Research economist presents upbeat reports, smidgen of bad news and a few "challenges" for Charleston area home builders and shoppers
The title might call to mind a movie about people departing on an 18-hour return trip to their small, Illinois home town.
But in this case, "The Long Road Back to Normal" represents how Joseph Von Nessen would term the Palmetto state's recovery from the late 2000s recession and housing tumble.
"South Carolina is doing very well," says Von Nessen, research economist at the University of South Carolina's Moore School of Business. "Employment growth is the single best indicator for housing," he says. People with jobs can afford to buy homes. "We've seen a steady increase."
Moreover, "Charleston's really been a leader in employment growth" with its entire metro area recording workplace numbers that top the pre-2007 recession peaks.
That's the good news, he told a crowd of close to 100 contractors, brokers and managers at the Charleston Home Builders Association's annual meeting and economic update in North Charleston.
There's bad tidings, too, such as how wage growth remains "relatively stagnant in South Carolina." The stalled paycheck numbers could leave prospective buyers on the outside looking in. "As wages rise, people can afford a home," he says.
Von Nessen also contends the economy has its ugly side. "A major consolidation is going on (among home builders)," he says. "Small builders' share is 25 percent what they were in 2007." He labeled the domination of top 10 builders - which saw its volume jump from 63 percent seven years ago to 83 percent today - a "call to action" for limited-sized companies to develop niches and otherwise compete more effectively.
"If you really want to scale up, you need to take market share from competitors," he says.
Referencing scores of figures in a Power Point presentation, Von Nessen explained how South Carolina maintains decent economic expansion and "slow, steady demand" in terms of housing starts. "That's a good thing. In the early 2000s, there were lots of fluctuations."
Elsewhere, Von Nessen says:
- Manufacturing growth spurred South Carolina's initial recovery from the recession: The state ranks in the top 10 on key production indices. Lately, job creation efforts have been more broad-based, which is a good sign. "We don't want all our eggs in one basket."
- At the same time, South Carolina's gross state product dipped the past three years. Business confidence remained low coming out of the recession, and companies weren't hiring. "Labor tends to be the most expensive cost." Now as confidence rises, "businesses are starting to hire to meet demand" that's already there, he says. Employment growth, meanwhile, leads to housing activity.
- In the most recent job expansion figures, Greenville has maintained steady growth at 2.5 percent while Charleston's and Columbia's numbers have fallen off a little. As a result, "Greenville's likely to have a pickup in housing," he says. Von Nessen added a "caveat" for the Charleston market: the Lowcountry stays insulated due to "growth in high price points from people moving in from out of state. People are buying homes without necessarily working."
- Charleston's economy as a whole gets a "green light, all things look good." He estimated a 2 percent employment growth rate the rest of 2014.
- Anemic wage growth in the state hasn't fully impacted greater Charleston, which has kept up with the national average. "But it hasn't been consistent," he says.
- For a really thriving economy, 3 percent employment growth is optimal. Still, "2 percent by next year is really good."
- Based on trends, "I can't see any reason Boeing can't be the next BMW." The aerospace industry is in a growth mode. North Charleston-based Boeing's aircraft making plant, like BMW's Upstate auto plant, trigger a "huge multiplier effect" of indirect job creation, he says.
To encapsulate the findings, Von Nessen cited comments from "another economist" who he did not name. That researcher said recently, "If you like 2013 in South Carolina, you're really going to like 2014."
The Columbia-based research economist pulled double duty of sorts June 19. Fellow speaker David Crowe, chief economist for the National Association of Home Builders, had a last-minute flight cancellation from Washington, D.C., explained Will Jenkinson, broker-in-charge of Carolina One New Homes who helped launch the yearly economic update.
Also at the yearly luncheon at Crowne Plaza Hotel, the group welcomed Albert van Overeem of Brock Built Homes as its 2014-15 president.
Reach Jim Parker at 937-5542 or firstname.lastname@example.org.