South Carolina Fall 2009 Quarterly Housing Market

Summary

Overall, economic growth in the housing industry and in the economy as a whole will continue in the coming months, but it will be slow. Banks dealing with defaults on commercial real estate loans will have difficulty extending new loans to builders and other investors, which will slow the economic growth of these industries. As a lagging economic indicator, unemployment will persist into 2010, and foreclosures and high housing vacancy rates will persist with it. This will lead to increased housing inventory and further reduction in house prices.Even so, the South Carolina housing market has seen increases in permits since January and only small increases in delinquent mortgages in the past twelve months. These are positive signs and indicate that South Carolina is in a stable position relative to the rest of the nation. House prices continue to hold their value and are, on average, appreciating. There are expectations of growth in the South Carolina housing market, but to be realized, builders must identify their target markets carefully and recognize that the economic recovery will take time.

Highlights

The recession is most likely over. Most economic indicators suggest that we are now in a period of economic growth. The banking industry is just beginning to absorb the losses from defaulting commercial real estate loans, which will make future loans of all kinds harder to acquire. Thus, despite the fact that the residential real estate market is showing signs of recovery, the recovery will be slow because of the increased difficulty for the home-building industry to obtain loans. The high U.S. and South Carolina unemployment rate is expected to persist for the remainder of 2009 and into 2010. Nevertheless, this is not an indication of a deteriorating overall economy. High unemployment generally lingers through the initial stages of economic recovery and is usually one of the last signs of recovery from a recession. Additional foreclosures and increased housing vacancy rates are likely to accompany high unemployment. This will lead to additional inventory and reduced housing prices at the national level. South Carolina, however, has experienced house price appreciation throughout 2009, an increase in permit activity, and only small increases in foreclosure rates. These facts suggest not only that South Carolina is a relatively stable housing market, but also that much of the excess inventory has been eliminated. In turn, South Carolina will be spared from some of the national consequences of additional foreclosures.

Click on this link for the complete report:
http://www.screaltors.com/SCmarketRpt_Fall.pdf

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