Signs of real estate recovery?

All real estate is local, but the market's recovery in Charleston is mostly in the hands of faraway decision-makers -- bank executives who control lending trends, Federal Reserve board members weighing interest rate levels, and business owners who decide when to hire more workers.

University of South Carolina research economist Joey Von Nessen said the region's real estate market hinges on factors such as employment, consumer confidence and what he said will be the inevitable rise of interest rates, which are at historic lows.

He spoke to nearly 400 real estate professionals who packed a Citadel meeting hall Thursday, explaining which economic forces could advance the local market's fragile recovery. He also discussed whether the recent uptick in sales activity will last in the wake of a now-expired federal tax credit for home buyers.

"Employment is the single best predictor we have for housing demand nationally and in South Carolina, so job creation is critically important," Von Nessen said.

Already, the national labor market has shown some job growth in the manufacturing, tourism and professional services sectors. Government hiring also has picked up, but Von Nessen couldn't say whether those were permanent positions or temporary jobs tied to the $787 billion federal stimulus package.

Figures from the Charleston Trident Association of Realtors, which organized the event, suggest that the real estate market has strengthened so far this year.

During the first half of 2010, the region's home sales were up 27 percent to 4,617 transactions, according to the association.

The median price also increased, about 1 percent to $184,836.

Monthly home sales showed unprecedented growth during spring, likely because of the expired federal tax credit that which was worth up to $8,000 for first-time buyers and $6,500 for other qualified purchasers who were trading up.

Though the incentive helped create "a market bottom," Von Nessen said it also rushed buyers who might have purchased later in the year, possibly triggering what one local real estate professional called a "tax credit hangover."

"We've essentially borrowed future sales from a few months out," Von Nessen said.

As a result, the region can expect to see slower real estate activity this summer and fall. Already, national pending sales, which economists look at to predict future sales, show a steep drop-off since the tax credit lapsed April 30.

"The question is: How long that is going to last?" he said, noting that improving economic conditions could make up for some of the loss.

The region's number of available homes has also passed the five-month supply threshold that Von Nessen said is healthy. Realtor association officials said the Charleston region has more than a nine-month supply of homes.

The region's existing 9,869 homes for sale has remained at a steady level for more than a year, despite the uptick in sales volume. That could be from a steady stream of distressed property coming into the market or because a growing sense of optimism is prompting more sellers to list their homes, said Rob Woodul, the association's president-elect.

The unknowns cast uncertainty over the local real estate market's recovery, enough that even an economist hesitated to give a firm prediction. Asked whether Charleston area home prices would rise or fall later this year, Von Nessen said he'd rather not speculate.

Reach Katy Stech at 937-5549 or kstech@postand courier.com.