Chapman Predicts 6.8% Price Increase in 2013

Chapman University economists forecast Wednesday that Orange County home prices will rise 6.8 percent in 2013, marking the second consecutive year of rising home values here.

This year’s home prices are projected to be up 4.2 percent, according to the 2013 forecast by Chapman’s Anderson Center for Economic Research.

The outlook was contained in a report that foresees mild growth in local hiring and the economy, driven by a recovering housing market and high consumer confidence. But a stronger recovery likely will be held back by expected federal tax hikes and budget cuts.

“The combination of job and real income growth along with historically low mortgage rates bode well for the housing market,” the forecast said.

High affordability and rising rents are expected to push more renters into buying, the forecast added.

Chapman calculated that a homebuyer earning $83,900 a year would pay about 27.2 percent of his or her income — $23,000 a year — in house payments and taxes for a median-priced Orange County home. That’s significantly lower than the historical average of 31.2 percent.

“This, in part, explains why home buying activity picked up steam in 2012,” the forecast said.

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