What $300,000 Will Buy In The Riverside/San Bernardino Real Estate Market

The median list price for the San Bernardino/Riverside, Calif. market is $292,800, up 24.6% from the same month last year, according to the National Housing Trend Report for Feb. 2014, published by Realtor.com. This puts the median list price well above the national average of $199,000, and the San Bernardino/Riverside market near the top of the list for the 146 metropolitan regions ranked in the report in terms of total number of listings. This market also had one of the largest year-over-year increases in total listings, with a 46.4% boost.

The properties currently listed for sale on Realtor.com for the San Bernardino/Riverside area range in price from the mid $30,000s for short-sale properties needing repairs to a $4.4 million, 5,000-square-foot luxury home on 24 acres in the foothills of the San Bernardino National Forest. Of the almost 2,000 properties on the Realtor.com list, 51 are available in the $292,800 to $300,000 price range. Here's a look at what buyers can expect to find for $300,000.

Market Conditions

Like many other areas, the San Bernardino/Riverside market was rife with foreclosures following the 2008 financial crisis. Today, the number of foreclosure listings has dramatically decreased, and most of the market is comprised of short sales and standard sales. One of the reasons for the increase in short sales and the decrease in foreclosures is that - unlike many jurisdictions - California law does not consider the "forgiven debt" of a qualified short sale to be taxable income. This has provided an incentive for many homeowners struggling with mortgage payments to consider short sales as an alternative to foreclosure.

Many of the standard sales are homes that were purchased by investors and upgraded. Others come from homeowners who want to take advantage of the current market. In 2013, Riverside County, for example, saw an increase in assessed property value for the first time in five years.

What $300,000 will Buy

As always, location matters; $300,000 will generally buy more house in the San Bernardino market than in Riverside. At this price point, San Bernardino buyers will find single-level properties ranging in size from 1,300 to almost 2,700 square feet, with three to five bedrooms and two to three baths. Situated on grassy lots with mature landscaping, homes tend to have updated kitchens with stainless-steel appliances, granite countertops and upgraded cabinetry. Many also feature hardwood and ceramic flooring (with carpet in the bedrooms), one- or two-car garages, central heat/air and fireplaces.

Buyers may find a larger selection in nearby Riverside, but $300,00 will land them smaller houses than in San Bernardino – around 1,200 to 1,700 square feet. Most will be single-level, three-bedroom, two-bath properties. What offerings in the two areas have in common: grassy lots, mature landscaping and, often, similarly updated kitchens, hardwood/ceramic tile flooring and one- or two-car garages. In addition, fireplaces and patios are likely. At least one property at this price is listed as a short sale, and some listings note that minor repairs (or TLC) are needed. Homes are close to schools, banking, restaurants, shopping and the freeway.

Buy or Rent?

Last year "Trulia's Rent vs. Buy Report," released by online real-estate aggregator Trulia, showed that, on average nationwide, it was 44% cheaper to buy a house than rent. The most recent report finds that buying is still 38% cheaper. The report compares costs for a seven-year period, using five calculations:

1. Average rent and for-sale prices for an identical set of properties.

2. Initial total monthly costs of owning (assuming 20% down and a 30-year, fixed-rate mortgage at 3.5% interest, as well as annual maintenance, insurance, utility and property-tax expenses) and renting (monthly rent, plus renter's insurance).

3. The future total monthly costs of owning and renting.

4. One-time costs and proceeds (for owning, this includes closing costs and capital gains tax of 15% for gains above the $500,000 annual exclusion; for renting, this includes one month's security deposit).

5. The net present value to account for opportunity cost of money (this compares cash flows over time).

How long you plan on living in an area, what mortgage rate you secure and your tax bracket are all considerations when determining whether it's better to rent or buy. The Rent or Buy calculator on Trulia.com can help you figure out what to do. If you buy a $300,000 house in San Bernardino, for example, with a 4.2% mortgage, and you are in the 28% tax bracket and plan on living there for seven years, it would be 33% cheaper to buy than pay a monthly $1,800 rent, the cost of renting an equivalent property. A small change in any factor can alter the outcome: If your interest rate is 5%, for example, it would only be 28% cheaper to buy. (If your metro area isn't in the calculator's drop-down menu, just go back to the Trulia.com home page and type it in.)

Again, using the calculator, if you are planning on living in the San Bernardino area for only two years, it might be 32% cheaper to rent, all other factors being the same. Like many markets across the nation, it is generally cheaper to buy than rent if you plan on staying for at least three to five years, and the longer you stay, the more sense it might make to buy.

The Bottom Line

Median list prices and inventories for San Bernardino have increased month-over-month and year-over-year. In Riverside, the home resale inventory nearly doubled over the past year. Prices in Riverside have increased month-over-month during the last year. Buyers can expect to find a reasonable selection of homes in the San Bernardino/Riverside market at the $300,000 price point, with even more selection if they slightly widen their price range in either direction.