In the evolving landscape of Southern California’s real estate, the Riverside-San Bernardino area, collectively known as the Inland Empire, is emerging as a standout market. Its unique blend of affordability, population growth, and strategic development is reshaping the region’s attractiveness to renters and investors alike, according to a recent 2024 Multifamily National Investment Forecast by Marcus & Millichap. As we move through 2024, several key trends are defining the local real estate scene, underscoring the Inland Empire’s growing appeal in a competitive market.
A Hub of Affordability Amidst Southern California’s Pricier Markets
The Inland Empire stands as the only market in Southern California where the average household spends less than one-third of its annual earnings on rent. This affordability factor, rare in the region, has been a significant driver of population growth over the past two years, making it one of the top destinations for new residents among major U.S. markets. This trend is expected to continue in 2024, further fueled by a historically high volume of new housing completions, primarily concentrated in Temecula-Murrieta, Fontana, and Moreno Valley. This development strategy not only addresses the demand for more housing but also supports positive net absorption across the metro, enhancing the overall market vitality.
Diverse Investment Landscape: Central and Outlying Areas Attract Attention
The Inland Empire’s real estate market has seen a well-distributed flow of deal activity, with significant investments spreading across both central and outlying areas. The metro’s affordability and growing population have broadened investor interest, extending to the Mojave Desert cities like Victorville, where Class C assets are being snapped up for competitive prices. Central locales such as San Bernardino and Fontana are also drawing investors, thanks to their below-average rents and substantial renter pools. Moreover, areas like Ontario and Riverside, with minimal new construction and strong demand, are becoming hotspots for investment.
2024 Market Forecast: Continued Growth with Challenges
The Inland Empire’s real estate market is poised for another year of growth, albeit with challenges that warrant attention:
- Employment: The job market is expected to expand, with an addition of 6,000 roles, predominantly in sectors traditionally associated with the renter demographic.
- Construction: The area is set to experience a significant increase in housing supply, reaching a 17-year high. This surge in development positions the Inland Empire competitively with neighboring markets.
- Vacancy: Despite a notable rise in vacancy rates over the past two years, 2024 forecasts a slowdown in this trend. However, the vacancy rate remains above the long-term average, indicating room for improvement.
- Rent: The Inland Empire is on track to record its 15th consecutive year of rent growth, reflecting the enduring demand for rental housing despite the increased supply.
A Market of Opportunities Amidst Southern California’s Landscape
The Riverside-San Bernardino area’s unique position as an affordable, growing, and diversely invested market sets it apart in the Southern California real estate landscape. With strategic development and a keen eye on evolving market dynamics, the Inland Empire offers a promising horizon for renters seeking affordability and investors looking for growth opportunities. As the market navigates the challenges of rising vacancy rates and the need for further absorption of new units, the fundamental strengths of the Inland Empire—its affordability, population growth, and strategic investment potential—underscore its resilience and potential for continued prosperity in 2024 and beyond.
