Orange County has been one of the top apartment markets in the nation in recent years and is projected to remain among the leaders. However, new wrinkles are starting to crack the surface of even this mighty market. As in other areas of the nation, multifamily developers should keep an eye on demand and occupancies in the next 12 months to see how the housing industry slowdown will affect multifamily demand in Orange County, said Delores Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California's Lusk Center for Real Estate. "In 2006, supply exceeded demand, and they are expected to be in balance for 2007," Conway said. "But if demand slows, Orange County may experience a second year where supply exceeds demand, resulting in somewhat lower occupancies." According to observers, the region could feel the sting of the housing slowdown in two ways. First, there's the general hit to the economy. Second, Orange County is home to a good number of financial services businesses that could be impacted by the industry's subprime troubles, tightening credit markets, and reduced job growth. Orange Countybased New Century Financial Corp., a major subprime lender, recently filed for bankruptcy. In 2006, the O.C. added 14,900 new jobs, with half in the business and professional services industries, and significant additions in education and health care, according to Conway. At the same time, there were 1,900 job losses in the mortgage and financial services industries associated with the housing market decline. The subprime loan crisis has put additional downward pressure on jobs in 2007, Conway said.
September 23, 2007