Economist: Employment figures play role in solid but unspectacular home sales, price figures
Job security and employment gains can do wonders for bolstering the housing market.
That’s a key refrain of economist Joey Von Nessen’s latest housing update. He says there’s one very good reason home sales are escalating. After suffering through the national recession, buyers have a positive outlook.
“I’m not worried about losing my job,” says Von Nessen, Columbia-based economist with the University of South Carolina and RESH Marketing. “That’s a tremendous sign of consumer confidence.”
He presented his findings on the national, state and Charleston area economy and housing market Aug. 7 at “Recovering and Rebuilding: the 2013 Midyear Market Update” sponsored by the Charleston Trident Association of Realtors. As many as 200 agents and real estate observers attended the event at the Charleston Marriott.
While presenting an upbeat forecast, Von Nessen cautioned not to become “too optimistic, too cocky,” noting that the state’s economic engine has dragged in recent months largely due to a manufacturing slowdown.
Von Nessen says the halting economy is not unexpected. The impact stems in part from federal payroll deduction changes and government sequestration cutbacks.
That’s shown up in the Charleston area economy, which, has posted more sluggish employment gains than most of the state as of late. At the same time, “You can see productivity in Charleston, the highest of anywhere in the state, the highest since 2001.” Charleston and Spartanburg were the only metro centers to witness personal income growth, Von Nessen adds.
Focusing on the Charleston housing market, the economist cited a 49.6 percent free-fall in home starts in 2008, then a 30 percent jump by 2010 as a result of the federal first-time homebuyer tax credit. By 2011, when the credit expired, home starts gained a nascent 0.1 percent.
“We essentially borrowed from 2011 in 2010,” says Von Nessen, who noted that he and his wife took advantage of the buoyant market blip in 2009 to buy a house.
Since 2011, home starts have rebounded by 32.8 percent.
“This time, it’s market driven,” Von Nessen says. He expects the increases “to be sustainable long term.”
The economist says, “We’re looking for a new ‘steady state,’” where the housing market rises steadily but doesn’t overheat.
“The 1990s were relatively healthy with slow, steady growth,” says Von Nessen, who’s more convinced that the housing outlook going forward will mirror the 20th century’s last decade.
“Things are really beginning to get better,” not a temporary blip, he says.
Another encouraging sign: the number of builders reporting a least one sale in the Charleston market skidded from 140 five years ago to 60 in the first quarter of 2013, but Von Nessen sees the drop-off hitting bottom. “We are not eroding builders anymore. I suspect we see this number tick up again.”
Home sales in the Charleston market are climbing. “Resales are really dominating right now,” he says. Similarly, home prices are showing steady gains. “We’ve seen growth in four of the last five quarters in home price appreciation.”
Analyzing Multiple Listing Service home sales figures, Von Nessen says the numbers point to a steadying market. After a 15.9 percent drop in 2011, prices increased 25.3 percent in 2012 and 25.8 percent this year.
“We are reestablishing consistent levels of growth. That’s what we really want,” he says.
Still, Von Nessen issued a final word of caution. “We don’t want to get too excited. If employment growth is effectively cut in half, expect the growth in the level of sales to slow down with it,” he says. “This needs to be in the back of anybody’s mind.”
Reach Jim Parker at 937-5542 or email@example.com.