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Looking back at the housing boom and bust


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    Southern California’s Inland Empire has the second-highest unemployment in the country for a metropolitan area with more than 1 million people -- 13.4 percent (September 2011). Only Las Vegas is higher. Job loss and the housing crash have devastated retailers on this commercial strip in Fontana, Calif.

    - Mitchell Hartman/Marketplace

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    Entering the struggling city of Rialto, population 100,000, along Route 66 from San Bernardino, its depressed neighbor to the east. Rialto’s population—which is predominantly Hispanic—grew 36 percent from 1990-2010.

    - Mitchell Hartman/Marketplace

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    The city of Rialto just turned 100 this month, but it’s not in a celebratory mood. Unemployment is over 16 percent, home prices have fallen by 65 percent and sales tax revenues have fallen, causing the city to trim its workforce by approximately 20 percent since the recession began.

    - Mitchell Hartman/Marketplace

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    In the Inland Empire, 45 percent of homes are underwater. Home prices fell 6.3 percent in the latest year (September 2010-2011), the 4th-largest drop for a large metro area. The region has had the third-most foreclosures in the nation (after Phoenix and Atlanta) since 2005.

    - Mitchell Hartman/Marketplace

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    A sign in downtown Rialto announces new homes but few are being built right now. Two planned developments are being stretched out over the next 10 to 20 years.

    - Mitchell Hartman/Marketplace

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    Downtown Rialto is a patchwork of shuttered shops and those still hanging on.

    - Mitchell Hartman/Marketplace

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    At the Patio West Deli in downtown Rialto, owners Claudia Szypusz and Gloria Miller say this is the slowest business has been in the last 30 years. But they believe the worst is now behind them and the economy has bottomed out.

    - Mitchell Hartman/Marketplace

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    With home construction in the Inland Empire at a standstill, public construction projects—some supported with federal stimulus funds—are among the only ones still active. This fire station project is in Fontana, Calif.

    - Mitchell Hartman/Marketplace

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    Rialto assistant city administrator Robb Steel says the city has tried hard to attract industrial jobs and employers, including logistics facilities that truck and warehouse imports from the Ports of Los Angeles to discount stores and malls nationwide.

    - Mitchell Hartman/Marketplace

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    Rialto is home to a huge FedEx logistics center. Warehouse vacancy rates rose to 20% in Rialto during the recession but they are now below 10% as global trade and consumer spending rebound. The typical logistics facility is 1.5 million square feet. Employment in logistics grew by 45 percent from 1990-2010. Much of the hiring is through temporary staffing agencies.

    - Mitchell Hartman/Marketplace

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    A new state-of-the-art logistics center for Sketchers has just opened in Moreno Valley. It will employ fewer workers than a typical warehouse—mostly highly-paid computer operators and technicians. The 1.8 million-square-foot facility cost $250 million dollars to build and employs the latest environmental and energy-saving technology.

    - Mitchell Hartman/Marketplace

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    One of the largest industrial employers in the Inland Empire, California Steel in Fontana has 1,000 highly-skilled workers. It plans to hire 50 more next year. The business is currently being driven by domestic demand in the gas and solar industries.

    - Mitchell Hartman/Marketplace

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    Unskilled workers—many of them undocumented—offer themselves as day-laborers outside a Home Depot in Riverside. Many low-wage workers laid off from warehousing and construction have moved into day-labor during the recession.

    - Mitchell Hartman/Marketplace

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    Sunrise Church in Rialto has boomed in recent decades as the city’s black and Hispanic population expanded. It now has 5,000 members and occupies a 13-acre campus including two large auditoriums, classrooms, offices, and playing fields.

    - Mitchell Hartman/Marketplace

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    Sunrise Church Senior Pastor Jay Pankratz preaches two sermons every Sunday flanked by an electric gospel band and huge video screens. In an adjacent auditorium, Spanish-language services are held.

    - Mitchell Hartman/Marketplace

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    Several miles from Sunrise Church, in a poor section of Rialto, is the Sunrise Mission. Church members volunteer to give out donated food and clothing to the needy on Sundays.

