OC Home Prices Forecasted to Jump 7.1% Next Year!!!
Source: OC Register June 30th, 2012
The average median price of an existing house is projected to rise 2% in Orange County this year, followed by a 7.1% leap in 2013, Chapman University’s Anderson Center for Economic Research forecast Wednesday.
But before you call your agent with “Buy” orders, be forewarned: That forecast reflects a change in the mix of homes that will sell over the next 18 months rather than a big increase in overall home values, the forecast warned. How come? Chapman foresees a decline in the number of foreclosed home and homes selling “short” of their overall debt. That will result in higher price averages, but not necessarily a big bump in home values.
Nonetheless, the local housing market is getting stronger, bolstered by rising demand, homes becoming more affordable than ever and an ebb in the number of homes on the market, Chapman economists said. “The combination of job recovery and high housing affordability is gradually improving housing demand,” the forecast said. It stated elsewhere: “Over the long-run, pent-up demand for housing in Orange County will lead to broad-based increases in home prices.”
Highlights of the forecast include:
- Home prices could reach levels not seen since at least 2007. Prices have dropped in three of the past four years.
- Homebuilding is projected to increase 27.3% this year and 15.1% in 2013, with 6,118 new housing units built in 2012 and 7,040 in 2013. That compares to construction levels ranging from 2,200 units in 2009 to 4,807 last year.
- Despite the rise in homebuilding, Chapman foresees a housing shortage over the next eight years as construction falls behind population growth. The O.C. population is projected to hit 3.26 million by 2020, creating a need for 66,000 additional housing units, or 9,800 units a year.
- Said the forecast: “The imbalance between demand and supply points to a sharp rebound in home prices and production in the second half of this decade.”
- Non-residential construction is projected to rise 6.2% this year and 7.3% in 2013.
- The ratio of home prices to rents is dropping as rents rise. It’s currently 252 times more expensive to buy a home than to rent, Chapman reported. That compares to a 2005 peak of 428, a 2009 low of 242 and an historical average is 316.
- Despite higher employment, more affordable homes and higher demand, there are three headwinds to home sales: More stringent mortgage requirements, a lack of financing for people who lost homes to foreclosures and short sales, and an increase in people who prefer to rent because they believe that buying a home is no longer wise.
- California home prices are projected to increase 5% this year and 6.1% in 2014. Statewide homebuilding is forecasted to rise 8.3% this year and 6.2% in 2013.
- U.S. home prices are forecast to increase 0.9% this year and 4.1% in 2013. Homebuilding is projected to rise 15.7% this year and 20.7% in 2013.
