(Statistics and forecast presented by Mark Boud, Economist at Real Estate Economics, Feb. 9, 2015)
- Oil prices have fallen over 50% in last 12 months, providing liquidity that needs to go somewhere
- The drop in oil prices equates to a short term benefit of about $750/US household in 2015
- Consumer spending makes up 65% of the US GDP. Each dollar saved on oil related products that instead goes toward consumer spending on other goods and services, has a multiplier effect of 7.5% as the money passes through the economy, changing hands. Expected stimulus effect on the economy of $100 billion in 2015
- Cyclical job growth is expected to peak this year or 2016
- Orange County unemployment rate is already dipping below 5%. Finding skilled labor is a challenge
- Growth of jobs is outpacing the construction of new homes. Lack of inventory and increased employment contribute to home appreciation but price aversion is slowing the pace of appreciation.
- Larger homes appreciated more than smaller homes last year (4.8% for home averaging 1000sf vs. 7.8% for homes averaging 4000sf)
- A higher volume of homes sales is expected in 2015 vs. 2014
- Expecting 5.2% appreciation of the median sized home (1460sf) in OC this year vs. 5.9% in 2014
- In 2015 OC will be one of the few markets in the nation to eclipse the bubble prices
- The Inland Empire is coming into its own with jobs increasing. Home appreciation in the IE this year is expected to surpass the appreciation rate of OC due to the lag effect
- Age qualified, single story homes are a hot market as the baby boom generation is retiring in massive numbers.
- The nation in general is ‘’firing on all pistons” with hiring in all sectors, including manufacturing
- By 2019, interest rates are expected to eclipse 6%