    - Mitchell Hartman/Marketplace

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    Sunrise Church member Albert Grigsby, who is retired from the military, supervises food distribution at the relief mission.

    - Mitchell Hartman/Marketplace

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    The historic Mission Inn in downtown Riverside reminds visitors of the opulence and prosperity of the Inland Empire in former times, when agriculture and a succession of housing booms made fortunes—for some.

    - Mitchell Hartman/Marketplace

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    In the High-Desert community of Victorville, single-family homes are going for a fraction of the prices during the housing boom of the mid-2000s. With foreclosures and short-sales rampant, it’s a buyer’s market.

    - Mitchell Hartman/Marketplace

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    As housing boomed in the Inland Empire during the 2000s, prices also rose further east across the mountain passes in High Desert communities such as Victorville. There’s still land available for development, but little demand for new houses now.

    - Mitchell Hartman/Marketplace

Mike Brophy, former San Bernardino assistant county assessor, in his replica 1929 Mercedes.

Steve Chiotakis: We're gonna get a look at the revised gross domestic product a little later this morning. Earlier reports had the nation's economy growing in the third quarter at 2.5 percent. But the economy continues to struggle in a lot of places -- like in San Bernardino, Calif., where the housing market there has been in a tailspin. It's cost thousands of construction jobs, and the jobless rate tops 17 percent.

Marketplace's Mitchell Hartman reports on a trip that he through the Golden State's Inland Empire.


Mitchell Hartman: I met retiree Mike Brophy at a vintage car rally in downtown San Bernardino. He gave me a ride from his car -- a replica 1929 Mercedes Benz convertible -- back to my car, a rented Kia. I was there to cover the housing boom and bust. And I soon realized that sitting in that bucket seat next to me was a guy who'd been there since the beginning.

Mike Brophy: I've been in real estate since '67. And then I got into real estate appraising in '74, because real estate sales, you go broke about every five years. Appraising was steady. So I got in, did that until ' 95, and then got appointed assistant assessor.

Hartman: For San Bernardino County?

Brophy: San Bernardino County, yes.

Hartman: You must have seen the beginning of the boom in the 2000s.

Brophy: I refinanced my house. I bought my house for $189,000 and then it went up to about $425,000. Now it's back down to about what I paid for it. I'm guilty, I took some money out -- and I don't know what the hell I did with it, either. I'm just as guilty as the next capitalist. I love money.

Hartman: Did people see the crash coming?

Brophy: I don't think so. Because I predicted it and people thought I was just being silly.

Hartman: They just figured the land's here, the demand will always be here.

Brophy: They figured people will just keep coming. They had since the '40s, before the '40s. So no, we didn't think it would ever end.

Hartman: Do you think it'll come back again? You think it's just another cycle?

Brophy: I don't think it'll come back like it was because I don't think unemployment will get under 8 percent. We have a different dynamic in this country.

And here in the Inland Empire, there's a long way to go. San Bernardino County has one of the highest foreclosure rates in the country. And experts don't expect home building to rebound until at least 2018.

I'm Mitchell Hartman for Marketplace.


Steve Chiotakis: There are maps showing how cities and states around the U.S. compare on unemployment, as well as pictures from Mitchell's reporting in the Inland Empire.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

Mike Brophy, former San Bernardino assistant county assessor, in his replica 1929 Mercedes.

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The IE Real Estate market is not going to improve by 2018. Why would anyone want to move to the Inland Empire? The air pollution is the worst in the nation, the water quality is the worst in the nation, there are no jobs, no employer in their right mind would locate here, the roads are too congested to commute somewhere in Southern California where there are jobs, the schools are terrible, the people are uneducated, food deserts abound, crystal meth addicts roam the streets at all hours, and there is a serious lack of medical facilities. Some inland cities have lost up to 10% of their population in the last 3 years because this is the new dust bowl. (Banning, CA - 2010 census population 28,988, current estimate - 23,562) Full disclosure - I am a former property tax appraiser in the IE, just like the article's subject. The former SB county Assessor was arrested for massive corruption and crystal meth, so take anything that one of his flunkies says with a grain of salt. I hope the money that he couldn't account for didn't go into his arms or up his nose.

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