County Most at Risk in Real Estate Slump
A University of Michigan study identifies Orange County as most at risk among the nation’s large urban areas from a downturn in real estate.
The study by the university’s School of Business Administration looked at the importance of real estate to the economies of the nation’s 64 largest urban areas. It found that Orange County’s economy was most dependent on real estate, followed by the economies of San Francisco and Los Angeles. Cities in the Northeast were also heavily represented in the top 10.
Commercial buildings such as offices and stores in many markets--including Orange County--are overbuilt, and housing markets are anemic.
“I don’t know about ‘riskiest,’ but Orange County certainly is riskier than average because real estate has been such a large share of our economy,” said Dennis Macheski, research director at the Orange County office of accountancy firm Price Waterhouse.
“That’s one reason why net job growth in California and in the county has been close to zero,” Macheski said. “We’ve lost a lot of construction jobs.”
Said Michael Meyer, managing partner of accountants Kenneth Leventhal & Co.’s Newport Beach office: “Real estate is important here because it’s still an emerging, growing market and there’s been a lot of construction to accommodate the growth in population.
“But for that reason I’d think Riverside and San Bernardino counties, which are growing even faster and are even more dependent on real estate than Orange County, would be perhaps even higher on the list.”
Risky Business
This is a list of areas whose economies are most or least at risk from the downturn in the real estate market, according to a University of Michigan survey: MOST RISK 1. Orange County
2. San Francisco
3. Los Angeles
4. Hartford, Conn.
5. Albany-Schenectady-Troy, N.Y.
6. San Diego
7. Boston
8. New York City-New Jersey
9. Providence, R.I.
10. Honolulu
LEAST RISK 1. Oklahoma City
2. Tampa-St. Petersburg, Fla.
3. San Antonio
4. Tulsa, Okla.
5. Louisville, Ky.
6. New Orleans
7. El Paso
8. St. Louis
9. Portland, Ore.
10. Salt Lake City
Source: School of Business Administration, University of Michigan
