The Charleston Real Estate Market: Investment Insights For 2021

Realtor.com predicted last year that Charleston would be a top real estate market as buyers searched for affordable alternatives to larger, more congested cities. The forecast for a strong real estate market in Charleston turned out to be accurate, as the Charleston real estate market continues to break records month after month.

The housing market in Charleston is projected to be among the top ten in the U.S. for the next several years. According to the Charleston Regional Business Journal, reasons behind the strong performance of the Charleston real estate market include relatively affordable housing, consistent job growth, and solid local economic expansion. 

Charleston is also ranked by BiggerPockets as one of the top seven best cash flow markets in the country, with low unemployment and double-digit population growth helping to generate potential gross rental yields of nearly 10%.

Founded back in 1670, Charleston is located on Charleston Harbor, along the Atlantic Ocean in South Carolina. The city is in the middle of South Carolina’s Lowcountry, a mostly flat region with some rolling hills that extends south to Savannah and north to Myrtle Beach. Charleston is rich in history, having played pivotal roles in the American Revolution and Civil War. 

The economy in Charleston is as diverse as the city’s history, with industry sectors such as manufacturing and transportation, tourism, and technology helping to drive the job market and employment growth in the Charleston-North Charleston Metro area.

Keep reading to learn why Charleston, South Carolina has been featured on several lists as a real estate market to keep an eye on for investment in 2021 and beyond.  

>>Explore Roofstock's Charleston Investment Properties here.

 

Population Growth

Two age groups at both ends of the demographic spectrum are driving population growth in Charleston and the entire state of South Carolina. Baby boomers are coming to the region for the climate and high quality of life, while Millennials are attracted by the fast-growing economy and employment opportunities in Charleston.

Key Population Stats:

  • City of Charleston is home to over 137,000 residents with more than 802,000 people living in the Charleston-North Charleston Metro area.
  • Metropolitan area consists of Berkeley, Charleston, and Dorchester counties.
  • Last year the population of Charleston-North Charleston grew by 1.5%, while over the last couple of years more than 4,200 people moved to the region.
  • Population growth in Charleston was 18.5% between 2008 and 2010, growing nearly 2X as fast as South Carolina and 3X as fast as the U.S. average.
  • In fact, each day 26 new people move to the Charleston Region.
  • Over the next 10 years the population of the Charleston metro area is expected to grow by more than 25%.
  • Median age in Charleston is 34 years vs the state median age of 39.

 

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Job Market

The population boom in Charleston is also helping to fuel the tech scene in Charleston, according to VentureBeat. Entrepreneurs and venture capitalists coming to this affordable coastal hub are helping to mold Charleston into an emerging location for high technology startup activity.

As the economy in Charleston continues to recover, the BLS reports that employment sectors including construction, manufacturing, information services, and professional and business services are showing the fastest signs of rebounding.

Key Employment Stats:

  • GDP of Charleston-North Charleston is nearly $45.6 billion, according to the Federal Reserve Bank of St. Louis, and has grown by nearly 75% over the past ten years.
  • Job growth in Charleston was 1.3% last year while median household incomes increased by nearly 6.2%.
  • Unemployment in Charleston is just 4.0%, as reported by the U.S. Bureau of Labor Statistics.
  • Target industries in Charleston-North Charleston include aerospace, automotive, info tech, life sciences, and logistics.
  • Largest public sector employers in the Charleston region are Joint Base Charleston military facility, Medical University of South Carolina, and Charleston County School District.
  • The Boeing Company, Roper St. Francis Healthcare, Trident Health System, and Walmart Inc. are some of the largest private sector employers in Charleston.
  • Biggest manufacturing employers in Charleston-North Charleston include KapStone Charleston Kraft LLC, Cummins Turbo Technologies, and Detyens Shipyards, Inc.
  • Medical University of South Carolina, The Military College of South Carolina, and the College of Charleston are three of the major colleges and universities in Charleston.
  • 90.9% of the Charleston residents have a high school degree or higher, while 37.5% hold a bachelor’s degree or advanced degree.
  • Interstate highways I-26 and I-526 are two of the major highways in Charleston.
  • CSX and Norfolk Southern both operate freight rail yards in the Charleston region.
  • Port of Charleston is part of the South Carolina Ports system and handles about 22% of the port system’s total container volume.
  • Charleston International Airport (CHS) is the busiest passenger airport in South Carolina, handling more than 4 million passengers annually.

 

Real Estate Market

Home sellers in the real estate market are regularly receiving multiple offers due to an inventory shortage combined with amazing demand for homes in Charleston. 

According to the Charleston Regional Business Journal, the number of buyers in the market keeps growing and there are no signs of a slow down. In fact, the majority of properties that come on the market are selling in less than a month.

Last year, Charleston-North Charleston was predicted to be one of the top 10 hottest housing markets in 2020, according to a recent article in Forbes. That’s turned out to be absolutely true. The region’s high quality of life, strong economy and growing job market are drawing both employers and residents to the market.

Buy-and-hold investors should note that Charleston-North Charleston should be a good market to invest in over the next several years. Another report from Charleston Regional Business Journal projects the Charleston housing market will remain in the top 10 for the next three to five years.

