Jobs are on the rise in Orange County, California, while home prices are headed in the other direction, according to the recent Spring Economics Forecast released by the Woods Center for Economic Analysis and Forecasting at California State University–Fullerton.
Job growth continued to rebound following significant drops during the pandemic, with some of the hardest hit industries during the shutdowns leading the way.
Job growth in Orange County set a record in 2022, with 84,000 jobs gained, a 5.3 percent increase.
More than 37,000 of the jobs gained were in the leisure and hospitality industry, a rebound from the pandemic-related closures that led to substantial layoffs.
While the county experienced growth, it remains at 37,100 jobs below pre-pandemic totals.
Los Angeles County has even more to recover, still 260,000 jobs shy of its February 2020 employment statistics.
The leisure and hospitality sector led job development overall in Southern California, except for the Inland Empire—where trade, transportation, and utilities led growth.
Home sales and prices reacted differently when the pandemic struck, as prices initially dropped but then skyrocketed to record highs fueled by low interest rates, according to the report.
“Tightening credit conditions, given the current banking turmoil, will put further pressure on the housing market,” the authors wrote.
The Federal Reserve’s interest rate hikes in response to growing inflation put stress on the home mortgage market by increasing borrowing costs more than 2 percent, subsequently slowing sales and increasing the number of days new listings are on the market before they are sold, according to the report.
Average days on the market has grown from six in March 2022 to 23 days a year later in Orange County, and Los Angeles has seen days listed before sale grow from eight to 30 over the same time period.
Since peaking in March 2022 after steady growth for nearly two years, home sales numbers are trending in the other direction statewide, but specific markets are showing signs of strength, with Orange County’s number of listings and sales prices increasing year over year, but still down compared to record highs, according to sales records.
In the Cal State Fullerton report describing the state of the local and national economy and forecasts for the future, the authors relate the complexity of current economic condition through the lens of Jeff Bridges’ character The Dude from the 1998 movie “The Big Lebowski.”
“The U.S. economy appears to have discovered its inner ‘Dudeness’ over the past year, hopelessly adrift amidst powerful headwinds, but bearing stoically, nonetheless,” the report begins, noting that a variety of factors are impacting the economy, with trouble looming in several sectors.
Interest rate hikes and the inflation they’re designed to combat are affecting businesses and consumers, and the tech-sector crash and commercial real estate woes are elements that could lead to recession, according to analysts.
While more than 92 percent of businesses surveyed in the Cal State study anticipate a recession in the near future, the respondents differ in the depth and severity expected.
“As such, our outlook calls for a ‘normal recession,’ not the heart-stopping calamity of the financial crisis but a garden-variety kind akin to the early 1990s or 2000s,” the authors wrote.
Financial market instability and the uncertainty it brings are one of the primary points of focus in the report’s analysis.
“While a violent credit crunch may have been quashed, we remain unconvinced that the current banking episode is entirely behind us, in large part because the health of small/regional banks continues to be of grave concern.”
In noting that California has weathered the current market stresses remarkably well, the report observes the state’s tendency to rely on federal resources and squander budget surpluses.
“California is currently doing what it historically has done best: going from years of plenty to years of lean,” the authors wrote.
