Double-digit housing appreciation will return to Orange County next year, with the median home price rising somewhere from 15.9% to 16.6%, UCLA economists forecast in a report released today.
That compares to a projected 8.8% gain in California next year and a 2.4% increase nationwide.
It also differs sharply from Cal State Fullerton’s outlook. An economist there said Tuesday that Orange County home prices will rise 2% to 3% next year – at most.
But Mark Schniepp, author of UCLA Anderson Forecast for Orange County, said he’s not predicting the return of the housing bubble.
Even after six years of appreciation, UCLA economists still don’t expect home prices to reach the 2006 peak. In fact, home prices likely won’t get back to that level again until 2016 or 2017, Schniepp said.
“We’re already at 16% (appreciation) from March. That’s just six months, and I’m talking about a year-over-year (change),” said Schniepp, chief economist with the California Economic Forecast. “When you have a cycle where you’ve over-corrected, you can go up 16%. It doesn’t really mean much.”
The gist of the forecast, Schniepp said, is that the Orange County housing market is in recovery.
“The train has left the station. It’s going down the track. This isn’t a head fake,” he said.
He added: “Now is the time to buy. (Actually), the time to buy was the spring and early summer.”
The UCLA housing forecast is part of an outlook that projects a jobs turnaround in O.C. in 2011.
In addition, the Orange County housing forecast states:
- That from 2011 to 2015, O.C. home prices will increase by 2.5% to 8.7% a year. The median home price, at $406,481 this year, is projected to top $500,000 by 2011 and to be above $600,000 in 2015.
- That foreclosures are expected to rise again early next year, but won’t derail the recovery.
- That homebuilding this year will fall to 1,912 units, the lowest number in records dating back to 1946.
- That homebuilding will pick up by 2012, rising above 11,000 units a year — levels not seen since 2002. In 2013, UCLA projects that housing starts will total 12,537.
- That mortgage interest rates will remain low. Southern California rates likely will be below 6% through 2015, the forecast said.
- That commercial real estate will be hampered by high unemployment through 2010, with recovery not expected until around 2011.
- Office vacancies — currently at 18% to 20% — will start to drop in 2010, but lease rates won’t resume going up until 2011.
- Retail sales are expected to start picking up in late 2010, aided by the recovery in the housing market.
“We do look for a much more robust recovery, certainly by 2011 and for homebuilding by 2012,” Schniepp said.