Professor and President Emeritus of Chapman University’s School of Business and Economics, Jim Doti, who’s Economic Forecast have been more accurate than the forecasts issued by all 30 agencies participating in the Blue Chip Economic Indicators surveys and have also outperformed the highly regarded Blue Chip Consensus forecast, calls housing a “bright spot” for Orange County, predicting that O.C. home sales in 2020 will grow at a hefty 3.2% (outpacing 2019 growth of 0.2%) and that residential permits will increase at 9%, exceeding 2018 and 2019 numbers.
Housing will be a bright spot for the O.C. economy in 2020. Economists led by university president emeritus Jim Doti and Professor Raymond Sfeir released their annual economic forecast, which predicts the U.S. economy slowing to a 1.9% expansion but without a recession looming next year. They also estimate that California’s trade with China will decrease by 14% to $153 billion this year, down from $178 billion in 2018.
Link to Original Story: https://www.ocbj.com/news/2019/dec/10/chapman-sees-oc-2020-housing-boost/
Sharp drop in mortgage rates in 2019 is leading to a pickup in home building and home sales, with that momentum building as we move into 2020. The economists believe that a significant challenge to Orange County’s economic future is the fact that much of its job creation in recent years has been in low-paying sectors like leisure and hospitality, and that Orange County’s employment growth rate will dip to 1.1% next year, well below California’s 1.5%, while this year’s weakness in the construction industry hindered employment in the financial, professional and business sectors.
Still, housing remains a bright spot for the Orange County economy, with total residential permits expected to grow at a healthy 9% in 2020, exceeding 2018 and 2019 rates, and with median single-family housing price will increase at a 3.2% rate in 2020 compared to 0.2% in 2019.
Nationally, however, there is some variance regarding housing market predictions, with Realtor.com predicting that U.S. home prices will flatten, increasing at just 0.8% nationwide, and that prices will decline in 25 of the 100 largest metropolitan markets, including Chicago, Dallas, Las Vegas, and San Francisco. At the same time, others are predicting a more competitive real estate market in 2020.
What This Means For You. Most experts agree that millennials will comprise the biggest buyer demographic in 2020. Younger buyers are eschewing inner-city living and have their sights set on 1,800 square-foot homes in the suburbs, with good neighborhoods and decent schools. Millennials will take more mortgages than baby boomers and gen-x’ers in 2020, the company predicts. Down payments from millennial buyers will also likely be more significant than ever.
Locally, we expect to see high-end Orange County markets like Corona del Mar, transition from a Buyer’s market to a Seller’s market through the first half of the year with prices increasing at around the same pace as greater Orange County as a whole.
With low mortgage rates starting to rejuvenate the market at the end of the summer of 2019, we expect to see their full impact on demand for housing next year. We also believe that inventory will tighten further in 2020, resulting in fewer purchase options than buyers have had in the past five years. We might even start seeing the return of bidding wars on some in-demand properties, which would be some welcome news for sellers who may have been holding out this year as the market stabilized. The competition and faster price growth will tempt more homeowners and builders to list homes, which will help improve the balance between supply and demand by the end of the year.
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Mortgage rates matter more than any other factor with the potential to impact home-buying demand through 2020, but most experts agree that the current decline in rates won’t last. Additionally, affordability will continue to be a limiting factor for homebuyers.
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