Published Jan. 16, 2013
Most of the top homebuilders in the Midlands chalked up major increases in the number of homes built in 2012, with Mungo Homes leading the pack with an 84% increase, to 518 homes built in 2012 from 281 homes built in 2011.
Economist Joseph Von Nessen cited factors that will continue to be positive for home sales in South Carolina.
Pent-up demand. In 2007, the growth in household formation was 1.3%. It dropped to 0.7% between 2008 and 2011. The members of these would-be households have been having trouble finding jobs. As new jobs are created, they will eventually buy homes.
House price appreciation is South Carolina continues to get stronger. The Federal Housing Finance Agency recently reported the third consecutive quarter of appreciation in South Carolina. Greenville has now shown appreciation for the first time since 2007. The current year-over-year increase may also signal that consumers are becoming less price sensitive.
The biggest single-year gain in home prices has come in the last 12 months.
Competition from existing home sales on price alone should ebb, as homeowners grow more willing to lower prices on homes they have lived in for many years, especially if they are facing a job-related relocation.
In a year-end report on 2012 building activity, data supplied by the Home Builders Association of Greater Columbia showed that the region’s biggest builders substantially increased their activity last year.
But a chart of the top 20 builders in the region shows that six of those builders actually built fewer homes last year than they did in 2011.
Two of the top 20 builders, however, built no homes in 2011, but rebounded in 2012: CF Evans & Co. Construction built 46 homes, while JJ&Z Builders built 14 homes.
Joseph Von Nessen, an economist with Resh Marketing Inc., said in the report that while recent trends have been tough on South Carolina homebuilders, there are signs of an improving outlook.
“Since 2009, the bulk of our recovery has come in the non-summer months,” Von Nessen said. “One can easily see this by looking at the unemployment rates, which has tended to rise in the summer months and fall in the spring and fall. Housing is seasonal, with the bulk of sales activity coming in the summer.”
Because the housing sector has not yet fully rebounded in South Carolina, Von Nessen said, the growth that would otherwise occur in the summer is not happening. As a result, the state has seen relatively low amounts of economic growth in the summer since the economic crisis in 2008.
He cited factors, however, that will continue to be positive for home sales including pent-up demand, strengthening of home price appreciation and the ebb of competition from existing home sales on price.