Southern California’s economic future—and particularly Orange County’s—is looking bright, experts said during Chapman University’s 43rd annual economic forecast.
“I’m personally confident in the future of Orange County,” Mike Mussallem, CEO of Irvine-based medical technology company Edwards Lifesciences, said during the forecast roundtable held virtually on Dec. 17.
“[My positive assessment is] due to the passionate engagement of many leaders and partners, … the dedicated and generous philanthropic organizations, and … committed and strategic businesses.”
Tapping Into Technology
Mussallem discussed his hopes of moving Orange County away from the tourism-based economy it is today.
“The current projection of Orange County is too dependent on tourism and retirement dollars, and that results in too many low-paying service jobs,” he said.
“Then we end up with a two-tier economy, rich and poor, and frankly uninspiring prosperity. Instead, we need to start and grow companies in Orange County that require high-level talent.”
One idea, he said, is to focus on artificial intelligence (AI) to drive innovation.
“We know there’s a lot of work to do, but we have the potential to be a world leader in this area, and stimulate a local super cluster in AI,” Mussallem said.
“The resulting new innovation jobs generate both professional jobs and the demand for service sector jobs. This means greater social equity and prosperity for the county.”
James Doti, an economics professor at Chapman, said Orange County was disproportionately affected by the COVID-19 pandemic.
“It’s because Orange County has an even greater proportion in leisure and hospitality and tourist-related employment than does California,” Doti said.
He said he’s bullish about 2021 for Orange County job growth, since a lower employment rate could mean a larger recovery than other California counties.
A Hot Housing Market
Lower mortgage rates helped create a seller’s market during the second half of the year, Doti said. Housing values appreciated an average of 7.8 percent, and Chapman is forecasting an additional 4.4 percent appreciation in 2021.
The university is also expecting residential building permits to reach 8,600, a 38 percent increase from the county’s current 6,200 permits.
Doti said a lack of new buildings helped boost the value of Orange County’s existing properties.
“There was no new supply coming in because of the drop in permit activity in the second quarter, the pipeline dried up, and there was very little new housing being built,” he said.
“So the number of days to sell a home dropped, and so with supply and demand, more demand and very little supply means [housing] prices increased. This is not just Orange County, this is kind of a national phenomenon as well.”
Although the economy might look in dire condition right now, and COVID “may transform the economy in some ways,” Doti said, “but we will to a certain extent return to normalcy and to the patterns that existed before.”
Other participants in the roundtable event included Dr. Raymond Sfeir, director of Chapman’s Anderson Center for Economic Research, and Fadel Lawandy, director of the university’s Hoag Center for Real Estate and Finance.