While incomes are on the rise and the cost of living remains below the national average, the greater Greenville market appears strong when it comes to housing.
According to Michael Dey, executive vice president and CEO of the Home Builders Association of Greenville, there are some challenges when it comes to future home building and development, specifically in Greenville County.
When it comes to answering housing demand with adequate supply, Greenville County may see future struggles because of the zoning process that Dey said has made building homes and housing developments difficult.
“It is a political question as to not being able to get enough subdivisions approved through the process,” Dey said.
According to the leading markets index measured by the National Association of Home Builders, the greater Greenville market — Greenville, Laurens and Pickens counties — is above the national average in home prices, on par with employment, but 26% lower than the national average for the number of building permits issued.
The data suggests the permit trend was on the rise from 2012 to 2015 with increases of 7.5% to 12% each year. Even though Greenville County has issued more permits by number than its neighbor, the gains in permitting year-over-year have been stronger in Spartanburg County. According to Market Edge data, Spartanburg County has seen a 28% increase in permits issued over each of the last two years. Greenville County, on the other hand, increased 6.3% in 2014 and 9.4% in 2015.
“They (Spartanburg County) are able to get the production moving in that market,” Dey said. “And, after 2-3 years of sufficient investment, that development is moving to Spartanburg.”
But, he said a lot of the growth in Spartanburg is attributable to the fact that recent job creation has come along highways 101 and 291 in or close to Spartanburg County because “rooftops follow jobs and commercial follows rooftops.”
“There are less challenges with land in Spartanburg because it is not as built-out as Greenville,” Dey said.
That doesn’t mean the housing market is gloom in the Greenville market. Quite the contrary, according to Robert Dietz, chief economist and vice president of the National Association of Home Builders.
In fact, more homes are deemed affordable to those making the median income in the region — $63,500. Dey said while the region averages 70% affordability — meaning people making the median income can afford 70% of the houses on the market — it has been as low as 65% and now it sits at 80%.
Dietz said the Greenville market sits in an enviable position in that even with home prices rising, which is met by equally rising income for residents, the market remains more stable and potential home buyers aren’t priced out of the market.
“Here, those price gains are driven by the job growth and that is simply not the case everywhere,” Dietz said.
And, Dey reiterated the development inside the city of Greenville provides balance to rural development around the city.
“The difference with Greenville city is the zoning is already in place and the development has been strong,” Dey said. “I think it’s hitting the numbers every year and it’s exciting to see.”
So, even with permitting being low compared to higher home prices, Dietz said the supply and demand issues the region may face in the future is more indicative of the industry progression. Even with more multi-family mixed-use developments under construction in the city of Greenville, Dietz said there is still a bright future ahead for the housing market in the Upstate.
“You have to keep producing, especially single-family housing, in anticipation of continued growth,” Dietz said. “You need that multi-family development as well. You need a mix. If you open up and allow the market to produce, you should be able to maintain a healthy housing market.”
However, with the housing market continuing to grow, Dietz said there are challenges.
“The challenges are the industry needs more workers and we have to have land available,” Dietz said. “But, as long as the income keeps going up things should remain in good shape.”