With a diversified local economy, positive job growth of 3% or 40,000 new jobs projected during the next 12 months, and a 2.5% unemployment rate, population growth is expected to continue in the county despite higher energy costs and rolling blackouts. Additionally, with the median household income of $57,395, only 26% of Orange County families can afford to purchase a home. All told, with developers expected to start construction on only 2,200 units this year, the market for available apartment units will remain tight and rents are projected to adjust further upwards accordingly.

Due to the significant rate of growth in rentals the past few years, more and more building owners are opting out of the Federal Government's assisted-housing program and converting their buildings to market rate complexes. The report notes that only 77% of potential tenants looking for Section 8 housing are going to find it in Orange County this year. From the first quarter of 1998 through the first quarter of 2001, average apartment rents have risen 28% from $917 to $1,181 per month. Rents are projected to increase another 6% this year after a 13% increase in 2000.

"The theme in apartment construction in Orange County continues to be 'too little too late,'" the report notes, even though the county had an all-time high number of permits issued to build units last year. The most active developer of product is still the Irvine Co., which completed 1,400 units last year. The properties that will be delivered this year will be luxury apartments mainly in Irvine and south county. One of the largest projects currently under construction in the county is the City Lights Apartments in Aliso Viejo delivering 426 units later this year and another 367 units in 2002.