets some of the better cashflow investment opportunities. Even though the current inventory is high, it will be easier to attract and keep renters here because you have two other markets even farther to the east you can attract renters away from. These markets will be less damaged by the westward migration than will the extreme fringe markets.

Moreno Valley, Perris and Murrieta

Moreno Valley Perris Murrieta

The third level inland is a high-risk market. There is little economic activity out there because it is dependent upon real estate. Market conditions will get worse here, and coditions will stay bad for quite some time. There are cheap houses here too. This one is $45/SF. However, based on current pricing across the area, this is the market slice I find least attractive. IMO, prices not low enough to compensate investors for the risk. I foresee continued downward pressure on prices across this entire market swath.

You can already see the brutal beating the Moreno Valley market is getting. Prices are down 20% YOY there.

Banning, Beaumont, Hemet and San Jacinto

Banning Beaumont San Jacinto Hemet

This last market is utter chaos. When Jim Cramer talked about “plowing under the Inland Empire,” this is the area he was talking about. The sleepy little communities in this area exploded with housing developments from 2003-2006. Everything out there is new. Now, with the collapsing prices to the west, everyone is abandoning their homes and moving closer to work and cutting their housing costs in half. This area is a disaster zone. It will be the last to recover. However, for those with a long-term market view and a lot of nerve, this is where the home-runs will be hit. There will likely be many properties less than 5 years old transacting near $40/SF. Here is one at $42/SF. At those prices, you could almost let it sit empty for three years and just factor in the vacancy loss to your calculations (maybe not that long, but you get my point). There is a price point where these properties become attractive. Anyone thinking about investing out there needs to be fully aware of the risk. There is a reason the prices are so low.

Notice that in none of this discussion did I mention appreciation. These properties are cashflow investments; appreciation is not a consideration. Sure, if California blows up another massive housing bubble some of these properties may provide a convenient exit point by offloading it to some fool caught up in a financial mania. But realistically, prices are not going up in Riverside County for a very long time. If you want to buy an “investment” property in these markets because you think pricing is going to recover soon, you are a fool.

Bull or Bear?

For those of you that want the IHB to remain permanently bearish, I am sorry, but I am not a permabear. I am still very bearish on Irvine and most of Orange County. I am still somewhat bearish on pricing in the Inland Empire, but price levels in many areas do cashflow. This is a fact. There are risks in this market: (1) prices might drop further, (2) rents may decline, (3) jobs might disappear, and (4) incomes may go down. But an objective analysis of many properties in Riverside County shows that buying them and renting them out currently provides returns superior to other investment classes. It is what it is.

Does reporting this fact make me bullish? No, it makes me a reporter of market conditions. Only an investor who weighs the risks and rewards and has an accurate idea of what they want can determine whether they are bearish or bullish on any given asset class. Some people will look at these properties and conclude prices must drop further; others may not. No investment is without risk–a fact that escaped everyone who was speculating on the sure thing during the bubble.

51 thoughts on “Understanding Riverside County's RE Market

  1. Lee in Irvine

    Excellent Work IR!

    I want to make a couple of points~

    I’ve always been intrigued with Corona for possible cash flow properties. The facts are very clear … a canyon of about 5 miles separates it from Anaheim Hills and Yorba Linda (2 wealthy OC communities). This canyon is owned by the Irvine Company, and some of it will likely be developed during the next boom, therefore decreasing the distance between Anaheim Hills and Corona. JMHO ~ Many people from OC that finally give up and choose a less expensive lifestyle, will select Corona because it’s so close. They can keep their jobs (deal w/ the 91), stay close to family, and still have access to all the great activities of So Cal.

    You know, there’s lots of talk about OC home sales increasing, and lots of “bottom” calling from ostrich dunkers, but the fact is, OC home sales are still down about 50% from the average of the last 20 years. That’s NOT a rally in sales. In fact that’s pathetic. It still doesn’t make sense to by real estate in OC.

