The Casden Market Forecast is anticipating a major rental increase across Southern California, the coastal cities will have an average 4.45% Rental increase that will inevitably force a migration to the inland parts of Southern California. According to the market forecast, coastal cities will experience an increase in rental cost in an already unbearable cost of housing, this will include cities such as Los Angeles, San Diego, Laguna Beach and Huntington. This increase usually forces people of lower economic means to move to the more affordable areas of southern California.
The Inland Empire has historically been a place for affordable housing. However Riverside and San Bernardino county part of the Inland Empire have been suffering through a severe housing shortage specifically for people interested in tenancy. The added strain from the coastal migration will only make the shortage worse. The Inland Empire is already projected to increase from the average of $1,662 per month in 2021 to an average of $1,810 in 2022. While the projections are an average of 8.9% in 2022 this realtor believes that the increase will be in fact 10% more than the projected increase. This means that the average rental in the Inland Empire will be $1,976. The main reason I believe that is that the above forecast model simply does not accommodate the people who have been priced out from the coastline cities who need a place to live within an hour and a half’s drive.
Effectively the coastal migration coupled with the Inland Empires strain on the rental market makes living in the Desert cities a great option however, Desert Cities from Palm Springs to Mecca are having their own housing shortage. According to The 2021 University of Southern California Casden Spring State of the Market Forecast article the Coachella Valley is projected to have an average of 9.5% rental increase across the entire valley in 2022.
The Coachella Valley has become a hot spot for new residents while California as a whole is suffering from an exodus. Our valley is having a significant increase in permanent residents. As we stand today we have fewer than 600 available homes for sale in the entire valley. The rental market is not faring any better.
For those of us hoping to get a better season to purchase, they really have a hard realization in front of them, rental properties will be more expensive therefore they will be an attractive investment even at a higher market price. To add to the rental market woes, interest rates will also climb according to the Fed up to 1% this year. A higher interest rate translates to a loss of up to $30,000 purchase power for every 1% increase and that’s just using the median purchase price of $450,000 in the Desert Cities.
The season to become a homeowner is now. While it is true that interest rates and home values are increasing tremendously, we are still an affordable and desirable place to live. Do not let another super bowl go by watching the big game from your landlord’s living room. Invest in yourself. There is still a lot of equity to gain in the Coachella valley.