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Riverside home sales on the increase, prices continue decline

While San Diego has weathered a rough housing market over the past couple years, it has been somewhat resilient compared to Riverside County.

However, like San Diego, Riverside may be seeing a turnaround in both new construction and home sales.

Ranked second in the nation for highest foreclosure rates by Realty Trac, Riverside has watched median home prices plummet while new construction slowed to all-time lows late last year.

Though prices of existing homes have continued to dip, the sales have been increasing.

The median price of a home sold in Riverside County was $166,840 in June, a 36 percent drop from June 2008 but up 6.2 percent from May.

However, home sales were up 45 percent in June from a year ago, according to data from the California Association of Realtors.

Prices relatively low compared to the housing boom have generated interest among many first-time homebuyers.

"Shrinking inventory in the lower end of the market is impacting prices, as many distressed properties are receiving multiple bids," said California Association Chief Economist Leslie Appleton-Young. "The year-to-year price declines are diminishing, and are at the lowest level since March 2008."

The affordability of homes is part of the draw, according to CAR. In the second quarter of 2009, CAR determined nearly four out of five people in Riverside County could afford an entry-level home at $137,000.

As sales have been picking up, so have new construction starts. Permit activity has been increasing since February.

After new single-family construction hit its decade-long low of 116 units receiving permits in February 2009, activity has increased.

According to the most recent data available from the Construction Industry Research Board, single-family home permit activity was up 43 percent from May to June this year, with 398 permits pulled.

But that is still low for this decade.

From 2000 to 2006, there was an average of 1,852 single-family home permits issued each month, with a spike in activity from 2003 to mid-2006.

The first major decline in activity came in August 2006, when there were 1,207 single-family unit permits issued following the 2,022 permits issued the month prior.

With the exception of a few months with mild increases, permit activity has trended downward ever since. For the first half of this year, single-family home permit activity was down by about a third compared to 2008.

Multifamily building is more difficult to see trends in, as one large project with hundreds of units can skew the numbers. The 16 multifamily units permitted accounted for one of the worst months this decade, though 2009 has had more multifamily units receive permits than 2007 and 2008. during the first six months of the year

If building trends continue, 2009 could outdo 2008 for being the worst year for home building on record.

Last year, homebuilders in California pulled fewer permits than any other year on record with 65,000, reported CIRB.

In June, CIRB adjusted its annual forecast for California upward from its original predictions, but still expects only 40,200 housing starts this year.

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