    I know that home sales in Las Vegas and Phoenix are at, or close to, the same pace as they were during the bubble years because investors are scooping up properties like mad. These two markets will certainly benefit from the debacle in So Cal, just like they did during the last crash. JMHO ~ There’s opportunity in the desert.

    I went to an investment conference a few weeks ago, and the speaker was non other than Jonathon Lansner of the OC Register. He made a comment of investors doing better right now buying real estate close to the ocean vs. the Inland Empire. I kinda giggled when he said it, and whispered in to my brother in-laws ear … “nothing could be further from the truth”. OC still has significant downside for investors, in-particular, the beach communities. Lansner comes off to me as someone who should stick with writing stories in the Register. I left the conference, NOT impressed.

    I do like the idea of this blog talking about opportunity too. There still is no opportunity in OC (in-particular no opportunity in Irvine), but other communities are getting closer.

    BTW, for the record … I do own investment property out of state. I’ll likely buy at least 1 rental in Corona, before I buy my home in Orange County. Maybe before the year is over.

    1. Lee in Irvine

      one more point~

      I remember hearing Bruce Norris (local RE Investor Pro) talking about buying a house in Moreno Valley (I think) for $16,000 in the mid nineties. He questioned himself after he paid more than that for his sons first automobile a few weeks later. He asked himself for the first time if he was in the right business, and if these properties would ever recover.

      He figured it out a few years later while on vacation in Maui … migration & affordability is key. He wrote a report called The California Comeback in 97, and was SPOT ON with his prediction.

      Bruce also predicted the debacle we’re currently in when he wrote another report called The California Crash a few years ago.

      Bruce Norris is now a millionaire several times over.

    2. IrvineRenter

      I have to wonder what Jon Lansner is thinking. First, buying coastal real estate is at best a speculation play. No properties anywhere near the coast make sense on a cashflow basis with current pricing. As a speculation play, I don’t see how there can be upside. These properties are so ridiculously overpriced by any available metric that it is difficult to imagine buyers pushing prices higher. There is the overwhelming amount of kool aid intoxication in the general public, but without the financing to enable buying, prices will not go up.

      1. Lee in Irvine

        These properties are so ridiculously overpriced by any available metric that it is difficult to imagine buyers pushing prices higher.

        Buyers can’t push beach prices higher because the banks ain’t gonna loan them the money to do it. These buyers bankrupted Thornburg Mortgage for God’s sake. Sure, there will be a fat cat that comes in every once in while with cash, and pay it in full. However, these buyers are (1) overstated and rare, and (2) typically smart enough to realize this ain’t a good time to buy a beach home. The beach communities are full of people living way beyond their means, and we’re just now starting to see the damage that they’re gonna cause.

        90% of potential Orange County buyers cannot qualify for a nonconforming mortgage. Wall Street ain’t gonna accommodate Orange County pricing anymore … at least not anytime in the near future … it just ain’t gonna happen. All these expensive houses at the top, place more weight on everything down below. This is the primary reason why I think Orange County is facing a calamity. We are simply too top heavy.

        1. IrvineRenter

          You and I are in complete agreement. I see the same circumstances you do, and I see the same inevitable outcome.

        2. george8

          Lee in Irvine:

          I am impressed by these two posts of yours today.
          Thanks for sharing your experience and insights.


      2. usuxor

        IR, you should be ashamed to call yourself a “blogger”. Blocking IP addresses is horrible. Then again, now that you are a realtard I would expect nothing less than that type of behavior. Go ahead, block my IP address now and since it’s a NAT address nobody at this starbucks will ever be able to view this lame site.

    3. David Pylyp

      Congratulations on engaging your readers and getting strong feed back and astute observations.

      Great to have discussions happening!

      David Pylyp
      Homes Toronto west

  2. OC Progressive

    Great Post!

