O.C. Home Prices to Continue Slide, Won't Recover Any Time Soon, Chapman Says

Home prices in Orange County will fall about 4 percent next year, Chapman University economists said Thursday, and will not recover any time soon.

The housing market is being buffeted by "countervailing forces'' of supply and demand, said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman.

"We're not building many new homes, which is good news in terms of home prices, but we're still dealing with a large supply of distressed properties,'' Adibi said.

Adibi and Chapman President James Doti, who is also the Donald Bren Distinguished Chair of Business and Economics at the school, released their economic forecast to a gathering of business and community leaders in Costa
Mesa.

Related: Sales Down Nearly 20% in O.C.

One "big drag'' on the local economy, the economists said, is the scaling down of government spending, which has led to layoffs.

Meanwhile, Orange County's 8.6 percent unemployment rate, which is already considerably better than the state's, will continue to improve, with job creation gaining momentum by year's end, Adibi said.

Job growth nationally could reach 1.4 percent, bringing the unemployment rate down to 7.5 by the end of 2012, Adibi said. Countywide job growth could reach 2.2 percent in 2012, he said.

Orange County should add 20,000 jobs this year and another 30,000 next year, Adibi said. Unemployment in Orange County fell from 9.1 percent in March
to 8.6 percent in April, the latest figures available. California's unemployment rate is nearly 12 percent.

Most of the added jobs expected in Orange County will be white collar positions—attorneys, accountants, and computer programmers, Adibi said. Private education organizations also will do strong hiring "because people are retooling and going back to school,'' he said, and the healthcare industry will also grow as the population ages and demand increases.

Adibi and Doti forecast better times for the leisure and hospitality industries.

"We believe tourism will improve, and partly because consumer spending will be relatively strong compared to last year,'' Adibi said.

Manufacturing will experience some recovery, particularly in high-tech as business invest more on equipment, Adibi said.

Among the wild cards will be oil and gas prices, he said. Political instability in the Middle East has driven up oil prices, but that should stabilize in the coming months, Adibi said, although "it's very hard to project gas prices.''

—City News Service