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High Costs Force Builders to Forsake Orange County

November 22, 1987

Rising land values and soaring costs are forcing many established Orange County home builders to develop their entry-level projects in Riverside, San Bernardino and Ventura counties, according to a study by REIS Reports Inc.

At the same time, tax reform measures, the influence of slow-growth citizen groups and a decline in revenue bond financing may dampen construction of new rental apartments in Orange County.

As a result, apartment house owners can look forward to higher returns. Linda Ashman, vice president of REIS' Los Angeles office, who compiled the report, said, "These trends put owners of existing rental projects in a very favorable position. The increase in rental rates will be exceeding historical growth rates in the near future."

That the apartment rental market is tightening up is reflected in the vacancy rates listed by the report. Orange County already has a vacancy rate of only 2.3%, far below most of the nation's larger rental markets.

All of this may make it difficult for young couples, especially those just starting out, to find affordable housing in Orange County, added Ashman. On the other hand, she stated that the market for "move-up" buyers continues to thrive, with homes priced at $250,000 and more selling briskly.

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