National, state economic headwinds could affect local realty market
August 29, 2013By J. Elias O'Neal
Despite seeing improvements throughout most sectors of greater Wilmington’s real estate market, a local economist says the region is still in recovery mode.
Tom Simpson, a professor at the University of North Carolina Wilmington’s department of economics and finance, said Tuesday that economic uncertainty at the state and national levels could mean slower than usual investment and growth at the local level.
Simpson was one of three panelists during the Realtors Commercial Alliance of Southeastern North Carolina’s annual Commercial Day. Other speakers included John E. Skvarla III, secretary of the N.C. Department of Environment and Natural Resources; and Wilmington Mayor Bill Saffo.
Simpson said slow new housing starts, credit availability and overall national economic uncertainty are making rapid economic expansion nearly impossible.
“We’re still feeling the effects of the Great Recession and probably will for some time,” Simpson told the large group of brokers and Realtors.
While companies are flush with cash, Simpson said they are choosing not to spend their capital because of the threat of pending regulations at the state level – pointing out the expiration of the Bush Tax cuts, sequestration and the Affordable Care Act as factors weighing heavily on businesses and investors.
“It remains high by normal standards,” Simpson said about business caution in the marketplace. “They have mountains of cash that they are holding back … and are not spending on investment.”
But like much of the country, the Wilmington area picture is slowly improving, Simpson said.
He said new data confirms that more commercial and residential transactions are occurring, with new multifamily and retail growth leading commercial development at the national level. He added that the housing market is also showing signs of tightening up.
Saffo echoed the same sentiments – adding that officials are poised to make some new job announcements in the coming weeks, but would not detail what those job announcements may entail. He said the city must continue to focus on economic development efforts – including the use of incentives - to make Wilmington an economically vibrant and viable location for new and existing residents and businesses.
“Personally, I don’t like [incentives],” Saffo said. “But if we don’t have them, we’re not going to be in play.”
Skvarla said that his division is working to vet DENR permits at a faster and more efficient rate in a manner that is protective of the environment. He told the group of local brokers that DENR, in its previous role, thought of itself as the “eco police” – often holding up many projects some workers deemed unworthy of development.
He said since he has taken the helm of the department, that attitude is beginning to change.
“DENR must envision itself, understand itself as a service organization,” Skvarla said. “We are no longer going to be an economic obstacle.”