Stock Market Stakeholder: Homebuilder

Andrew D. White

Homebuilder; president-elect of the Home Builders Association of South Carolina

Lexington

Anytime there is an uncertainty in the economy, discretionary purchases are affected and the home market is no exception, according to Andy White, Lexington-based homebuilder with 30 years of experience, including the development of Saluda River Club.

"However, more home purchases are compelled by changes in family status, job relocations and other factors than purely discretionary motives," White explained. "As household formation continues to gain momentum, as more people are finding new or better jobs, leaving the nest or getting out of relatively expensive rental housing, the housing market will continue to improve. Those longer-term, structural changes will likely prove to be more impactful than a temporary stock market correction."

At the start of the Great Recession, demand for new homes fell by almost 75 percent nationwide. South Carolina fared a bit better, falling by 71 percent while demand across the Midlands fell 64 percent, White said. Nationally, permits bottomed out in 2009 and the rest of South Carolina followed in 2010. However, new permits in the Midlands did not hit the cyclical low until 2011, he said.

"Growth in new home permits was slow and steady in the Midlands from the early 1990s through 2002, averaging about 4,000 new single family homes per year before the housing bubble began in 2003," White said. "By 2006, 616 different builders combined to start a record 6,225 homes in the Columbia market. After the crash, only 40 of those builders were still actively engaged in the business, pulling a total of just 2,218 permits by 2012."

However, South Carolina has been seeing housing recover at fast rate, White said, adding that in 2014, new home starts were 69 percent above the cyclical trough in South Carolina, but had only grown by 43 percent nationally.　

"The housing recovery in Columbia was running much slower than the rest of the state last year, but is beginning to catch up as we move through 2015," White said. "I expect Midlands builders to start about 3,000 homes this year, so we still have a way to go to get back to the pre-boom and bust average of about 4,000 per year. Of course, there are pockets here that are doing much better than others. Lexington County has recovered to its pre-bubble level, but Richland County still has a way to go to catch up."

The current market unrest will not have the same impact as the implosion experienced in late 2008 and early 2009, White said.

"That was a very serious crash, followed by a total meltdown in the mortgage market," White said. "The recent unrest in the equity markets is just a long overdue correction."

Janet Jones Kendall

This story was originally published August 27, 2015 at 9:30 PM with the headline "Stock Market Stakeholder: Homebuilder."