    It will be interesting to see what happens to some of these exurbs that had huge construction in 2003-2008 as the prices were inflating unsustainably. So much of their economy was based on infrastructure, construction, marketing, financing, insuring, furnishing, and maintaining these new homes. Other major employers relying on imports in the warehousing and logistics industry are shedding employees as the imports through local ports plummeted by 35% in a year. Riverside’s Fleetwood Enterprises had shed 7.000 jobs before filing for bankruptcy in March.

    The incomes and jobs in those sectors supported the quickie marts, grocery stores, restaurants, and retail, and service establishments so the entire local economy is rapidly falling apart.

    Ultimately local governments in places like Hemet will see dramatic reductions in revenues, and will be forced to cut everything, including public safety. This story marks the beginning

    Because reports on sales tax and property tax lag by at least a few quarters, local elected leaders really can’t see how much their economies have already dropped, and what the implications are for the future.

    Some people think that these economies will just sort of spontaneously recover, but it’s hard to see where the jobs will come from in the Inland Empire, and without the jobs, who’s going to rent or buy the houses?

  3. OC Progressive

    Link didn’t work. I was trying to get to a story at PE.com titled Inland cities turn to public safety in hunt for budget cuts.

    Regardless, cities may be faced with cutting officers by virtue of the sour economy.

    Cities have not had to turn their eye toward public safety budgets because they had robust revenue streams buoyed by sales and property taxes and fees collected from developers, especially during the recent period of explosive growth in the Inland area.

    1. IrvineRenter

      That reminds me of another danger of investing out there: underfunded HOAs. Some of these new communities where the foreclosure turnover is 75% ore greater, the HOAs do not have the funds to operate. This causes a blight on the entire neighborhood.

      When you take a city facing budget cuts and a neighborhood HOA dealing with almost no budget at all, it makes for a precarious investment situation. Of course, that is how some define opportunity.

  4. roundcorners

    I just did some calculations; granted if you can still put only 10% or 20% down; on a $200K IE house and be cashflow positive; here are the ROI:

    ROI with 10% Down @ .5% (Appreciation) 51.14%
    Yearly ROI 5.11%

    ROI with 10% Down @ 1% 104.62%
    Yearly ROI 10.46%

    ROI with 20% Down @ .5% 25.57%
    Yearly ROI 2.56%

    ROI with 20% Down @ 1% 52.31%
    Yearly ROI 5.23%

    The real key is still leveraging! Cashflow investors still need to borrow; the key to the IE is that you can have positive cash flow at such low downs.

    1. IrvineRenter

      There will be some investors who will go out there without leverage and buy for pure cashflow. With many properties trading at GRMs of 100 or less, an all-cash investor can obtain a 12% return (12% cap rate). What other investment class out there offers a 12% cash return? Add leverage at 5%-6%, and you can obtain even bigger returns. Factor in any amount of appreciation, and you get the insane returns you show above; although, I really don’t see these properties appreciating any time soon.

      Cashflow properties are unique because the “urgency” to buy does not come from trying to pick a bottom. People will buy cashflow properties now because it is the highest available market return. You can buy one of these houses today, or you can buy it 5 years from now at the same price. There is no urgency created by worry about missing the low prices. There is an opportunity cost of waiting as an investor would miss the 5 years of cash returns. That is why cashflow investors will go out there even now when prices are falling and there is no worry about prices going up any time soon.

  5. bltserv

    Just heard that the Riverside Tax Assessor is saying that 8% of all homeowners failed to pay the final Property Tax installment.

  6. No_Such_Reality

    IR, this is much better than Schadenfreud. I am one who misses your community profiles.

    I think this showsw what you can do and I’ll plant a request. Do the same style breakdown for the different zones within Orange County. You can then do a small community profile for the some of the more likely substitution areas within OC.

    1. IrvineRenter

      That is a good idea. I will do some more research and create a post. I think Boyd Martin will send me the OC Data to use as a starting point. I may need to break down the analysis to a finer grained view. There are so many sub-markets with subtle differences that it is hard to characterized them accurately without a very detailed analysis. It may take several weekend posts to cover the topic.

