Chapman Economic Update Finds Home Price Appreciation Still Flat

Orange County housing prices are a little softer this year than economists at Chapman University anticipated when they prepared their 1996 forecast six months ago.

In a midyear update Thursday, university President James L. Doti--a pioneer in the field of regional economic predictions--said that a first-half slump in home prices will all but offset a small gain expected in the last six months of the year.

As a result, homeowners won’t be much richer in equity than they were in December, but they shouldn’t be any poorer. Originally, Doti had forecast a 1.4% gain in resale home values this year--the first appreciation since 1990. Now he says an uptick in interest rates contributed to a price drop of 1% to 1.5% in the first half. The economists predict a dip in interest rates that should bring a 2% gain in values from July through December.

For a $200,000 home, the difference between the December forecast and Thursday’s is $2,000.

The economists also released their annual tourism prediction Thursday and said that, although their computer model shows that the number of visitors to the county will remain flat at about 39 million for the year, there actually could be an increase of 3% to 4%.

Esmael Adibi, Chapman’s Center of Economic Research director and co-author of the forecast, said the computer model doesn’t account for the drawing power of single attractions like Disneyland’s Indiana Jones Adventure ride, which last year was responsible for pulling hundreds of thousands of additional tourists into the county.

Tourism industry specialists tend to agree with Adibi’s best-case estimate and say that hotel occupancy and gate receipt tallies at area amusement centers so far this year all point to a modest increase in tourism.

But the bulk of the mid-year update was devoted to explaining how the numbers haven’t changed.

Earlier predictions of increased foreign trade activity, a jump in home construction and an employment gain of 2%, or 23,000 new jobs, all seem to be on the money at the halfway mark, the economists said.

The increase in employment, to a year-end total of 1,172,000, is being driven, Doti said, by the first gains in defense contract work since 1987.

“While this will not lead to a sharp increase in high-technology employment growth,” he said, it means that “a major drag on the Orange County economy has been lifted, at least for 1996.”