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2021 CTAR Residential Market Update with Dr. Joseph Von Nessen

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1/19/21
1
Joseph Von Nessen, Ph.D.
Research Economist
January 19, 2021
joey.vonnessen@moore.sc.edu
The 2021 South Carolina...
1/19/21
2
Total South Carolina Employment Growth
Source: U.S. Bureau of Labor Statistics, CES-SA
Month/Month Percentage Jo...
1/19/21
3
Total South Carolina Employment Growth
Source: U.S. Bureau of Labor Statistics, CES-SA
Month/Month Percentage Jo...
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2021 CTAR Residential Market Update with Dr. Joseph Von Nessen

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The 2021 Residential Market Update with Dr. Joseph Von Nessen, Economist with the Moore School of Business at USC. An annual presentation on how we ended 2020, the 2021 forecast and tangible takeaways you can share with your clients in the coming year!

The 2021 Residential Market Update with Dr. Joseph Von Nessen, Economist with the Moore School of Business at USC. An annual presentation on how we ended 2020, the 2021 forecast and tangible takeaways you can share with your clients in the coming year!

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2021 CTAR Residential Market Update with Dr. Joseph Von Nessen

  1. 1. 1/19/21 1 Joseph Von Nessen, Ph.D. Research Economist January 19, 2021 joey.vonnessen@moore.sc.edu The 2021 South Carolina Economic Outlook Charting the Winding Road to Recovery 1 We’re Almost Back! (Or Are We?) 2
  2. 2. 1/19/21 2 Total South Carolina Employment Growth Source: U.S. Bureau of Labor Statistics, CES-SA Month/Month Percentage Job Gains 1,850 1,900 1,950 2,000 2,050 2,100 2,150 2,200 2,250 Jan.'20 Feb.'20 Mar.'20 Apr.'20 May.'20 Jun.'20 Jul.'20 Aug.'20 Sep.'20 Oct.'20 Nov.'20 3 Total South Carolina Employment Growth Source: U.S. Bureau of Labor Statistics, CES-SA Month/Month Percentage Job Gains 1,850 1,900 1,950 2,000 2,050 2,100 2,150 2,200 2,250 Jan.'20 Feb.'20 Mar.'20 Apr.'20 May.'20 Jun.'20 Jul.'20 Aug.'20 Sep.'20 Oct.'20 Nov.'20 -12.6% 4
  3. 3. 1/19/21 3 Total South Carolina Employment Growth Source: U.S. Bureau of Labor Statistics, CES-SA Month/Month Percentage Job Gains 1,850 1,900 1,950 2,000 2,050 2,100 2,150 2,200 2,250 Jan.'20 Feb.'20 Mar.'20 Apr.'20 May.'20 Jun.'20 Jul.'20 Aug.'20 Sep.'20 Oct.'20 Nov.'20 +3.6% 5 +0.8% Total South Carolina Employment Growth Source: U.S. Bureau of Labor Statistics, CES-SA Month/Month Percentage Job Gains 1,850 1,900 1,950 2,000 2,050 2,100 2,150 2,200 2,250 Jan.'20 Feb.'20 Mar.'20 Apr.'20 May.'20 Jun.'20 Jul.'20 Aug.'20 Sep.'20 Oct.'20 Nov.'20 6
  4. 4. 1/19/21 4 1,850 1,900 1,950 2,000 2,050 2,100 2,150 2,200 2,250 Jan.'20 Feb.'20 Mar.'20 Apr.'20 May.'20 Jun.'20 Jul.'20 Aug.'20 Sep.'20 Oct.'20 Nov.'20 Total South Carolina Employment Growth Source: U.S. Bureau of Labor Statistics, CES-SA Month/Month Percentage Job Gains -3.4% 7 South Carolina Employment Recovery in 2020 Source: U.S. Bureau of Labor Statistics, CES-SA Current Pct. of Pre-Pandemic (Feb.’20) Employment Levels -18.0% -16.0% -14.0% -12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% Leisure and Hospitality All OtherS.C.Sectors -16.5% -1.5% Excluding Leisure & Hospitality, S.C. employment levels are only down 1.5% compared to Feb.’20 8
  5. 5. 1/19/21 5 Charleston Employment Growth Trends: 2020 Source: U.S. Bureau of Labor Statistics, CES-NSA Year/Year Employment Growth -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sept. Oct. Nov. Leisure & Hospitality All OtherSectors 9 County-Level Unemployment Recovery Source: U.S. Bureau of Labor Statistics, November 2019, April & November 2020 Fairfield 12.2 % Fairfield 12.2 % Fairfield 12.2 % November 2019 = 2.4% April 2020 = 12.8% November 2020 = 4.4% 10
  6. 6. 1/19/21 6 County-Level Unemployment Recovery Source: U.S. Bureau of Labor Statistics, November 2019, April & November 2020 Fairfield 12.2 % Fairfield 12.2 % Fairfield 12.2 % November 2019 = 2.4% April 2020 = 12.8% November 2020 = 4.4% 11 South Carolina 2020 Unemployment Rates Source: U.S. Bureau of Labor Statistics, CES-SA 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% February M arch April M ay June July August Septem ber O ctober Novem ber 2.5% 3.2% 12.8% 12.4% 8.7% 8.7% 6.4% 5.2% 4.2% 4.4% 12
  7. 7. 1/19/21 7 U.S. Consumer Spending: Durable Goods $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 Jan.'11 Jul.'11 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16 Jan.'17 Jul.'17 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 Note: Values Represent Annualized Totals, in billions 13 U.S. Consumer Spending: Non-Durable Goods Note: Values Represent Annualized Totals, in billions $2,300 $2,400 $2,500 $2,600 $2,700 $2,800 $2,900 $3,000 $3,100 $3,200 Jan.'11 Jul.'11 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16 Jan.'17 Jul.'17 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 14
