Experts See Good Times Despite Slowed Growth : Export Market Should Hold Up and Moderate Housing Prices Should Go Up

Orange County’s economy will continue to benefit from a burgeoning export market, but “the hustle and bustle of previous years” will be missing as the growth rate slows, a national economist said Thursday.

A real estate consultant, meanwhile, predicted that moderately priced housing in Orange County will continue to appreciate but that prices paid for million-dollar homes may be negotiable.

Those were two of the assessments presented to about 400 people at an economic outlook conference sponsored by the Irvine Chamber of Commerce at the Registry Hotel.

Despite slower growth, the prospects for Orange County’s $50-billion economy are still good, said Joseph A. Wahed, chief economist for Wells Fargo Bank in San Francisco.

Manufacturers are producing near capacity, Wahed said, in large part because of significant growth in exports. Overseas demand for U.S. goods is increasing because the value of the dollar has declined in relation to foreign currencies. That demand, Wahed said, should help prevent a recession.

“If your profits are not growing at 10% a year, you are not average,” Wahed told the group.

Brea real estate consultant Alfred J. Gobar agreed that the area’s economy is slowing. From 1970 to 1980, the number of jobs in the county increased at an annual rate of 42,000, he said. From 1980 to 1987, the rate dropped to 35,000 a year. Last year, it dropped to 26,000.

Finding workers to fill those jobs is also becoming a problem, Gobar said. High housing costs keep many potential workers out of the county.

“Our local housing market does not accommodate many middle-income people,” said Gobar, who defined middle-income households as those earning $22,000 to $25,000 a year.

Orange County employers will increasingly rely on workers “who are not sensitive to housing prices,” Gobar said. Two groups of people who fall in that category are illegal aliens and workers who commute into the county, he said.

The prices of houses costing less than $350,000 will continue to rise, but at a slower rate than in the past, Gobar said. Houses selling for more than $1 million may see an actual decline as the pool of potential buyers dwindles.

Office space will be in abundance, Gobar said, and owners will offer reduced rent and other incentives to entice potential renters.

But the supply of industrial space may be inadequate to satisfy demand, causing price hikes, Gobar said. He cited as an example a developer who was selling industrial space for $100 a square foot.

Developers are continuing to build new homes in the county, but at a slower rate than in past years, said Irvine realtor Philip Bettencourt. In 1987, about 24,500 housing permits were issued, Bettencourt said. Last year, the number dropped to about 22,000.

Overall, the value of Orange County homes rose 31% from 1987 to 1988, contrasted with a national average of 3.9%, he said. The increasing presence of foreign and out-of-state developers, including several British and French companies, is helping to drive prices up, he said.