University of South Carolina research eonomist Dr. Joseph Von Nessen recently provided a Residential Market Update to the Charleston Trident Association of Realtors. Here are some key points from his update:
- Cooling Economy - We continue to move away from an overheated economy to a more stable economy by slowly cooling off. Recession is a risk if we cool too long or too fast.
- Recession Likely? - It depends, so far we appear to be on track for a soft landing rathan than a recession. We are not out of the woods yet though. The Feds are still aiming to decrease inflation to 2% but they don't want to lower the inflation to the point of recession.
- Resilient Jobs and Consumer Spending - The strength of the labor market is a good predictor of housing demand and we are currently experiencing a resilient job market. Consumer spending is expected to remain steady in 2024.
- Inflation Still a Threat - Wages have grown approximately 14.5% since December 2020; and inflation has grown more at approximately 18%. This means inflation is still affecting our purchasing power.
- Interest Rates - Housing is at the front line in battle with inflation because housing purchases are tied to both inflation and interest rates. Most of the Fed rate hikes are likely behind us though as they are unlikely to raise rates again in 2024.
- Housing Sales and Price - Normally if home sales go down like they did in 2023 the prices should be going down too. But we are seeing prices go up. Reason for this is because of the low inventory that has occured because of a decade long period of underbuilding.
- People Moving to Southeast - More population gains are expected in the southeast than in any other region through 2040. So demand for homes in Charleston is likely to keep going up.