      1. Bitter Renter

        I too have been hoping for blog posts of this type. If it takes multiple weeks to cover everything, great — the more detail, the better.

        With regards to your repeated plug for NewHomesMatch, I have to again dispute your claim that they allow you to view floorplans for all new homes. When you first mentioned them on March 28th, I said:

        Thanks for the tip on NewHomesMatch. Looks like they still need to work out a few bugs, though—on the property I tried out, clicking on “Floor Plans” just brought up a very small empty on-page popup with a close button. Tried IE as well as Firefox and got the same behavior. Then tried another property, but that page managed to crash my Firefox. Tried the page again in IE, but the “Plans” section was greyed out on that one. Tried a third property and “Plans” was greyed out there too. Same with the fourth. Gave up at that point, but look forward to this site being useful in the future.

        Now if only there were a site that archived floorplans for new homes while they’re available online and then gave access to them when the houses are being sold used. Closest I’ve seen to this is a few of the nicer realtor sites, but of course they only have plans for properties they’re listing, and of course not for all of them.

        Just retried my search and none of the problems have been corrected. No floor plans available for the first several Irvine houses in my search (and again, gave up after trying several).

  7. roundcorners

    at $45/sq foot; can’t you buy the place; accidently burn it down; and make a profit in the insurance money (replacement value)?

    1. roundcorners

      I’m not avocating anything illegal of course; but my point is that if replacement value is not an indicator of acutal value; whats stopping it from dropping to $20/sq foot?

  8. nefron

    But who wants to drive out to the Inland Empire on a tenant’s phone call? Can you hire a property management company out there and still have enough positive cashflow to make it worth the investment?

    1. IrvineRenter

      Sure, you just factor those costs into your bid price. Ordinarily, you would think locals would have an advantage in this regard and they would buy up all the good deals, but this is not the case. The problem is too big for the locals to mop up the mess. Outside money is going to have to come in to absorb this inventory. For that to occur, prices have to drop low enough to make it profitable. That is in fact occurring right now.

  9. Modguy

    It’s obvious you put a lot of work and thought into each daily post that we probably take for granted. Thank you making this blog something informative and of interest everyday. I really do read it everyday… and I honestly think it’s been more interesting over this past week with a slightly new perspective on things.

    That being said, I was afraid you might use this weekend’s open thread to announce your new subprime mortgage brokerage business with this guy:


    {just a joke! IR 🙂 }

  10. MacInThebox

    I like today’s post a lot. Thank you very much for all the analysis.

    I do have one question, Ontario is not included in the report. My impression from chatting with people is that Ontario may be developed sooner than Corona. Is anyone familiar with the city?

    For investors, why would Corona be more favorable than Ontario? The only thing I can think of is that Corona is closer to the OC; not sure if there are other factors.

  11. tacoshark

    Good post. Folks tend to think Corona is soooo far from the OC. I currently live in Corona (sierra del oro, green river exit) and work in Irvine. I always get asked how’s the commute? People are shocked when I say I prefer it over my commute when I lived in Irvine. I use the 241 (free flowing and beautiful scenery) and get home in 25 minutes (door to door) everyday w/ no surprises. When I lived in Irvine (6 miles from work) it took me about 18-20 minutes door to door and I was stuck on the 405 bumper-to-bumper traffic. If there was an accident, it would easily take me 25-30 minutes. I factor in the toll road cost into my cost living and still come out ahead compared to my $1900/month 900sq ft apartment in Irvine.

    1. brea

      Every day, as I drive past Green River, I look at the time because I know I will be in Irvine in about 15 minutes. Years ago, I would get on at Green River and there was a long line of traffic backed up but it was still better than sitting on the freeway. I assume you get Elsinore commuters cutting through Corona just to get on there.

