The economy in south Orange County is “getting better,” but, to stabilize, more people are needed, said the author of an economic forecast specifically for the region.
That summation elicited a surprising “ugh” from an audience of local real estate agents. For them, more people usually means more sales, said Lauriann Meyer, executive vice president of the Laguna Board of Realtors, which sponsored the economic presentation. Impingement on quality of life may explain the communal groan, she said.
“The economy is getting better, but we’re on the edge. We could go the other way very quickly,” Anthony Teng, dean of the advanced technology and applied science department at Saddleback Community College and co-author of the second annual South Orange County Economic Report, told the group of reality professionals recently.
South county also needs more development to keep “improving” its economic statistics, said Teng, who sidestepped the politics of “too many people.”
“South Orange County is not growing,” he said. “Laguna Beach, with 24,000 residents, really hasn’t changed much in the last five years. How are we going to entice more people into the community?”
South county provides $26 million annually in goods and services, 17 percent of the overall “gross regional product,” as Teng calls it in his report, which delineates the region’s top industries, employers and occupations.
South Orange County comprises almost 21 percent of the county’s population and 18 percent of its jobs. “We’re actually a major contribution to our region,” he said.
For Kelly Perkins, who appraised coastal properties for 10 years and now sells real estate in Laguna Beach, said more isn’t always desired by realtors. “We don’t want more people. We’ll switch out people, but we want the same population,” she said. “We have a high demand and a limited supply. That will always be the case.”
Change is occurring, however, in south county demographics due to increasingly higher home prices, said Teng. The biggest drop in population lies with 5- to 19-year-olds, and 35- to 50-year-olds, their parents. “We’re losing the next generation in our communities in south Orange County,” he said.
“I’m not saying every city needs to open up a bunch of low-income housing developments,” he commented. “But what we have to understand is that your demand side can’t afford your supply side.” The median home sales price in Orange County for March was $625,000; in Laguna Beach, it was $3 million in January, according to data from CoreLogic and Altos Research.
Teng, Israel Dominguez and John Jaramillo collected data on real estate sales and construction, job availability, income, sales tax revenue and products and services on 11 south-county cities, including Laguna Beach, Dana Point and San Clemente. Teng recently presented his 70-page data and market analysis data to 100 business people at Neighborhood Congregational Church on St. Ann’s Drive.
“I might as well hit you with the good and bad news right now,” he said. “If we’re trying to improve the sales market, we’ve got to find a way to find the people who are able to afford to buy homes.” Teng forecast that median home prices will increase from 2 to 4 percent annually.
Coupled with higher homes prices, the “scary” thing, he said, is that inventory is down for both houses and office space.
In 2014, a house sold in less than a month in Laguna Beach, Teng said. Sales are taking longer now and fewer houses are for sale because prices are going up and people are staying put respectively, he said.
In the commercial market, the only significant new construction underway or planned is at the Irvine Spectrum, the Laguna Hills mall remodeling and new sites in Lake Forest and Dana Point, he said.
Car-packed freeways also hinder economic growth, he said. “You can only send so many cars up and down the 5 Freeway,” he said, adding that businesses don’t use toll roads because it becomes too expensive.
Realtors cited the conflict between more housing developments and the ongoing drought. “Where’s the water going to come from?” asked Berkshire Hathaway realtor Judy Field.
Using industrial space for artists’ studios or light manufacturing would help bring small businesses into the south county market, Teng said. “If you’re going to bring in small business, you have to find affordable space,” he said. “Without that, the problem we’re going to run into is that your aging population and the younger people can’t afford to move in here.” For a person to afford a one-bedroom apartment in south county, the average hourly wage would need to be $27, he said.
The good news, said Teng, is that more jobs are available. Unemployment in Orange County was 4 percent and Laguna Beach was 3 percent in March, lower than six months ago, he said. In the next 10 years, he predicts a 10 to 11 percent job growth in south Orange County, which outperforms the rest of the nation, he said. He cited Burning Glass, a website that lists all job openings in the country.
Retail and hospitality rank as the top job contributors with advanced technological manufacturing rated second.
Middle-market jobs, generally technical positions, are going unfilled because job-seekers lack skills, said Teng, who fields calls from employers daily asking for skilled workers. “They’re missing soft skills, like how to write a letter, not how to text-message somebody,” he said. “Our kids don’t have that skill anymore because of technology.”