This year will see metro Charleston’s hot economy and real estate outlook ease to a more manageable performance gait driven by master-planned growth, an economist and local broker told builders at a new homes update June 16.
“Is economic growth slowing?” University of South Carolina research economist Joseph C. Von Nessen posed at the Charleston Home Builders Association luncheon a week ago Thursday.
“I think the short answer is ‘no,” he says. “But it’s stabilizing.”
Von Nessen spotlighted the statewide economy and real estate picture while touching on the Lowcountry’s impact on South Carolina.
Carolina One New Homes broker-in-charge Will Jenkinson explained figures on the metro Charleston market’s new homes hot spots.
“What a difference five years makes,” Jenkinson says. It had been a “painful new homes market,” he says. Now, observers are seeing “a gradual comeback.”
Metro Charleston posted 1,696 homes sold in May at a $275,000 median price compared with 1,400 transactions a year ago at a $235,000 midpoint, he says.
At the same time, a healthy 34 percent of sales thus far in 2016 are new homes, Jenkinson says.
Von Nessen, who spoke to the 75 or so builders and associates in attendance June 16, notes that this year’s stable outlook in South Carolina follows earlier economic reports entitled “A fragile recovery?” in 2012, “Is this as good as it gets?” in 2013, “Has the economy peaked?” a year later and “What’s up with interest rates?” last year.
Even though 2016 may start to plateau, the state’s economy expects a seventh year of expansion — “the best yet for South Carolina,” he says.
Von Nessen cites key indicators from the past year:
• Employment growth leveled off at 2.7 percent. At the same time, the number of jobs should rise this year. Charleston’s workforce will go up 2.4 percent, Von Nessen forecasts.
• Construction proves the strongest industry with an 8 percent workforce surge statewide. Manufacturing grew a “relatively weak” 1.8 percent in South Carolina, but saw stronger gains in higher paying durable goods employment with wages averaging $65,000 a year. “That’s a reason you see a high housing (sales) rate,” he says.
• A nationally computed home price index “is not slowing but stabilizing. That’s a good thing. Slow and steady wins the race, so to speak,” Von Nessen says.
• Housing starts grew 7.4 percent in the Charleston area, a strong figure but below previously lagging Columbia, which is up 11.1 percent.
Von Nessen predicts employment growth, a key factor in home sales expansion because working buyers have money to spend, to increase 2.8-2.9 percent this year, “but not a new record.”
On the U.S. level, the economist says “uncertainty” is relatively high in 2016. At the same time, South Carolina should benefit from key financial factors such as lower gas prices. The state typically ranks among the lowest rates in the country. “That’s basically the same effect as a tax cut, a stimulus to the economy,” Von Nessen says.
Earlier this month, Carolina One and Real Estate Information Services released an upbeat new homes market report for the Charleston area.
Jenkinson pointed out the up and downs in local home sales in the past decade, touting numbers from the Charleston REIS office.
The low took place in 2009 with 2,200 homes selling in greater Charleston, compared with a peak of 7,000 in 2006.
“Right now, we are on pace for 4,000 homes (sold) this year,” up from 3,600 houses in 2015, he says.
Reach Jim Parker at 843-937-5542 or email@example.com.