By Dennis Quick
Senior Staff Writer

Charleston’s hot residential real estate market is not part of a national housing bubble on the verge of bursting.

So says David Lereah, chief economist for the Washington, D.C.-based National Association of Realtors, which held its annual executive meeting at The Sanctuary at Kiawah Island earlier this month.

For openers, Lereah emphasizes there is no national real estate bubble. “Real estate is local,” he says.

Secondly, the nationwide demand for housing is genuine and the supply limited, says Lereah. The demand comes largely from baby boomers reaching retirement and seeking second homes, most often in warm, sunny locales.

This helps explain the Lowcountry’s strong residential real estate market, Lereah says. The region has “all the positive indicators” of a genuine housing demand rather than a speculative bubble, he says.

“Stable, healthy employment,” a diversified economy, homes appreciating at roughly 8% annually, a coastal location and a history that attracts tourism are strong factors leading to the Lowcountry’s robust residential real estate market, explains Lereah.

Lereah expects the Lowcountry’s housing boom to continue for some time.

“Charleston is looking good for the next several years,” he says.

Charleston Southern University economist Al Parish agrees. He forecasts that building permit activity should increase, with developers expected to seek 8,800 residential permits for this year, compared with about 8,200 last year. For 2006, homebuilders are projected to request 9,500 permits. The permits include both single- and multi-family residences.

The value of the pulled residential building permits is expected to jump from a projected $1.2 billion in 2005 to $1.3 billion in 2006. That figure reached about $1.1 billion in 2004.

“We are not in a housing bubble,” Parish emphasizes. “Our housing market is driven by actual demand. People are moving here.”

Dennis Quick is senior staff writer for the Business Journal. E-mail him at dquick@crbj.com.

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