Local economy on the upswing

The Charleston area is seeing a stronger economic recovery than the rest of the state and most of the nation, but don't expect a jump in real estate sales or higher home prices.

That was the message from two economists who addressed the Charleston Trident Association of Realtors at its 2011 year-in-review Wednesday. It was a positive message for the Charleston region, but lukewarm encouragement for those in the real estate business.

"Charleston is a really good place to be right now," said Joseph Von Nessen, an economist at the University of South Carolina Moore School of Business.

If Von Nessen and Raymond Owens III, senior economist with the Federal Reserve Bank in Richmond, Va., prove correct in their forecasts, 2012 will bring modest economic growth.

More jobs will be created, but unemployment rates will remain high because people will re-enter the labor force. Residential real estate sales will rise -- just 2.7 percent, Von Nessen predicted -- and real estate prices won't change much.

"Expect mild improvements in sales activity with little price variation," Von Nessen told the real estate professionals. The Post and Courier was a sponsor of the event.

The economic projections are good news for people looking to buy a home.

"If you look at mortgage rates at historic lows, now is a great time to buy a house," Von Nessen said.

Those hoping to sell a house would benefit from rising prices and greater demand.

"It was kind of discouraging to hear projections that it might get better in 2014," said Aubry Alexander, an agent with Daniel Ravenel Sotheby's International Realty. "It still hinges on cleaning the short sales and foreclosures out of the market."

No urgency seen

Robert Bach, chief economist for Grubb & Ellis, spoke at a different real estate conference Wednesday, at Trident Technical College in North Charleston. And like the economists who spoke at a downtown Charleston hotel, Bach said home prices haven't bottomed out, and he said that as a result there appears to be no urgency among prospective home buyers.

Bach noted that the nation's homeownership rate has been dropping, and said that's likely to continue as more foreclosures work their way through the legal system.

"That means more renters," he said.

After a lengthy development drought, several thousand rental units are on the drawing board in the Charleston region. As those rentals become available, providing additional housing options, that could also temper home sales.

Behind all the forecasts are questions about jobs, and on that front there are some encouraging signs.

"Not only are we beginning to see some strength in the job market, we're beginning to see some durability," Owens said.

Economists look at how indicators tie together and interconnect. Job growth and rising consumer confidence generally lead to increases in consumer spending and a rise in household formation.

In other words, if an unemployed young person finds a job, he is more likely to move out of his parents' house, rent or buy a home, and start spending some money.

A few extra hurdles

With the real estate market, in addition to of the usual issues of supply, demand and affordability, the market has been struggling to absorb large numbers of properties that were foreclosed upon and sold cheap.

And the pool of potential buyers has been limited by tighter lending standards, unemployment and stagnant wages.

"Housing doesn't look to be rebounding strongly in 2012," Owens said.

Local Carolina One real estate agent Nell Postell said she's feeling more optimistic than the economists she listened to Wednesday.

"I'm having more activity now than I've had in years," she said. "It's really ticking up."

Postell said some buyers are paying cash for properties selling for as much as $1 million.

"We're seeing multiple offers on listings that have only been on the market for a few days," she said. "We haven't had that in years, so we're real happy."

There is optimism to be found, but sometimes that just means things seem less bad.

The National Association of Home Builders/Wells Fargo said Wednesday that its builder sentiment index rose for a fifth straight month in February. The index has climbed 15 points since September and is now at 29, its highest level since May 2007.

That means builders are more optimistic than they were months ago. However, any reading below 50 indicates negative sentiment about the housing market, and the index hasn't seen 50 since 2006.

Here is Alexander's takeaway on all the forecasts:

"It is what it is," he said. "You get up in the morning and you make calls and you try to sell your listings."

John McDermott and The Associated Press contributed to this report. Reach David Slade at 937-5552.