I lived, worked for the county government and owned a home in the city of Riverside. First, you need to be very careful when you are referring to Riverside, as it is both a city and a county. Riverside county stretches from the Arizona border to within 8 miles of the Pacific Ocean and encompasses such cities as Palm Springs (one of the wealthiest communities), Indio (one of the poorest communities), and Moreno Valley. Look at specific areas and avoid generalizing - it is the sixth largest county in the US so you can imagine the vast differences in housing prices, incomes, crime rates etc.
I purchased my personal residence in 2003 for $197,000. It was a nice remodeled (hardwood, granite) 1300 sq ft home built in 1924 in an eclectic neighbourhood that was a mix university professors, meth addicts, and artists. One mile in one direction was a ton of gang activity and one mile in the other direction was a series of $500,000+ homes in gated communities. I sold my home in 2005 for a profit of $120,000 and could have made more but needed a quick sale because I was moving. However, that was just prior to the foreclosure nightmare in the US.
So let me tell you what I know. Currently, Riverside has foreclosures on nearly every block and in every market. It has one of the highest foreclosure rates in the county and the Inland Empire (Riverside and San Bernardino Counties) is rated the sixth highest depreciating market in the US. The per capita income in the county is $26,448 (this is a better measurement than average because communities such as Palm Springs tend to skew it). Because of this, it’s one of the country’s worst subprime and conventional adjustable rate market disasters. Much of the economy is based on housing construction so you can imagine what is happening to jobs at this moment - there is no major employer other than city and county government - most people commute to Orange and LA Counties. Job losses from the housing slowdown will stagnate housing demand.
A couple of good things: there is a community college (RCC) and the University of Riverside California (UCR) located downtown that attracts a lot of renters to the area and there are infrastructure improvements (the 60/215/10 freeway interchange) that will somewhat address the traffic nightmare. Riverside is 60 miles east of LA but at least 60 minutes to the airport (Friday from 3pm - 7pm it is 3 hours). There is one commuter train into LA ($12 single trip), but most everyone drives.
There are very tough areas in Riverside so it is very important to be aware of who you are renting to. Within the immediate environs of the university is one of the worst areas so do not think that it only attracts students. It is rife with prostitutes, gangs, and many drug addicts. There is however, an intiative to revitalize the area but it is a slow process. A person I know owns an apartment building near the uni and rents fully furnished one bedroom apartments for $700 a month. A two bedroom home could probably fetch $1200-$1400 a month.
One feature of the California housing market is that escrow (closing costs) are negotiable between the buyer and the seller and in this market, it may be possible to have the seller pay all of the buyers costs. Also, most sellers provide and pay for one year home owners insurance policy that covers the complete cost of anything that goes wrong with the home (roof leaks (it NEVER rains in Riverside), garbage disposal breaks etc.). But in my humble opinion, the negatives of the market outweigh the positives. I believe that the market will continue it`s downturn before it is corrected. However, I use the term `correction` loosely - houses increased 100 percent in less than two years with no driving economic forces behind the change.
