“The fact that we’re adding to the overall inventory suggests that the area is growing and demand is increasing relative to supply, both very positive indicators.”
ECU College of Business
By Michael Abramowitz
Friday, December 7, 2012
Home sales and planned residential construction in Pitt County and Greenville grew in the last year, a local economist said this week.
In October, sales grew by 35.8 percent in Pitt County and nearly 104 percent, Greenville, over the same month last year, signaling a rise in consumer confidence in the steadily growing economy, said economist Jim Kleckley, director of the Bureau of Business Research at East Carolina University’s College of Business.
There were 144 units sold in the county in October, with an average value of $139,773, compared with October 2011, when 106 homes were sold, at an average value of $144,872, according to statistics released this week by the N.C. Association of Realtors and the U.S. Census Bureau.
The 44 new building permits issued in October — 33 for single-family homes and eight for multi-family dwellings — compared with a total of 32 issued during the same month in 2011.
Changes in the number of units sold are more accurate economic indicators than average values because there are more variables at work from year to year, such as home size, that have an impact on average prices, Kleckley said.
“The fact that we’re adding to the overall inventory suggests that the area is growing and demand is increasing relative to supply, both very positive indicators,” he said.
Based on charting of 12-month averages for housing sales since 2008, Kleckley believes that the October 2012 upturn in housing sales following two years of relatively flat sales, matched by North Carolina’s even steeper climb, could signal that the local economy has passed its bottom point and could be the sign of genuine economic stability people wanting to invest have been waiting for.
“A lot of this change has to do with the positive economic indicators that are coming into play, the confidence people have in their jobs being there tomorrow and interest rates still at historic lows, allowing them to get more for their money,” Kleckley said.
While no one factor will likely make someone choose or not choose home ownership, it is among the most important of economic indicators because it is a stored value, the economist said.
“We like home ownership because, if it is yours, you tend to take better care of it, and vice-versa. It’s part of the argument they’re having on the other end of Fifth Street,” Kleckley said in reference to recent debates over changes to Greenville’s “3-unrelated rule.”
Continued strengthening of the overall economy during the months ahead will hopefully coincide with the start of the spring selling season, but is also where dysfunction in Washington, D.C., could throw a wrench into things, Kleckley said.
“If activity starts pushing beyond the marginal increases we’ve been seeing, it will make everybody feel better” Kleckley said. “Once we start clearing the existing home inventory, we should start to see a big push in building activity. If we go over the fiscal cliff, though, we could lose the world’s confidence and get a downgrade in our ability to pay our debt.
“That would mean interest rates would go up, followed by increased mortgage rates. If that happens in a weak market with increased taxes, it could wipe everything out.”
Contact Michael Abramowitz at email@example.com or 252-329-9571.
via The Daily Reflector.