      How long is your commute from your driveway to the on ramp? Also, do you ever wish you lived in the tract behind the Green River Jack in the Box?:)

      1. tacoshark

        It takes me 2 minutes from driveway to freeway on Green River. I heard there were long lines before they put in the signals, but I’ve seen them because I moved in right after the signals went in. The area behind the Jack in the Box is not for me. There’s something about living right below a dam that wont let me sleep at night.

        1. brea

          Wow? I never would have thought they could solve that back up. I have wondered but not enough to get off the freeway. I figured all of Corona and Elsinore were taking side streets just to get on there. My commuting experience is from the 80’s. I am back to commuting, but I am now in the carpool lane.

          The homes behind the Jack in the Box has no appeal to me because they are so isolated. I Don’t picture there being much water behind the dam but they did raise it. They lost some homes in the Nov. fires too.

  12. newbie2008

    Cash flow is an excellent way to look at property and should be used by any investor. Hard to factor in true vacancy rates with the job loss. A vacant house requires utilities especially with a freezing winter climate. Purchase price and final sales price most be looked at. Say purchased for $60k and in vacant most of the time. Sell at $40k and you’re out $20k plus the cost to maintain the property. What’s are the rates on non-owner occupied property? 8%? Then 1% property, 0.7% insurance (property and liability), maintenance and repairs $2000 per year?

  13. Geotpf

    I’m looking for a house in Riverside and Riverside is a lot different than the other parts of the county, for the simple part that there is a LOT of older housing stock in the city. Riverside was well built up by 1960 (except on the edges) when all the rest of these places were just dirt. This means smaller houses on bigger lots, no HOA dues, but potentially more repairs. Much of the newer stuff is still more expensive and probably has a way to fall, price wise, while the lower end stuff is being snatched up by people who realize that their monthly payments will be not much more than renting an apartment (like myself), so it can’t fall much more.

    My maximum price is $150k, and I actually have a pending offer in on a property at my maximum (because it’s a steal for what I’m going to get). Of course, in range 4, you can get twice the house (in terms of sqare footage) than what I’m getting-but I also work in Riverside (my commute will be less than ten minutes one way).

    If you are a cash flow investor in Riverside, the older housing stock probably makes more sense than the newer stuff. There are a couple hundred 2 or 3 bedroom, 1 or 2 bath houses, 900-1200 square feet, good sized yard, no HOA dues, built in the 1950’s, for sale for $100-150k or less at any given moment. Very rentable stuff, nothing fancy. Just avoid the bad parts of town, like Eastside and Casa Blanca (although you can potentially rent Eastside houses to UCR college kids, as UCR is just east of Eastside). Now, what parts of town are “good” or “bad” can change block by block in this city. For example, the area bordered by Adams, Magnolia, the 91, and Jefferson is good, and the area bordered by Madison, Magnolia, the 91, and Arlington is good, but the area in between (Magnolia/Jefferson/91/Madison) is bad. Although, picking a good neighborhood might matter more to an owner/occupant than somebody who is going to rent it out, especially if the price is right.

    An even more dramatic example is where Eastside begins in the southern portion. South of Eastside is a gold course, and houses very near the golf course course cost much, much more than those a few blocks north.

    This house, 2608 Carlton, is listed for $1.2 million:


    This house, 4607 Victoria, is listed for $75k:


    They are .36 miles apart, according to Mapquest. Yeah, the city is that crazy. (Admittedly, the $1.2 million property has been on sale for two years with no reductions, but…)

    I should also note that your Corona example is a short sale, so pricing is meaningless, and your Wildomar example is priced at the starting bid for an auction, so the pricing is also fictional. Neither house will actually sell at anything close to their listed price.

    1. Tab

      Thanks for the post regarding Riverside. We’re thinking of moving there as well. Do you have a map that shows the good vs bad parts of Riverside? That would help us a lot.

      1. brea

        Make sure you check out Victoria Ave. It starts at La Sierra and goes all the way to the Eastside. At Central Ave is Poly High School which may be the favorite. My kids went to La Sierra High and we had a great experience. There is the Riverwalk developement if you want gated with HOAs (probably Mello Roos also). Mission Grove is one of the new neighborhoods, but I think it is too far off the 91, but worth checking out. The Riverside Plaza is a shopping center near the 91 and Central. I like that area but the homes are older. The appeal is that it is walking distance to the community college, lots of shopping and services, Riverside Medical Clinic, and even downtown. Check out the Mission Inn and the older building downtown. Lots of history. It is a big city with lots of diversity. I recommend spending some time hanging around the different shopping centers and driving around some.

      2. Geotpf

        I don’t have a map, but I have a series of areas. The most extreme bad parts are Eastside, which is east of the 91, west of the 60, and north of the canyon and a few blocks north of the Victoria Country Club golf course, and Casa Blanca, which is southeast of the 91, southwest of Mary, northwest of Victoria (or so-the block or two directly connected to Victoria is good), and northeast of the auto center. I would also avoid the Magolia/Jefferson/91/Madison area, as mentioned before. I’ve mostly been looking at the two blocks bordering that one (Adams, Magnolia, the 91, and Jefferson and Madison, Magnolia, the 91, and Arlington), as well as the areas between Arlington, Magnolia, and Monroe, and Van Buren, Colorado, and Arlington. For north of Arlington, Streeter is the major borerline-east of it is good, west is bad. If you like nice old houses, the Wood Streets area is excellent.

        Now, if your price range is above $200k, areas like Canyon Crest and Mission Grove are quite good, but more expensive than the older areas I outlined above. The area east of the 60 (beyond UCR) is good as well.

        I’m not as familiar with the western portion of the city. South of the 91 has some good areas, including some new subdivisions (although immediately south has some bad parts, near Indiana near Jackson and Monroe). North of the 91 in the western part of the city gets kind of sketchy in parts. The northwest corner of the city is kind of rural.

  14. brea

    The Temecula/Murrieta growth is linked more to San Diego than Orange County. It would have been an outrageous commute to the OC 25 years ago when the traffic was lighter.

    I like it down there. It is closer to the ocean so it is cooler than the rest of the county. There is even a lot with a ocean view looking across Camp Pendleton. They have a nice mall, an Old Town area, and wineries.

    1. Nameless

      Yep. Murrieta/Temecula may be third level for LA/OC but it’s the first level for San Diego. It’s only a 40 minute commute to the outskirts of Greater San Diego, and that’s where most of the growth came from. Temecula also happens to have strong schools (mostly rank 8 and above). You will have a hard time finding anything below $90/sf in Temecula and below $80/sf in Murrieta. It’s illogical to group these with Perris.

      1. IrvineRenter

        Temecula does get many sales from the San Diego market. It was the first market in Riverside County to begin showing distress because of the association. San Diego’s market rose then fell a full year ahead of OC’s market. My company has an office in Murrieta. It is a transitional market that gets commuters from both directions; however, the drive must be very difficult. As you pointed out, it is 40 minutes from the outskirts of Greater San Diego. I doubt there are many people who live here who only have to drive to Poway or Escondido for work.

        1. george8

          Temecula has some nice newer homes on beautiful golf courses. They are haven for golfing, wine tasting retirees. And the prices are getting to the points almost below construction costs.

          1. george8

            Probably so. I do not have actual closed price to prove it. Many listings are short sale prices that just tease you.

          2. Geotpf

            Short sale prices are complete BS in Riverside. There’s a street here with three houses in a row for sale. They are more or less identical. Two are short sales, both priced at $80k. The third is an REO, priced at $135k. Those short sales will never sell for $80k-the bank will never approve such a price.

