Chapman University said in its 2010 economic forecast out today that the median price of an Orange County house will increase 4.9% in 2010.
“About the best thing that can be said is that we’ve bottomed out and a slow recovery is under way,” the Chapman forecast says. “This view is supported by a shrinking inventory of new and existing unsold homes, improving credit markets and growing pent-up demand.”
Other elements to the local real estate outlook include:
- Housing affordability will decline slightly next year due to higher mortgage interest rates, but will “still (be) attractive by historical standards.” (See chart at right.)
- Affordability in Orange County dropped this year to the lowest level in records dating to 2001, with just 29.4% of a median-income family’s paycheck going for monthly house payments on a median-priced home.
- That compares to 2006, when 48.4% of a median-income family’s paycheck went for monthly house payments on a median-priced home.
- In 2010, Chapman projects that just over 30% of the paycheck will go to house payments.
- New home construction — while expected to rise slightly from 2009’s post-war record low — will still be the second-lowest since the mid-1940s.
- Builders are expected to add just 2,300 dwellings next year. That compares to 2,028 this year and 3,159 in 2008, the previous record low prior to this year.
- While new home construction will be up, those gains will be offset by a 20.4% decrease in non-residential building. Overall, spending on new construction will decline 5.2% in 2010, Chapman projected.
- That decline will be worse than what’s expected to happen statewide. The forecast said that California construction should drop 2.2% from the current year’s levels. And even that smaller rate of decline “will be a drag on the state’s economy,” the forecast said.
The forecast added:
“Many housing markets throughout the nation are still weak. Most important, the bursting of the housing bubble has left potential home buyers wary. With the glory days of endless double-digit home price appreciation at an end, consumers will likely stay put rather than over extend themselves for an asset that has lost its speculative allure.”
Real estate outlooks:
[rssfeedme cat=”lansner” feedpath=”/category/outlooks/” max=”6″]
