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Local Housing Strong In Spite of Adverse Reports


by Gene Wunderlich


Don’t know how many of you saw the recent article in The Californian headlined “San Diego economy poised for rebound”. The article summarized a positive economic forecast for California and San Diego by U.S. Bancorp CEO Richard Davis. Had the article confined itself to the positive economic news as forecast it would have been a decent enough read, as articles in The Californian go.

But the article ended with Davis expressing his concern for housing in the Inland Empire and, if the reporter is to be believed, specifically Temecula and Murrieta – the ‘exurban’ areas. Citing high gas prices and a ‘trend’ toward apartment renting in big cities, Davis opined that “We may have to raze a lot of houses. We may have built a lot of houses in the wrong place.”


Now according to his Forbes Magazine profile, Mr. Davis is a real whiz bang in the banking industry and heaven knows I don’t have a competing profile in Forbes. But then again, he is just a banking exec who lives and works in Minneapolis who enjoys a visit to our sunny climes during the dead of a Midwest winter. They may be razing houses back in his Twin Cities but we haven’t seen that in SoCal and certainly not in our Twin Cities (Murrieta/Temecula).


So I decided that I would ask a couple questions about his supposition that any inquiring mind might want to know – like where in the hell did you come up with that theory, Dick? Because it sure doesn’t seem to comport with the reality on the street in Southwest Californias. It’s no great revelation that the current havoc at the gas pumps will have an imnpact on areas commuters but you have to ask (well, I have to ask, their reporter didn’t feel the need) is it really forcing people to abandon our affordable homes in the Wine County or Murrieta to live in an apartment in downbtown San Diego? I did a little breakdown that you can find at ‘’ that indicates Mr. Davis should confine his prognostications to what he knows best – which apparently is not the housing market in Southwest California.


All right, got that of my chest. It apparently comes as quite a surprise to some that our housing market in Southwest County is quite robust. Single family home sales were off just 1% in 2011 from our record setting pace in 2010 when we sold more homes than ever before in Southwest California. Our prices continue to stabilize within a narrow range and for the first time since late 2008, there are more ‘standard’ homes for sale than distressed!. Bank-owned homes now make up just 13% of our active market, down from 90+% just 3 ½ years ago. Looking at the absorption rate of single family homes in the region, our inventory of available homes is down 20% from last February to just 3.3 months and last month we sold 1.1 homes for every 1 new listing that came on the market. Raze homes? We should be raising homes. Maybe that’s what he meant.


Let’s see, last January we sold 481 homes – this January 561. Last February we sold 533 homes – this February 601. Last February our regional median price was $227,173 – this February $233,190. Warm up the bulldozers? Actually, Davis was right about warming up the bulldozers but for the wrong reason. You may recall my chart showing new housing starts statewide with about 36,000 starts in 2009, 39,000 in 2010 and just 33,000 in 2011 – this in a state that requires 125,000 housing starts a year to stay abreast of demand. Bulldoze lots for new homes, folks.


Jeez, I hope he was closer to the mark on his positive news for San Diego than he was on his housing news for Temecula & Murrieta.

OK. Now it’s off my chest. Sorry, I just get a little defensive when people who can’t find our region on a Google map pontificate about it like they had a clue. There’s a couple economists in the state that have the same problem. Anybody who lumps the Southwest California economy or housing market in with the rest of Riverside County is suspect to begin with. If they lump us in with the ‘Inland Empire’, they don’t even deserve a read. Of course that’s just my opinion. I don’t even have a Wikipedia profile, let alone Forbes.


Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors.