I am often asked about the current state of the local real estate market. So here’s my opinion based on the current data.
Since early 2015, prices have been steadily rising across the entire city of Riverside. This graph shows average sales price in four of the major zip codes of the city (92501, 92503, 92505, and 92508). As you can see, the six month running average has been rising in all four zip codes with only a slight dip in the early months of 2016.
So what is driving the rise? I think several factors are contributing to this rise, but I believe the three main contributors are the continuation of historically low interest rates, low inventory, and a rise in consumer confidence.
Bankrate.com’s survey recently found that 21% of experts think rates will rise and 21% of experts think rates will drop. However, I tend to agree the other 58% who strongly believe that rates will remain relatively unchanged for some time to come with gradual increases in the future only because they are the lowest they’ve been in 55+ years. These low rates will continue to spur more buyers that couldn’t previously afford a home and that will bolster home prices.
The high rate of unemployment we experienced through 2016 put a significant damper on people’s confidence. This slowed spending, specially in real estate (typically the largest expenditure in most people’s lives), and despite the increasing confidence and higher employment home sellers are not ready to move. They’re opting to preserve their equity or using it to upgrade their existing homes. This is also contributing to a higher quality of previously owned homes when they do come on the market.
I’m always happy to hear other opinions.