7% Slowdown in Home Construction Expected : Real estate: Study says 1,000 fewer houses will be built this year. Fallout from county bankruptcy is cited.

By DEBORA VRANA

Jan. 18, 1995 12 AM PT

TIMES STAFF WRITER

IRVINE — Orange County developers will construct 1,000 fewer homes this year because of lingering uncertainty among buyers about the county’s bankruptcy, a real estate specialist said Tuesday. County officials decision to file bankruptcy Dec. 6 could “throw cold water on a buyer’s mental willingness to change his or her financial situation and take on new debt,” according to a study prepared by Walter Hahn, a director with the Newport Beach office of Kenneth Leventhal & Co., an accounting firm.

The prediction also threatens the fledgling recovery of the real estate market in Orange County, which for months has posted stronger home sale figures than other counties.

Developers, already concerned they won’t be able to sell their own bonds to finance projects because of negative national publicity, will pull back on new home construction projects until later this year.

Specifically, Hahn reduced by 7% the number of homes expected to be built in the county during 1995--to 13,000 from 14,000. The largest municipal bankruptcy in U.S. history also could result in a decline in school quality, delays in new sewers and other public construction projects dependent on future bond sales and a temporarily negative impact on the hotel and retail industries.

But, Hahn said, because Orange County’s underlying economy is solid, any impact from the bankruptcy would be temporary. He said it was most important for the business community to pull together and help Orange County government officials develop a workout plan for restructuring.

“We in this industry and in the business community have a strong responsibility to help the county get its act together,” Hahn told about 200 people gathered at UC Irvine for a morning seminar. “We need to help them prepare a workout plan backed by the business community.”