Report: Fayetteville, N.C., in recession
Posted October 10, 2008 2:12 p.m. EDT
Updated October 10, 2008 6:32 p.m. EDT
Fayetteville, N.C. — Six metropolitan areas in North Carolina have slipped into a recession during the past six months, according to Moody's Economy.com. But home sales and military spending are helping alleviate economic woes in Fayetteville, officials said.
Moody's report measured leading economic indicators – including unemployment, GDP, income, industrial production and sales – to see if the economy of 381 U.S. metropolitan areas contracted or expanding from March through August.
North Carolina as a whole has slipped into a recession, with 11 of its 14 metro areas in or at risk of a recession, according to the report.
Statewide, bright spots in the report were Raleigh-Cary, Winston-Salem and Jacksonville, whose economies were expanding.
Metro areas at risk of a recession included Durham, Rocky Mount, Goldsboro, Greenville and Wilmington.
Moody's Economy.com ranked five other North Carolina metro areas as in a recession: Asheville, Burlington, Charlotte, Greensboro-High Point and Hickory-Lenoir-Morganton.
Fayetteville lost 600 manufacturing jobs in the past six months, according to Moody's report, and consumers have been spending less, Chamber of Commerce officials said.
However, the military presence at Fort Bragg underpins the local economy, injecting $7 million annually, commerce officials said. The military provides residents with a steady source of income and job security for workers in fields that cater to the military.
"I think we are a lot more fortunate than communities who don't have the impact of a significant military presence," Doug Peters, president of the Chamber of Commerce, said.
The housing industry should also get a boost over the next few years from the relocation of as many as 45,000 people to the region as part of the military's base realignment process, builders said.
"They've got to have housing," Greg West of H and H Homes said. "Food, clothing and shelter are essentials."
The region has not been immune to the nationwide mortgage and credit crises: home sales have been down about 10 percent from 2007. Statewide, however, similar markets have seen 40 to 50 percent declines.
West said he has seen the average sale price decline from around $250,000 to $175,000 over the past year. In response, builders are putting up smaller, more affordable homes, he said.
"We're trying to make sure we watch it closely and put the right product out there," West said.
Realtors and city officials disagree about the extent of foreclosures in Fayetteville. Realtytrac.com reports that 165 properties went into foreclosure in Cumberland County in August.
Kathy Wood, a real estate agent who specializes in selling foreclosed homes, estimated that the foreclosure rate is up about 25 percent and said that number is likely to grow more in 2009. However, city officials said that statistics from the city's Real Estate Division show no "significant increases" in Fayetteville.
Wood pointed out that the foreclosure rate is up to three times higher in the Triangle.
Wood said that foreclosures have begun to hit upper-income workers in expensive houses. Many of those homeowners had adjustable rate mortgages and couldn't make the higher payments when their rates increased.
Some foreclosures also stem from recently relocated homeowners who couldn't sell their homes in another state in order to complete purchases in North Carolina, Woods said.
Two-thirds of the 50 states were in a recession in August, according to the Moody's report.
Moody's definition of a recession was based on the one used by the Business Cycle Dating Committee of the National Bureau of Economic Research.