Orange County will see a 12.9% increase in permits for new home building this coming year, while local job gains are set to remain sluggish amid a slowdown in the U.S. economic growth rate, Chapman University economists said.
The researchers, led by President Emeritus Jim Doti, said Orange Countyโs median home price will decline slightly in 2025.
On the national front, the Wall Street jubilation over President-elect Donald Trump may not translate into a concrete economic boost next year.
While Dotiโs team emphasized โwe are not forecasting a recession in 2025,โ U.S. economic growth is projected to slow to 1.8% from an expected 2.7% this year.
Chapman presented a chart saying itโs been the nationโs most accurate GDP forecaster from 2004 to 2023, tapping Goldman Sachs and Morgan Stanley.
โOrange Countyโs economy has been relatively weak,โ Doti told the Business Journal on Dec. 10 regarding job growth.
โThe proportion buying new homes is greater than it has been in the pastโ and will push the number of residential permits up, Doti said.
Doti added: โIn the past Orange County has been used to being a growth engine and outperforming both the state and the nation. Now both state, Orange County and the nation are experiencing similar growth rates.โ
Chapman, based in Orange, last week named Matt Parlow as the universityโs new president effective Sept. 2, 2025.
OC Job Growth at 0.8%?
Doti spoke in an interview two days before he presented the 47th annual Chapman University Economic Forecast from the A. Gary Anderson Center for Economic Research to several hundred business leaders, investors and academics at the Musco Center for the Arts on campus.
Doti cites several issues that contribute to his concerns about Orange County. They include weak job growth, lower taxable sales, lower resales of homes and a decline in population thatโs hampered economic growth.
โTotal taxable sales in Orange County have hardly budged since 2022,โ the Chapman team says in its forecast. They predict taxable sales will increase only 0.2% in 2025, after a 2.1% decline this year, hurting municipalitieโs revenue.
โOrange Countyโs job growth for 2025 is forecasted at 0.8%, the same as our forecast for the U.S. and slightly lower than Californiaโs 1%,โ the Chapman economists said.
The anemic growth forecast comes as some local companies have recently announced job cuts.
Medical device maker Masimo laid off 75 employees in Irvine effective next month, while video game maker Blizzard Entertainment laid off 140 employees at its Irvine offices in October.
Residential Permits to Go Up
On the construction front, residential permits are forecast to increase by 12.9% in 2025 despite continuing high mortgage rates, which may be indirectly helping new construction, the Chapman economists said.
Doti emphasized that the predicted total 9,480 permits is low compared to some years past.
There is a shortage of resale homes on the market because homeowners donโt want to sell and lose their โsweetheartโ locked-in mortgages. That has led to a sharp drop in resale home sales.
Taxable sales in Orange County โfared even worseโ when compared to other Southern California counties, apparently mostly due to the recent population declines in most California counties.
โSome countervailing forces are acting to keep home prices relatively steady in 2025. Our forecast calls for a slight decline of 1.1% in the median home price,โ according to Dotiโs team.
Doti told his audience during the presentation on Dec. 12 that the decline in home prices was โnot muchโ but added: โWeโre not seeing the kind of appreciation we had before.โ
The median price of a home in Orange County is forecast to drop to $1.17 million next year from $1.18 million in 2024.
Orange County is also experiencing weak growth in jobs in higher paying Advanced Industries as compared to San Diego and Silicon Valley over the 2019-23 period, the forecast said.
Here are some excerpts from the Business Journalโs interview with Chapman
University President Emeritus Jim Doti on Dec. 10
ON RECESSION CONCERNS
โThe rumblings you hear relate to the fact that many still feel, because of the lag negative impacts of that sharp rise in the Federal Funds Rate, that next year will revert to a recession.โ
(Jim Dotiโs team is not predicting recession; the Federal Reserve Board makes its next rate decision on Dec. 18)
TRUMPโS PROMISE OF TARIFFS
โAs to whether heโll do it or not is an open matter.โ
โI think there will be higher tariffs, probably not quite as high as what everybody is fearful of.โ
Any negative domestic impact from higher tariffs โprobably wouldnโt happen until 2026.โ
OC HOME SALES, CONSTRUCTION
โResale activity has been very low and itโs still in recessionโ because people arenโt putting their homes up for sale due to their low-interest mortgages.
โA much greater share of the supply now is with new homes.โ
โWe see a pickup in permit levels. That pickup is from very low levels.โ
โIn terms of actual production, I think youโd be safe to say that itโs going to be a strong yearโ due to a rebound from the COVID era and a lack of resale on the housing market.
โADVANCED INDUSTRIESโ JOBS IN OC
โI just feel that the university community here in Orange County should be doing more with respect to connecting its research, its graduates to local industry in a better way than what is happening. That is closer linkages with venture capital firms, closer linkages with technology, and universities connecting with the medical product companies here to produce the kind of graduates that they need to support continued growth.โ
ORANGE COUNTY ECONOMY
โOrange County is experiencing weak growth, economic growth in terms of job growth compared to other counties.โ
โPopulation is dropping in Orange County.โ
โOrange Countyโs economy has been relatively weak.โ
