2016 year in review | ctar residential market update | dr. von nessen

Joseph Von Nessen, Ph.D. Research Economist January 18, 2017

[email protected]

A Paradigm Shift

Economic growth leveling off

A tighter labor market

Strong housing demand

1

2

3

South Carolina Employment Growth

Source: Bureau of Labor Statistics, Current Employment Statistics, NSA

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Jan.'11 Jul.'11 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16

South Carolina Employment Growth


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Jan.'11 Jul.'11 Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16

+2.2%

Slower Global Growth/App. Dollar

Declines in Demand for Exports

Declines in Manufacturing

(Trans. Equipment)

Declines in TransportaBon/

Trucking

Ripple Effects

China/U.S. Foreign Exchange Rate

Source: Board of Governors of the Federal Reserve System

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

Jan.'12 Jul.'12 Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16

S.C. Export Volume (TEUs)

Source: South Carolina Ports Authority

-‐15.0%

-‐10.0%

-‐5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Trans. & U9l Manufacturing

5.3%

2.5% 2.0% 1.9%

2015/2014 2016/2015

S.C. Employment Growth: By Industry


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Jan.'15 Jul.'15 Jan.'16 Jul.'16

S.C. Employment Growth: Trans. Equip. Manuf.


2016 South Carolina Employment Growth Rate

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%

Jan.'15 Jul.'15 Jan.'16 Jul.'16

Construc9on Prof. & Bus. Services Health Care & Soc. Assist.

S.C. Employment Growth: By Industry


2016 South Carolina Employment Growth Rate

S.C. Avg. Employment Growth: 2015-2016

Fairfield 12.2 %

Avg. Growth: +2.2% Source: BLS, Current Employment Statistics, NSA

3.2%

1.5%

1.2% 0.5%

1.4%

1.7% 1.4%

Outlook for 2017: Employment Growth

Source: Division of Research, Moore School of Business

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

q115 q215 q315 q415 q116 q216 q316 q416 q117 q217 q317 q417

2.9%

2.4%

3.0%

2.5% 2.6% 2.5% 2.4% 2.3% 2.5% 2.6%

2.4% 2.5%

Historical Forecast

A Tightening Labor Market

3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0%

U.S. S.C.

Unemployment Rates

Source: Bureau of Labor Statistics; SA LAUS, CES

SC: 4.4%

US: 4.7%

4.4%

-‐6.0%

-‐4.0%

-‐2.0%

0.0%

2.0%

4.0%

6.0%

8.0% Jan-‐09

Jun-‐09

Nov-‐09

Apr-‐10

Sep-‐10

Feb-‐11

Jul-‐1

1

Dec-‐11

May-‐12

Oct-‐12

Mar-‐13

Aug-‐13

Jan-‐14

Jun-‐14

Nov-‐14

Apr-‐15

Sep-‐15

Feb-‐16

Jul-‐1

6

Source: State and Area Employment, Hours, and Earnings (NSA)

S.C. Average Hourly Earnings (Total: Private)


S.C. Average Hourly Earnings (Total: Private) Region Oct. 2015 Oct. 2016 % Change

Charleston $23.01 $24.39 +6.0% Columbia $22.58 $22.41 -‐0.8% Greenville $21.09 $21.80 +3.4%

Myrtle Beach $18.86 $19.89 +5.5%

Spartanburg $20.60 $21.22 +3.0%

State Total $21.53 $22.47 +4.4%


Outlook for 2017: Total Personal Income Growth


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

q115 q215 q315 q415 q116 q216 q316 q416 q117 q217 q317 q417

5.2% 5.1% 5.6%

4.9% 4.9% 4.3%

3.7%

5.1% 4.8% 4.8% 4.7% 4.7%

Historical Forecast

U.S. Skills Gap Misery Index

0

50

100

150

200 De

c-‐00

Sep-‐01

Jun-‐02

Mar-‐03

Dec-‐03

Sep-‐04

Jun-‐05

Mar-‐06

Dec-‐06

Sep-‐07

Jun-‐08

Mar-‐09

Dec-‐09

Sep-‐10

Jun-‐11

Mar-‐12

Dec-‐12

Sep-‐13

Jun-‐14

Mar-‐15

Dec-‐15

Source: Bureau of Labor Statistics; SA LAUS, JOLTS

1.5

2

2.5

3

3.5

4

4.5

5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

2007-‐2010 2011-‐2016

S.C. Unemployment Rate

The Beveridge Curve

Source: Bureau of Labor Statistics; SA LAUS, JOLTS

U.S. Job

Ope

nings R

ate

South Carolina Demographic Profile

Source: American Community Survey, PUMS, 2010-2014 (Ages 25-65)

54.5% 45.5%

<Associate's Associate's or Higher

Movers LTM Non-Movers

64.8%

35.2%

<Associate's Associate's or Higher

Mover LTM Non-‐Mover Management 8.1% 7.7% Engineering 2.1% 1.5% Military 8.9% 0.4%