  8. 8. 1/19/21 8 -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Oct.'19 Nov.'1 9 Dec.'19 Jan.'20 Feb.'2 0 Mar.'20 Apr.'2 0 May.'20 Jun.'20 Jul.'20 Aug.'20 Sep.'2 0 Oct.'20 Nov.'2 0 Loaded Exports Loaded Imports S.C. Charleston Port Container Volume Growth (Year/Year Pct. Change) Source: South Carolina Ports Authority, January 2021 15 U.S. Consumer Spending: Services Note: Values Represent Annualized Totals, in billions $6,500 $7,000 $7,500 $8,000 $8,500 $9,000 $9,500 $10,000 $10,500 Jan.'11 Jul.'11 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16 Jan.'17 Jul.'17 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 16
  9. 9. 1/19/21 9 What Do These Trends Mean for Charleston Housing Markets? Demand is likely to remain strong in 2021 17 Source: Multiple Listing Service and Moore School of Business Charleston Monthly MLS Sales: 2012-2020 300 500 700 900 1,100 1,300 1,500 1,700 1,900 2,100 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16 Jan.'17 Jul.'17 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 Jan.'21 18
  10. 10. 1/19/21 10 Source: Multiple Listing Service and Moore School of Business Charleston Monthly MLS Sales: 2012-2020 300 500 700 900 1,100 1,300 1,500 1,700 1,900 2,100 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16 Jan.'17 Jul.'17 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 Jan.'21 Sales activity in Winter 2020 comparable to Summer of 2019 19 Why? • Fewer employment losses among potential homebuyers • Migration patterns strongly favor South Carolina • More disposable income and higher savings rates • Low interest rates 20
  11. 11. 1/19/21 11 Charleston Employment Growth Trends: 2020 Source: U.S. Bureau of Labor Statistics, CES-NSA Year/Year Employment Growth -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sept. Oct. Nov. Leisure & Hospitality All OtherSectors 21 Charleston Job Losses and Housing Affordability Source: U.S. Bureau of Economic Analysis Note: Maximum house price assumes a dual income household and a mortgage qualification at approximately 3x annual household income Industry Reduction in Employment (Nov’.19 vs. Nov.’20) Median Annual Wage Estimated Max. House Price Leisure and Hospitality -26.3% $20,425 $122,550 All Other -2.1% $57,177 $343,062 $260 ,000 $280 ,000 $300 ,000 $320 ,000 $340 ,000 Dec.'18 Dec.'19 Dec.20 $289,108 $292,264 $339,931 22
  12. 12. 1/19/21 12 58.1% 4.1% 33.5% 4.3% Projected Pct. of U.S. Population Growth: 2020-2040 Source: Weldon Cooper Center for Public Service, UVA, 2020 23 24
  13. 13. 1/19/21 13 Source: Multiple Listing Service and Moore School of Business Charleston SF Median Annual House Price Growth -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Jan.'16 Jul.'16 Jan.'17 Jul.'17 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 Jan.'21 +16.0% 25 Yet 2021 Year/Year Growth in Housing Sales Could Be Flat or Negative by Q3 or Q4 How is that Possible? 26
  14. 14. 1/19/21 14 (1) A record year in 2020 is hard to top (2) Severe supply constraints • Pending sales now exceeds the number of active listings • New sales as a percentage of total sales is unusually high Two Primary Reasons Negative Year/Year Growth in this Case Would Not Imply a Market Downturn 27 What’s Next for U.S. & S.C. Economic Recovery? More economic headwinds coming, but there is light at the end of the tunnel! 28
  15. 15. 1/19/21 15 COVID-19 Case Increases Vaccine Dissemination Has Begun $900B Fiscal Stimulus Package 29 S.C. Possible Emp. Recovery Scenarios Source: U.S. Bureau of Labor Statistics, CES-SA & Division of Research 1,800 1,900 2,000 2,100 2,200 2,300 2,400 2,500 2,600 Jan.'18 Jul.'18 Jan.'19 Jul.'19 Jan.'20 Jul.'20 Jan.'21 Jul.'21 Jan.'22 Jul.'22 Jan.'23 Jul.'23 Historical Lower Upper Aug. 2021 Nov. 2022 30
  16. 16. 1/19/21 16 • South Carolina’s economy has experienced a strong rebound throughout the Summer and Fall months, with most major sectors now approaching pre- recession employment levels • The primary exception to this statewide recovery trend has been the Leisure & Hospitality industry, which cannot fully recover until a vaccine is widely available • Residential housing demand likely to remain strong, though the rate of growth could flatten or even decline in 2021q3 and 2021q4 due to supply constraints • Full recovery for South Carolina’s economy in which employment rebounds to pre-pandemic levels is not currently expected until at least mid-2021, but exact timing depends on how quickly the vaccine becomes widely available The Bottom Line 31 Thank You! 32

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