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PALM SPRINGS

THEY WILL COME: IT'S ONLY A MATTER OF TIME...

BY JACKIE DEVEREAUX DESERT HOT SPRINGS, CA -When economist Dr. John Husing spoke about the financial future of Desert Hot Springs everyone attending Tuesday's Business Expo at the Miracle Springs Resort and Spa was listening intently. Husing, the keynote speaker at the luncheon attended by 125 local businessmen and women, said that Riverside County is the fastest growing area in the nation, and in his opinion, Desert Hot Springs will experience the next big boom in growth. Husing said that while most of California's population growth has been along the coastal counties from San Diego to San Francisco over the past few decades, growth patterns are changing and moving outward towards the Inland Empire. New home construction is down and housing prices have fallen dramatically, Husing explained with a display of Powerpoint charts. The average price of a home in DHS is $214,000 and $301,000 in the Inland Empire with prices much higher in coastal communities throughout the state. People are now opting to move to places where they can afford to buy a home, he said. "If you build freeways, they'll come,? Husing said, "and if you don't build freeways, they'll come anyway.? Traffic congestion in the Inland Empire has grown significantly from 2000 and will continue to clog freeways through 2020. San Bernardino and Riverside counties expect 2.1 million people to be added, and that forecast is rising. Only six states are adding to their populations: California; Arizona; Texas; Florida; North Carolina; and Georgia, while states such as, Pennsylvania, New York and Illinois are losing people. The freeways will move east of Beaumont with the migration of people, and DHS is the first place people will come to when moving from Los Angeles, Orange, Ventura and San Diego counties. Husing said the drop in new housing construction can be attributed to a number of other factors. Some California counties do not have enough available land or city and county governments have enacted restrictive or in- adequate zoning causing a slowdown in new home construction. Additionally, this rise in foreclosures has changed the financial climate for lending institutions. New home sales are down significantly from the Mexican border to Ventura, he said. The baby boomer generation (those born from 1946 to 1964) created a higher demand for homes. As the demographic numbers rose with the number of births surpassing the number of deaths, so did the number of mortgages. As the prime lending rates increased, loans went from fixed to variable and created chaos in the lending world. Banks were handing out loans to people who couldn't afford the variable rate after it rose, and now they find themselves in foreclosure. "The real problem started with the book, "Flipping Houses For Dummies,? Husing said. This cut supply for new homes and raised prices as people started investing in real estate. Add to this mix the fact that banking standards for loans deteriorated from 2004-2006. Now the best seller is, "How to Make Money on Foreclosures,? he said laughing slightly. But this is no laughing matter. Housing prices need to fall even more, he said, to get the economy back on track. New homes will see a 13% drop while some existing homes will see a 20% drop in prices. "Every home sale right now is a distressed sale,? he said. The Feds are trying to get the mortgage rates down but lenders are keeping rates unusually high now because they are afraid. However, the picture is somewhat brighter in DHS, he said. "Here 58% of the residents can afford to buy a home because prices are down, lending rates are down and income levels are up,? he said. There are enough existing homes in inventory along the coastal communities to last another 44 months, including Los Angeles, San Diego, Orange and Ventura counties. The Inland Empire has only a 9 month supply of existing homes in inventory. "New home construction could start up again in the Coachella Valley,? he said.

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