Will Jenkinson’s yellow bow tie may have been the flashiest part of his remarks Tuesday on the local new-homes market, but the Charleston broker deftly examined the role that jobs play in boosting house construction and sales.
He even opened with a turn on a familiar movie title.
“Planes, tires and automobiles,” Jenkinson told a full crowd at a Charleston Home Builders Association luncheon in North Charleston. The builders knew his point: Boeing’s 787 Dreamliner employs thousands of people locally, South Carolina leads the nation in tire manufacturing and car plants Volvo and Sprinter vans locally and BMW in the Upstate keep the state’s economic motor running.
“Well, what a difference five years can make. We are in that thriving economy again,” he says.
Jenkinson, broker-in-charge of Carolina One New Homes; and Columbia economist and consultant Joey Von Nessen presented the annual Charleston New Homes Update.
“We are in a period of economic expansion in the state of South Carolina,” Von Nessen says. A 2.3 percent employment growth rate compares favorably with the 2.2 percent jump in jobs in 2006-07 before the housing slide and resulting national recession in the late 2000s. The economist notes how South Carolina was in a recovery period, building up its fortunes after a slump, until moving in the past year into the “uncharted waters (of expansion), a period of change never seen before.”
Greater Charleston’s economy continues to be resilient in the years since the housing plunge, Von Nessen says. “This is the only area of South Carolina with consistently high rates of employment growth” hovering around 3 percent.
Workforce expansion leads to “housing demand, (the) most pronounced in the past 12 months,” he says.
The relationship between jobs increases and housing expansion can be shown in the rate of housing starts’ growth statewide.
In 2014-15, the number of homes breaking ground in metro Charleston grew by 23.7 percent. At the same time, housing starts rose by 6.4 percent in the Greenville region and 7.1 percent in greater Columbia.
Another indicator that benefits the housing market when it’s strong is South Carolina’s gross domestic product growth. In 2014, the state’s GDP grew 2.2 percent, which is higher than the national average and favorable compared with neighboring Georgia and North Carolina.
Also the state labor force — flat for a few years now — turned upward in the past 12 months, according to Von Nessen. He cites a change in consumer confidence. “People out of the labor force are moving back in. That’s a positive sign,” he says.
Income growth, too, can benefit the new-homes industry.
“It has not looked good in South Carolina in the past five years,” but the income rate changed in the past 12 months, Von Nessen says. The fourth quarter 2014 income growth ranking was fourth in the Southeast and 14th in the country with a 5 percent increase. Wages are being “bid up” because of labor demands.
Von Nessen cites four key points of the state’s and locality’s economy and home market:
• South Carolina really hit its stride in 2015.
• Charleston leads the state in job creation; it’s new-home job market remains consistent.
• Consumers are in better financial shape as measured by income growth compared with this time a year ago.
• The most pressing question is when will interest rates rise.
Jenkinson, who focused on the local housing outlook, says 1,457 homes sold in the Charleston area with a median sales price of $235,000, according to May figures, as opposed to 1,340 residences with a midpoint price of $217,000 a year ago.
Greater Charleston tallied the second fastest growth rate in the U.S. among “middle metro areas” with populations from 500,000 to 1 million, he says.
The new-homes industry has been booming as of late. Through April, 28 percent of closings were new houses. “That is staggering,” Jenkinson says. The national rate was 8 percent.
By area, Berkeley and Dorchester counties count 37 percent of their home sales as new residences, while the rate in Charleston County is 21 percent.
Jenkinson provided perspective on the market’s frothy overexuberance in the early 2000s, bottom-falling-out standing in the late 2000s and recovery today by comparing home building permits.
Permit totals in metro Charleston peaked in 2005 at 8,084, free fell to 2,732 in 2009 and rebounded over the years to 4,144 in 2014.
He offered a litany of new-homes communities and sales figures by county, including Cane Bay topping sales in Berkeley County with Daniel Island, Carnes Crossroads and Nexton following in volume and Cainhoy Plantation getting ready to launch; and The Ponds leading Dorchester County in sales while Summers Corner neighborhood kicks off the 80,000-acre MeadWestvaco development at East Edisto. In Charleston County, larger new-homes communities include Freeman’s Point on James Island, Poplar Grove west of the Ashley; Spring Grove in Ravenel as part of the East Edisto development; 6,000-acre Long Savannah at Glenn McConnell Parkway and Bees Ferry Road; Mixson in North Charleston; and 25 communities from several homes to thousands of homes in East Cooper including Carolina Park; Oyster Point; and Tides IV condo development priced at $400,000 to $1.2 million near the Ravenel Bridge in Mount Pleasant. Prices in new-homes neighborhoods run from the $200,000s to seven figures.
Charleston’s upbeat housing trend “says great things about our market,” Jenkinson says. “Like any market there are challenges,” he says, citing a long permitting process that can take more than two years to construct a house; and delays in completing 21-year-old Interstate 526.
Reach Jim Parker at 937-5542 or email@example.com.