Office 11.6% 13.2%

ConstrucBon 4.0% 5.3% ProducBon 4.2% 8.5%

TransportaBon 5.3% 6.4%

S.C. Pct. Employed by Selected Occupations

Source: American Community Survey, PUMS, 2010-2014

South Carolina Initial Unemployment Insurance Claims

Source: U.S. Department of Labor, Initial UI Claims, 12-week moving average

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

3/18/00

3/18/01

3/18/02

3/18/03

3/18/04

3/18/05

3/18/06

3/18/07

3/18/08

3/18/09

3/18/10

3/18/11

3/18/12

3/18/13

3/18/14

3/18/15

3/18/16

Outlook for 2017: Unemployment Rate


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

q115 q215 q315 q415 q116 q216 q316 q416 q117 q217 q317 q417

6.5% 6.1%

5.6% 5.5% 5.6% 5.6% 5.1%

4.6% 4.6% 4.5% 4.7% 4.5%

Historical Forecast

Strong Housing Demand

Construction Emp. Growth vs. S.C. Average

Source: Bureau of Labor StaMsMcs, CES NSA

-‐6.0%

-‐4.0%

-‐2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Jan.'11 Jan.'12 Jan.'13 Jan.'14 Jan.'15 Jan.'16

S.C. Construc9on

S.C. Regional Competitiveness by Industry Pct. Point Difference Between National Industry Growth and S.C. Industry Growth


-‐2.0% -‐1.5% -‐1.0% -‐0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

Construc9on Manufacturing Durable Goods

NonDurable Goods Wholesale Trade

Retail Trade Trans. & U9l Informa9on

Financial Ac9v. Prof.&Bus.

Health & Soc.Assist. Leisure&Hosp.

Ongoing Stimulus Effects

(1) 2015 Flood

(2) Hurricane Matthew

What About the Charleston Housing Market?

0 200 400 600 800

1,000 1,200 1,400 1,600 1,800

Jan.'13 Jul.'13 Jan.'14 Jul.'14 Jan.'15 Jul.'15 Jan.'16 Jul.'16 Jan.'17 Jul.'17

Historical Forecast

Outlook for 2017: MLS Sales Activity +11.9%

+17.1% +9.1% +30.9%

+8.1%

Charleston Quintile Analysis

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Q1 Q2 Q3 Q4 Q5

Charleston Price Point Breakdown <$100K $100K-‐

$150K $150K-‐$200K

$200K-‐$250K

$250K-‐$300K

$300K-‐$350K

$350K-‐$400K $400K+

2013 12.3% 14.3% 18.3% 14.7% 10.9% 6.8% 4.6% 18.1%

2014 10.7% 12.8% 18.2% 14.4% 11.8% 7.8% 5.3% 18.9%

2015 7.8% 10.1% 18.2% 16.3% 11.8% 8.8% 5.5% 21.5%

2016 5.6% 8.1% 16.9% 18.4% 12.5% 9.3% 6.7% 22.3%

-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐

2016/2013 -‐6.7% -‐6.1% -‐1.3% 3.7% 1.6% 2.6% 2.1% 4.2%

2016/2015 -‐2.2% -‐2.0% -‐1.3% 2.1% 0.7% 0.5% 1.3% 0.9%

Charleston MLS: Median Price by Year

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2013 2014 2015 2016

6.0% 5.7% 6.2%

4.6%

S.C. Employment Growth: Construction

Source: Bureau of Labor StaMsMcs, Current Employment StaMsMcs, NSA

-‐25.0% -‐20.0% -‐15.0% -‐10.0% -‐5.0% 0.0% 5.0%

10.0% 15.0%

Construc9on of Buildings Specialty Trade Contractors

FHFA House Price Index

Source: U.S. Federal Housing Finance Agency

-‐15.0%

-‐10.0%

-‐5.0%

0.0%

5.0%

10.0%

15.0%

q110

q210

q310

q410

q111

q211

q311

q411

q112

q212

q312

q412

q113

q213

q313

q413

q114

q214

q314

q414

q115

q215

q315

q415

q116

q216

q316

Charleston

Columbia

Greenville

Hilton Head

Spartanburg

S.C. Builders Reporting at Least One Sale

Source: U.S. Bureau of Labor Statistics

(Residential & Non-Residential)

2,500

2,600

2,700

2,800

2,900

3,000

3,100

2011 2012 2013 2014 2015 2016

Will the U.S. Dollar Continue to Strengthen?

Gas Prices Low!

Consumer Confidence High!

South Carolina’s Economy on Solid Footing for 2017 November 2016 State Leading Indices

Source: Federal Reserve Bank of Philadelphia

[email protected]

2016 year in review | ctar residential market update | dr. von nessen

Real Estate