The price of homes across South Carolina continues to rise, but not as much as the price nationally, and a moderate increase is expected in 2018.
Home prices rose 4.7 percent in 2017 in the Palmetto State. That compares to a 7 percent jump across the nation, driven mainly by a scarcity of available homes amid high demand and low interest rates.
The median price in the state is $188,500, according to the Columbia-based S.C. Realtors Association. The price varies greatly by region, especially in the bigger markets.
Among the state's major metropolitan areas, the median price ranges from $160,000 in the Midlands to $250,000 in the Charleston region. Greenville and Myrtle Beach fall within that range, with both posting median prices below $200,000 through November.
The new year is expected to bring higher home sales and higher prices, said Nick Kremydas, CEO of S.C. Realtors.
"South Carolina's economy is growing and continuing to add jobs, and mortgage interest rates will remain near historic lows," he said. "The real drag is inventory. Tight inventory will remain tight, despite increases in new construction. This ongoing inventory shortage will result in home prices continuing to increase as well."
Higher prices and local government anti-growth policies are creating housing affordability issues in many areas of the state, forcing service industry workers such as teachers, police officers and fire fighters to live farther away from the communities they serve and contributing to sprawl, Kremydas said.
"Growth plus tight inventory plus higher prices plus tax and regulatory barriers equal housing crisis? Not in 2018," Kremydas predicted. "But South Carolina may have to face this possibility sooner rather than later."
Coastal communities from the Grand Strand to Hilton Head still command higher prices as retirees and job seekers relocate to cities near the state's beaches.
The higher cost to buy a house in Charleston comes from simple supply and demand. With high-profile, large-scale employers such as Mercedes-Benz and Volvo Cars setting up shop in the region, job seekers are flocking to the area, driving up the need for housing. Add that to retirees seeking coastal charm in a food town filled with tourists and home builders wary of adding too much supply, and the conditions are ripe for higher prices.
Home prices in the Midlands were only slightly higher for the past year, but they are more stable since state government and higher education form the backbone of the Columbia-area economy.
"We have had a good year, but the sales are not as dramatic as they have been in other parts of the state where we have heard about bidding wars," said Laura Derrick, an agent with Coldwell Banker in Columbia and the new president of S.C. Realtors.
Derrick pointed to housing stock in the Midlands as being "very, very low," but she also noted that homes listed above $500,000 didn't sell as well as they did in 2016.
She believes some upscale buyers were waiting to see what happened with tax reform before diving into a new purchase.
In a sign of a strengthening Midlands market, Derrick said building permits were up in November and December. Home builders now construct houses to meet demand instead of overbuilding like they did before the last recession. That's contributing to the dearth of homes on the market, but a jump in building permits is a sign of more product coming to market, which could help to stabilize prices.
From a statewide perspective, Derrick said Charleston, Greenville, Rock Hill and Myrtle Beach have performed well this year in home sales.
"It's been a good year overall," she said.
In Myrtle Beach, home prices marched steadily higher during the past three years and were up 4.2 percent in 2017, but there hasn't been as much decline in inventory as some other parts of the state, such as Charleston.
"Homes are sitting on the market for a much shorter period of time," said Angela Fabbri, marketing and communications director for the Coastal Carolinas Association of Realtors.
"Looking ahead, we continue to feel things will be positive," Fabbri said. "This market is booming in terms of growth. We are not fearing the so-called ominous bubble. We don't see any indicators of that. Everything is steady and doing well."
In Charleston, home prices were up 4.2 percent for the year and are expected to continue at about that rate in the new year. That's about the same pace as the national projection, according to property information service CoreLogic.
Depending on where buyers are looking, the price jump could be higher in the Charleston area, according to Michael Scarafile, president of Carolina One Real Estate, the region's industry leader in home sales.
In Mount Pleasant, where median home prices are already above $400,000 and there are calls to limit further growth, a two-month supply of inventory is available that will drive prices higher, Scarafile said.
A balanced stock of homes on the Charleston market is about a six-month supply.
On the lower end of the home price market, lack of inventory will push prices higher in areas such as Summerville while high-priced abodes will see less dramatic rises because there is more upscale product to choose from, Scarafile said.
The local home-buying market remains strong, but he cautioned against comparing a possible record in home sales in 2017 to 2005, when more homes sold in the region than any other year. That was two years before the housing market crashed and the Great Recession set in.
"We don't see any warning signs or things that concern us like last time," Scarafile said. "At this point, we still have very strong demand, and inventory is being absorbed as it comes on the market."
Mortgages are more affordable with lower interest rates than before the last recession, and money is available with proof of qualification for a loan.
"The good thing is, if you climb up a mountain and fall off the side and climb up again, are you going to do it again?" Scarafile said. "We now have a taller mountain that's broader than last time."