Millions of people visit Charleston every year, and more than a few stick around. But residents new and old face an increasingly competitive — and potentially unsustainable — housing market.
More than 40 people move to the Lowcountry every day on average, according to census data. But the Charleston Trident Association of Realtors reported last week that the area’s inventory of residences for sale rose by just 50 homes in the month of May.
That’s great news for anyone trying to sell a house. Those looking for a new place to live, however, can expect to pay dearly.
CoreLogic, a California analysis firm, lists Charleston among the seven most overvalued real estate markets nationwide in a recent report. A market becomes overvalued, the report’s writers argue, when home prices rise at a much faster rate than an area’s median income.
Data from the latest Charleston Trident Association of Realtors home sales report confirm that trend.
The median price of the 1,457 homes sold in the Lowcountry last month stood at $235,000. That’s a nearly 11 percent increase over May of last year.
Suffice it to say that area residents, on average, did not enjoy a comparable increase in income. In fact, median household income has stayed relatively flat for the past decade, according to census data.
But unaffordable housing isn’t just a Lowcountry problem. A recent study by the National Low Income Housing Coalition calculated the hourly wage needed in order to afford rent for a standard two-bedroom apartment at fair market rates without spending more than 30 percent of income on housing. The results are shocking.
Even the most affordable state — Arkansas — suffers from an average price range well above most starting salaries, requiring earnings of nearly $13 an hour to make rent.
South Carolina’s needed hourly pay — $14.57 — stands at nearly double minimum wage. With higher prices in the Charleston area, Lowcountry residents need to earn more than $18, according to the report. That represents a serious concern for the local economy.
If tri-county residents routinely spend well over 30 percent of their incomes on housing, they end up with less money to spend, save or invest. And if rents continue to rise, the situation could worsen.
One solution involves encouraging homeownership over renting, since mortgage rates remain low and the robust Lowcountry housing market offers solid potential for return on investment.
But high demand can push desirable parts of town out of reach for young people and new families. And young adults struggling with student loans, car payments and other debts may not be able to afford a decent down payment.
To that end, the city must also work to create a more affordable rental market. Generally, that means increasing the stock of available rental properties.
Of course, new development brings the risk of other problems like increased traffic and loss of green space. But thoughtful planning can mitigate those impacts significantly.
Some kind of planning will be required one way or another, since living in Charleston seems unlikely to become less desirable anytime soon. The only question will be whether residents can afford it.