Dr. David Crowe, Chief Economist of the National Association of Home Builders, delivered a cautious outlook for the nation, but a more optimistic outlook for the Upstate. Members of the Home Builders Association of Spartanburg, Home Builders Association of Oconee, Mortgage Bankers of the Upstate, and the Home Builders Association of Greenville learned about the factors that have influenced the housing market and the contrast between the Upstate and the nation.
Dr. Crowe reported that housing starts in the Greenville MSA have already begun recovering, and will rise to 3,000 in 2012 and 4,000 in 2013, a historically normal level of activity. South Carolina as a whole also is rebounding, albeit more slowly, and will exceed 20,000 starts by 2013, also near a normal level of activity.
The country also is rebounding, but will take much longer to return to a normal level of activity and will not reach 1 million starts before 2014, still well below 1.6 million, the level considered necessary to meet demand. Factors contributing to the slow recovering include tight credit restrictions for home builders and high levels of inventory and foreclosures in the nation’s largest housing markets. Dr. Crowe reported that 70 percent of all foreclosures were concentrated in 12 states. Florida leads the way with 23 percent of all foreclosures in the nation.
Factors contributing to the recovery include historically low interest rates, which are expected to remain near historic lows for the rest of the year, high levels of affordability, strong job creation, particularly in the Upstate. Dr. Crowe also reported that pent-up demand, caused by a slowing of household formation, will heavily influence housing market recovery as the rest of the economy recovers and household formation returns to normal.
Positive factors influencing the Upstate include fundamentals like home price to income, which did not fall out of balance in the Upstate like it did nationally, and unemployment, about which Dr. Crowe reported that the Upstate is now below the state and the nation.
To view Dr. Crowe’s presentation, click here and open the document at the bottom of the page.