      2. eclipxe

        Thanks for pointing this out. As someone who grew up in LA/OC and then moved out here (Temecula/Murrieta) you really find there is an interesting mix of market forces in play:

        1. OC/LA transplants
        2. SD transplants
        3. IE transplants

        To folks from OC/LA we are *very* far from *everything*. To folks from SD we are just kind of out of the way. We are pretty much the Corona of San Diego. Many of the nicer San Diego neighborhoods and job centers (outside of Downtown) are in North County (La Jolla, Rancho Bernardo, Carlsbad, Sorrento Valley). Temecula/Murrieta acts as a North County suburb with reasonable commutes to SD Coastal job centers (mainly Carlsbad and Sorrento Valley). This really helps differentiate the market out here compared to the far flung parts of the “3rd tier” like Perris/Moreno Valley/etc.

        Two other major points are climate/smog and industry. Temecula/Murrieta are quite close to the coast (17 miles, not counting De Luz). It gets hot out here but not like most of the IE, there are actually coastal breezes and such. It also helps us avoid the IE smog belt – go 20 miles north and it’s like night and day.

        Our local industry in Southwest Riverside is also much stronger than most of the far flung exurbs. There *are* jobs in the area outside FIRE – Abbott, International Rectifier, PHS, Scotts, Opti-22, Plant CML, Pechanga etc, etc. There are a handful of software, engineering, biotech firms tucked away in the hills. We’re not going to challenge Irvine for local jobs but we aren’t serving as a regional job hub either. Much of the local community (400k in SW Riv Co) can be served with a mix of local industry and short commute. The mean travel time for work is 33.8 minutes. Not as horrendous as many people believe. Most outsiders don’t realize it but many people from surrounding cities actually commute into Temecula/Murrieta to work.

        So although the area has been very hard hit, there are a lot of contributing factors that lessen the pain significantly down south. It’s not immediately obvious to OC/LA folks looking from the outside in, but there is a bit of “here” here as well as strong demographic differentiators especially compared to warzones like Moreno Valley, Perris, Hemet, San Bernardino, etc.

  15. drudometkin

    Good post. I work in Anaheim hills and have always considered buying out in corona, but I’m glad I never did. (thank god) As for now I rent in yorba linda.

  16. MalibuRenter

    Regarding the articles you linked to, I am suspicious of the one from USC on rents going down. The CPI component for rent isn’t declining in LA/OC. I think there is some sort of difference in methodology between the two.

    The Housing Chronicles article on case shiller tiers shows how effects of different financing on each tier. My prior research showed that the rate of growth of home prices during the bubble was pretty similar between tiers, if all tiers were conforming. The same has been true of the bust.

    However, for places where the higher tier or middle tiers had different funding sources than the lower tiers, they behave rather differently.

    In most of CA, the higher tier didn’t have as much of a price increase, and has had a slower decline. The higher incomes and later ARM resets of the higher tiers have helped keep those homes from dropping as quickly. However, now that financing for jumbos has gotten significantly more expensive and difficult, prices above jumbo conforming are coming down quickly to where they are affordable without going to a full jumbo loan.

    1. newbie2008

      It seems like the rent is the luck of the draw. A coworker rented at 50% more than what I rented. His is newer and signed the lease 6 months before I did. Another coworker reported his lease came up and IC lowered his lease by slight under 10%.

  17. Dunbar

    I work in Ontario, there aren’t any nice areas of Ontario just various shades of bad. I would compare it to Pomona or Upland, you need to go to Rancho Cucamonga to be in a nice area. Corona has a wide range of areas from ghetto bad to areas similar to Chino Hills or Rancho. Plus, as others have pointed out, Corona is conveniently located for a wide range of commutes and is reasonably priced relative to the other “nice” IE cities. I don’t know how the school system ranks.

    1. Bitter Renter

      I’ve only been to Ontario for the airport and once to Ontario Mills Mall, but the area around the latter seemed pretty nice. Has it gone downhill in the past several years?

  18. New Homes in Winchester

    Getting a new home for about 60% less than a similar older home in Orange County may be worth the drive to Riverside County.

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