Housing Crisis Stings Inland Empire

At first blush, the numbers seemed downright humbling. The batch of data released by the U.S. Census Bureau last week seemed to suggest that the Inland Empire was some sort of failed experiment in mega suburbia--27,000 square miles of plummeting incomes, limited education, dropping real estate values and soaring poverty.

But so far, the news has generated little chagrin in Riverside and San Bernardino counties. Instead of soul-searching, government and business leaders immediately looked across their borders and angrily laid the blame on Los Angeles and Orange counties.

Yes, they said, the region struggled with an influx of senior citizens. Some questioned whether the Census Bureau used the appropriate inflation indexes to compute changes in the economic climate. But more than anything, the officials charged, the Inland Empire’s economy is falling victim to the lack of affordable housing closer to the coast.

“What you are seeing is the exporting of the coastal communities’ problems to the inland region,” said John Husing, a prominent Inland Empire economist, consultant and booster.

Many analysts agreed, and said the figures point to a disturbing caste system developing in California as the cost of housing soars.

Statewide, the housing affordability index--the percentage of people who can afford a median-price home in California--fell this spring to 29% from 34%, according to the California Assn. of Realtors. It was the lowest mark in two years, and many fear that the trend will continue if mortgage rates keep climbing.

In Los Angeles County, the median price for a home has risen nearly 19% over the past year to $267,000; the price in Orange County is up 12.3%, to $370,000.

Eventually, some fear, California’s wealthy and its middle- and low-income families will lead separate lives--the wealthy along the coast, the others farther inland, two separate castes divided roughly by the Golden State Freeway.

That prospect has some in the Inland Empire insisting that California consider dramatic changes in tax structures and other programs to repay inland counties for shouldering the affordable-housing load and the social problems--such as high crime rates and increasingly crowded schools--that accompany development.

Otherwise, said Max Neiman, a professor of political science at UC Riverside who studies development policy and the effects of growth, “this is the social sorting of the state’s population.”

“This is the way it has been forever in Southern California,” he said. “Where is the plus side for having been good citizens on the housing scene?”

The census figures painted a dreary portrait of the Inland Empire. Adjusted for inflation, median household income across giant swaths of the Inland Empire fell between 1990 and 2000--by 8.3% in Riverside County and 3.6% in San Bernardino County.

Median home values dropped markedly in many areas, and the 20.3% decline in San Bernardino County was bigger than all but three counties in the state. Poverty levels rose sharply in both counties.

Few areas in the Inland Empire--home to 14 of Southern California’s 20 fastest-growing cities, a region whose booming population of 3.2 million is expected to double in the next 25 years--escaped the gloomy findings.

In the region’s two largest cities, Riverside and San Bernardino, the percentage of people living in poverty rose 48.6% and 37.4%, respectively.

Even the region’s pockets of wealth--from Redlands, where the median home value fell 13.4%, to Temecula, where the percentage of people living in poverty soared--did not escape unscathed.

“It does not bode well,” Neiman said. “These are dismal figures.”

All told, the data continue to raise questions about the Inland Empire’s long-standing belief that unfettered development will foster economic power.

And the figures make it clear that the region, which has long complained that it is seen as a second-class dumping ground by its richer, coastal cousins, has become overwhelmed by a population boom made up largely of housing refugees from the coast.

“Whether or not anyone wants to admit it, we’re in a housing crisis, and we are going to continue to be that way,” said Frank Williams, chief executive officer of the Baldy View chapter of the Building Industry Assn. of Southern California. The chapter represents builders in San Bernardino County and eastern Los Angeles County.

Many believe that the numbers point to a fundamental flaw in the Inland Empire’s struggle to build houses fast enough for new arrivals.

The region’s focus on new communities--seen as the best hope for high-quality development, better jobs and higher retail sales--remains keen, largely because builders wield enormous political clout in the region.

But older communities are virtually ignored, many say.

So though Murietta, which has new, gated neighborhoods in southern Riverside County, saw its median household income rise dramatically, income levels fell in Perris, an older city of about 35,000 southeast of Riverside.

“We are constantly barraged with all these challenges to keep up with growth, which I think is happening too fast,” said Riverside County Supervisor Bob Buster. “That diverts our attention, and the two counties become disjointed where you have this great gap between communities.”

That gap tends to feed development in remote communities that once never dreamed of becoming commuter bedrooms serving Los Angeles and Orange counties.

Banning, for example, off Interstate 10 east of Beaumont, watched its population grow by about 14% in the 1990s, or nearly 3,000. More building is expected, said Vickie Burt, the town’s economic development and redevelopment manager, most of it in the form of single-family houses.

“It is this domino effect,” Burt said. “People continue to search for value in housing. So we’re seeing new rooftops.”

Some government agencies are beginning to recognize the growing disparity between newer and older communities.

The San Bernardino County Board of Supervisors, for example, recently approved a $650,000 program that will help homeowners in Redlands and Highland rehabilitate older houses. A local subsidiary of a national nonprofit housing organization will provide low-interest loans for repairs.

Los Angeles officials familiar with the affordable-housing situation there did not return phone calls seeking comment.

Ken Domer, an Orange County Housing and Community Development Department section chief, said his agency realizes that the lack of affordable housing is a problem, and that many people are driven to seek homes farther inland.

Domer said Orange County is taking substantive steps to address the problem.

The county Board of Supervisors, for example, plans to allocate $35 million in the next five years so housing officials can act as permanent lenders to for-profit and nonprofit groups willing to build low-income units.

The goal is to build 1,000 affordable housing units each year, he said.

“We recognize there is a problem,” Domer said. “That’s why we’re doing our best to act on it.”