Grand Strand housing market poised to pick up steam

sjones@thesunnews.comApril 29, 2013 

— An improving real estate market along the Grand Strand could pick up steam this year if consumer confidence doesn’t take a hit from a slowing economy.

“The coastal area is not participating in the robust [real estate] recovery, but it is imminent,” Lawrence Yun, chief economist and senior vice president of the National Association of Realtors, said at Monday’s annual meeting of the Coastal Carolinas Association of Realtors.

Last year was the turnaround year for the housing industry with rising sales and prices and declining inventory, and Yun said that the turnaround coupled with the Federal Reserve Bank’s zero cent prime lending rate are leading a nationwide improvement that is now seeing a growth in the number of people employed and the number of new households.

The growth in employment, said University of South Carolina research economist Joey Von Nessen and the meeting’s other speaker, is the single best indicator of housing demand.

But the future is not without potential landmines that both men essentially said can be summed up in one word: Washington.

“You will get a good housing recovery as long as Washington does no harm,” Yun said.

Von Nessen said that the reimposition of a 2 percent payroll tax, spending cuts from the sequester and the ongoing European recession all pose dangers to the state’s economy.

He said that generally, South Carolina has fared better than many states because of its strong and growing manufacturing sector. The Boeing start-up and hiring in Charleston was primarily responsible for the positive trend in the state’s employment in 2012. But he warned that manufacturing growth will be less this year than last because of the return of the payroll tax, a situation that could be exacerbated by what’s happening in Europe, where many of the state’s manufactured products are shipped.

Von Nessen and Yun said that while the growth in the number of people who are employed is a good thing, they noted that the rate of growth will be dampened as more and more people who dropped out of the labor market during the recession return to take advantage of newly-created jobs.

As the number of people in the labor market increases, Yun said, it will weigh on the percent who are employed or unemployed.

Yun noted that the real estate rebound has been much more robust inland than it has along the coast because the inland market is mainly a primary market while that near the oceans is a second-home market. The recovery of second-home markets, he said, always follows the recovery of primary home markets.

Yun also said there is an anemic housing construction industry, a situation he said was mostly a result of tight lending rules and a lingering reluctance of community banks to lend. Most of the construction that is happening is by national homebuilders who don’t rely on banks for their financing.

He said the banks are waiting to see what will happen with impending regulations as well as to things such as requirement for a 20 percent down payment and the mortgage interest deduction.

He urged the gathered Realtors to let their national representatives know how they stand on the issues.

Von Nessen said the Grand Strand has seen more job growth this year than any other region of the state because of a strong rebound in the leisure and hospitality industry. He said the area is becoming one of the state’s hot spots for employment and housing starts.

Statewide, he said there recently has been the first growth in construction since 2007.

Yun said he sees interest rates rising to perhaps 5 percent by the end of 2015.

But he said that the negative affect of that could be offset if the banking industry returns to lending standards that it used 10 to 15 years ago.

Contact STEVE JONES at 444-1765.

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