“Nationally, we believe we’re through almost all of the housing price drop,” he said.
As new construction of homes declines, and more and more people enter the age range at which they are looking to start families, the demand will catch up to the supply soon, Doti predicts.
Orange County, however, is in a different boat because it experienced such an enormous appreciation in housing values compared with the national average, he said.
“Orange County housing prices went up way, way more, so there is much more room for them to go down,” economic researcher Esmael Adibi said.
At the peak in housing prices the average Orange County family would have to spend more than 50% of its income to make the monthly mortgage payment — 18% more than the historical average of 32% — but now that figure is down to 38%.
In addition, Adibi believes, the local housing market has a couple more factors contributing to its grim outlook. The researchers predict trends in the housing market by considering things like job creation and unemployment.
Because Orange County is so intertwined with the mortgage and construction industries, the county lost a higher percentage of its jobs than most other California counties, according to recent statistics, and the damage may even be underestimated, Adibi said.
“These numbers are bogus because they don’t count all of the undocumented workers that [worked in construction],” he said.
Fortunately, they predict the county will get 14,000 jobs back in 2009.
To make matters worse, floundering construction usually doesn’t affect housing prices until years after, according to the Chapman analysts.
