Local homebuilders have been slow to respond to the county’s shifting housing marketing, an economist for Wells Fargo & Co. told an Orange County audience on Thursday.
Senior economist Scott Anderson said he was surprised to see local housing permits rise 15% in August from a year earlier, while housing starts were up 30% over the same period.
“The permits are moving in the wrong direction,” Anderson said. Homebuilders “haven’t responded to the housing slowdown. They are building as though it’s business as usual.”
The median price for an OC home could fall about 3% next year, Anderson said.
“The California slowdown is about double what I’m seeing nationally,” Anderson said.
The slowdown stands to affect construction, Anderson said.
“The shoe has not dropped yet on construction payrolls, which will happen once we start to see lower permits, and lower housing starts,” he said.
The county is likely to finish with job growth of 1.1% this year, according to Anderson. Next year, he said he sees jobs essentially flat with a 0.5% gain.
Commercial real estate has been a strongpoint, according to Anderson.
He said he expects demand for office and industrial space to stay strong in the next year or two, with some softening.
“I see some softening next year because valuations are so high,” he said. “We are still a year or two out on a slowdown like we are experiencing now in housing.”
As for interest rates, Anderson said he expects the Federal Reserve to stand pat at 5.25% through the first half of next year.
In the second half, he sees two more quarter-point hikes as inflation jitters may reemerge.
