Economic recovery is under way along the Grand Strand, but expect tourism to bounce back before real estate does, said Robert Salvino, a research economist at Coastal Carolina University.
"In housing, it will be years before we get to the [pre-recession] level because it was an unprecedented upturn," Salvino said at a university event Tuesday morning. "That recovery will just take some time, but it is there. It's just slowly coming. Tourism, I think, will get back to a normal pace much quicker."
Salvino offered his latest predictions for the regional Waccamaw Council of Governments -- which includes Horry, Georgetown and Williamsburg counties - at the Waccamaw Higher Education Center in Litchfield Beach.
Hotel occupancy is expected to rise 1.7 percent this fall and 0.4 percent this winter, compared with the same seasons last year, Salvino said.Occupancy increased 7.6 percent during the summer. Room rates at hotels rose 1.6 percent during the summer, and will continue to rise through the off-season with a 3.3 percent rise projected for fall and 2.7 percent for winter.
How far the hospitality industry has rebounded depends on how you measure it, Salvino said.
Revenue per hotel room has already returned to pre-crash levels, but tourist spending has been slower to catch up, he said. Retail sales in 2007 were $1.1 million and fell to about $929,000 in 2009 and were up to $972,000 by 2010. At this rate, tourist spending will be 90 percent recovered by summer 2011 and fully recovered by 2012, Salvino said.
In real estate, building permits issued in Horry County have been flat from 2008 to 2010, he said. The number of permits for single-family homes is far from what it was during the boom years earlier this decade, Salvino said. For example, the U.S. Department of Commerce recorded 575 building permits in Horry County in July 2005 but only 90 in July 2010.
Because construction contributed so much to the economic boom, a weak real estate sector will hold the overall economy back from reaching pre-recession peaks, Salvino said.
The real estate market could rebound in 12 to 14 months, provided banks loosen their lending standards and foreclosures go away, but both of those factors are uncertain, said Tom Maeser, a real estate analyst with the Coastal Carolinas Association of Realtors, after the event.
Even if the area returns to the number of homes and condos that were being built or sold during the boom, the properties may not fetch pre-recession prices, he said.
Other recovery indicators, such as consumer confidence, have remained flat, Salvino said.
The amount of shipping through the Port of Georgetown also remains down and that's not likely to change unless the port is dredged, he said. Even if the Georgetown steel mill reopens in 2011 as ArcelorMittal representatives say it will, that is unlikely to make a large difference in the amount of goods that go through the port, he said.
Salvino's biggest message was that the economy will remain relatively flat in the near term, said Tim Tilley, president of heating and cooling engineering firm EnviroSep.
Tilley was one of a handful of businessmen in an audience of mostly academics and municipal and county employees. About 30 people attended the event.
The economy needs to diversify beyond tourism and real estate to get beyond the flat projections, Tilley said.
"We need diversification in the area in the form of manufacturing and engineering resources," he said.
Diversification is a slow process and there's no clear route for the region, which is at the whim of entrepreneurs, Salvino said.
The Waccamaw Regional Council of Government's Economic Outlook Board will next meet in February to renew its forecasts.
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