Economists, Steven Slifer and Joey Von Nessen shared their forecasts for 2015 on Jan. 14 at the “Residential Real Estate Market Update” and “2014 Year in Review” event hosted by the Charleston Trident Association of Realtors.
Slifer predicted the gross domestic product should grow by 3.4 percent — up from 2.8 percent last year — mortgage interest rates should stay near record lows, and gas prices will likely rise during the peak driving season before falling steadily as they did in 2014.
Focusing on South Carolina, including the Charleston area, University of South Carolina economist Von Nessen proclaimed, “If you like 2014, you’re really going to like 2015.”
Slifer, who keyed on the larger economies, said the U.S. fiscal outlook shows productive expansion for the next few years at least. He said no factors for a recession will materialize until 2018.
A burgeoning stock market and plummeting fuel prices, down to $2 a gallon from $3.70 a year ago, have bolstered consumer confidence, he said. Home prices are rising at 4.5 percent a year, boosting equity. At the same time, mortgage rates fell to a 3.9 percent average in 2014.
“My gosh, that’s the lowest in 50 years,” Slifer said. He predicted rates will inch upward to 4.5 percent by the end of the year.
The U.S. economy has also been “cranking out jobs,” pushing close to what’s considered full employment. “I’m looking for 3 percent growth in consumer spending,” Slifer added. Slifer also cited a “big drop in the homeownership rate.” Much of the decline, he claimed, stems from the 35 and under generation. “Younger people are not as desirous to own a home,” he said. While fewer homes are being bought, “there’s a huge shortage of apartments,” he added.
Von Nessen predicted a “stable but shifting” economy in South Carolina. Areas such as the Upstate around BMW and the Lowcountry with Boeing are seeing the highest employment increases in recent years. Just like BMW and the automotive industry, Boeing is contributing to an “emerging aerospace cluster,” he said. Unlike individual plants leaving states, “clusters don’t get up and move,” Von Nessen said.
In the past year, however, employment gains have been most pronounced in the tourism-driven Myrtle Beach area. “Consumer spending is up. Household health is the best in five years. When home prices go up, net income goes up,” he said.
There are signs of a fundamental employment shift as the professional and business services sector reap the largest job gains.
“The growth is primarily temporary staffing, employment staffing, contract workers,” the economist said.
Von Nessen said he thinks “this is a long term trend,” noting that the sector’s contribution to employment growth rose 30 percent in 2013-14.
“Employees say, ‘This works. We’ll stick to this,’” Von Nessen said.
He predicted a 1.9 percent economic growth rate in the state, pointing out there’s a “general uncertainty” tied to economic troubles in global markets. Also, no South Carolina industry is in rapid expansion, considered an 8-10 percent growth rate.
The economist said housing growth in the state is “really leveling out. That’s a good thing. You want stability,” he said.
Looking at the Charleston housing market, he forecast prices will increase at a slower rate. The 25 percent housing surge in metro Charleston in 2013 dropped to 9 percent last year. Von Nessen predicted a 6 percent increase in 2015, calling it “good news.”
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