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 County’s 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 Doti’s team emphasized “we are not forecasting a recession in 2025,” U.S. economic growth is projected to slow to 1.8% from an expected 2.7% this year.
Chapman presented a chart saying it’s been the nation’s most accurate GDP forecaster from 2004 to 2023, tapping Goldman Sachs and Morgan Stanley.
“Orange County’s economy has been relatively weak,” Doti told the Business Journal on Dec. 10 regarding job growth.
“The proportion buying new homes is greater than it has been in the past” and will push the number of residential permits up, Doti said.
Doti added: “In 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.”
Chapman, based in Orange, last week named Matt Parlow as the university’s 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 that’s hampered economic growth.
“Total taxable sales in Orange County have hardly budged since 2022,” 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 municipalitie’s revenue.
“Orange County’s job growth for 2025 is forecasted at 0.8%, the same as our forecast for the U.S. and slightly lower than California’s 1%,” 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 don’t want to sell and lose their “sweetheart” locked-in mortgages. That has led to a sharp drop in resale home sales.
Taxable sales in Orange County “fared even worse” when compared to other Southern California counties, apparently mostly due to the recent population declines in most California counties.
“Some 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,” according to Doti’s team.
Doti told his audience during the presentation on Dec. 12 that the decline in home prices was “not much” but added: “We’re not seeing the kind of appreciation we had before.”
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 Journal’s interview with Chapman
University President Emeritus Jim Doti on Dec. 10
ON RECESSION CONCERNS
“The 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.”
(Jim Doti’s team is not predicting recession; the Federal Reserve Board makes its next rate decision on Dec. 18)
TRUMP’S PROMISE OF TARIFFS
“As to whether he’ll do it or not is an open matter.”
“I think there will be higher tariffs, probably not quite as high as what everybody is fearful of.”
Any negative domestic impact from higher tariffs “probably wouldn’t happen until 2026.”
OC HOME SALES, CONSTRUCTION
“Resale activity has been very low and it’s still in recession” because people aren’t putting their homes up for sale due to their low-interest mortgages.
“A much greater share of the supply now is with new homes.”
“We see a pickup in permit levels. That pickup is from very low levels.”
“In terms of actual production, I think you’d be safe to say that it’s going to be a strong year” due to a rebound from the COVID era and a lack of resale on the housing market.
‘ADVANCED INDUSTRIES’ JOBS IN OC
“I 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.”
ORANGE COUNTY ECONOMY
“Orange County is experiencing weak growth, economic growth in terms of job growth compared to other counties.”
“Population is dropping in Orange County.”
“Orange County’s economy has been relatively weak.”