Key Market Stats:

  • Zillow Home Value Index (ZHVI) for Charleston is $348,052 through November 2020.
  • Homes values in Charleston increased 5.8% year-over-year and are projected to grow by another 10.3% in the next 12 months.
  • Over the past five years home values in Charleston have increased by more than 26%.
  • Median listing price for a home in Charleston is about $325,000 based on the most recent report from the Charleston Trident Association of Realtors (Nov. 2020).
  • Inventory of homes for sale in Charleston has decreased by nearly 52% year-over-year.
  • Months supply of inventory in Charleston is 1.5 months, which is a 61.5% decline from the same time last year.
  • Median sales price of a home in Charleston is $319,000.
  • Sales-to-list price ratio is 97.8%, which means that on average homes for sale in Charleston are selling for the full asking price.
  • Of the 66 neighborhoods in Charleston, South of Broad is the most expensive with a median listing price of $1.8 million, according to Realtor.com.
  • Most affordable neighborhood in Charleston for buying a home is Creek Point where the median listing price is $229,900.


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Strong Renters’ Market

Charleston is one of the best markets for renters, according to recent research by WalletHub. The Charleston rental market receives high ratings for activity in the marketplace, affordability of rental housing in Charleston, and a great quality of life.

Another reason for the strong demand for rental property in Charleston-North Charleston is due to the consistent imbalance between demand for housing and supply. 

As the Charleston Regional Business Journal recently reported, the Charleston region needs about 7,500 new housing units to keep up with population growth but hasn’t reached that level of construction since 2006. As a result, more people are renting where they live, even though the market is relatively affordable to buy in.

Key Market Stats:

  • Median rent in Charleston is $1,889 per month vs. $1,749 per month for the Charleston-North Charleston Metro area.
  • Rents in Charleston increased by an average of 6% over the past year, according to RENTCafé.
  • 57% of the housing units in Charleston rent for between $1,001 and $1,500 per month.
  • 39% of the households in Charleston are renter-occupied.
  • Neighborhoods in Charleston with the lowest rents include Four Mile Hibernian, Rosemont, and Air Harbor – Geddes Hall where rents range between $1,079 and $1,098 per month.
  • Neighborhoods in Charleston with the highest rents include Downtown Charleston, Harleston Village, and South of Broad where rents average $2,216 per month.

 

Historic Price Changes & Housing Affordability

Two data points that real estate investors often review when deciding which markets to buy rental property in are the historic changes in home prices and the affordability of housing in a specific area.

The historic rise or fall in home prices can provide an indicator of the potential for future price changes over the long term, while housing affordability is one indicator of how strong or weak the demand for rental property may be. 

Each month Freddie Mac releases up-to-date data on the change in home prices for all markets across the U.S. The most recent Freddie Mac House Price Index (FMHPI) report for the Charleston-North Charleston, SC MSA reveals:

  • October 2015 HPI: 168.04
  • October 2020 HPI: 235.90
  • 5-year change in home prices: 40.4%
  • One-year change in home prices: 8.9%
  • Monthly change in home prices: 1.0%

The Housing Affordability Index (HAI) from the NAR (National Association of Realtors) measures how affordable buying an existing single-family home is for a family earning the median income in an area. The NAR assumes that a family will use a conventional loan with a 20% down payment to purchase a home. 

However, the affordability index doesn’t consider factors such as whether or not the family has money for a down payment, or lifestyle preferences such as many millennials choosing to rent rather than own, even if they have the financial resources to buy.

Based on the NAR’s latest report, the HAI for the Charleston-North Charleston MSA was 141.1 in 2018, the most recent year available. This means that the median family has a little less than 1.5 times the income needed to purchase a median priced, single-family resale home in the Charleston metro area.

 

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Quality of Life

There’s something for everyone in Charleston, South Carolina. The city is a blend of well-preserved historic buildings and modern new development. Lively nightlife venues and cutting-edge art galleries share cobblestoned streets with churches dating back to the Revolutionary War, earning Charleston the nickname “The Holy City”.

Key Quality of Life Stats:

  • Forbes ranks Charleston as the 24th best place in the country for business and careers, with high rankings for job growth, education, and the cost of doing business. 
  • Charleston is ranked #16 by WalletHub as the best city to find a job.
  • USA Today has described Charleston as a “millennial magnet”, according to the Charleston Regional Development Alliance
  • Niche.com gives Charleston an “A” grade for quality of life, with strong ratings for diversity, nightlife, family living, housing, and public schools.
  • U.S. News & World Report ranks Charleston as the 42nd best place to retire and the 27th best place to live in the U.S., reporting high rankings for net migration, desirability, job market, and quality of life.
  • Climate in Charleston is humid subtropical, with mild winters and hot humid summers and plentiful rainfall all year long.
  • Taking a Charleston Harbor Tour, going to nearby Folly Beach, and taking a horse-drawn carriage ride are just a few of the fun things to do and see in Charleston.
  • Charleston dates back to the Colonial era of 1670 and is home to historic sites, museums and attractions such as the Calhoun Mansion, Patriots Point, and Charleston Museum.
  • MUSC Health-University Medical Center and Roper St. Francis are ranked among the best hospitals in the Charleston metropolitan area.
  • Sports teams in Charleston include the South Carolina Stingrays, Charleston RiverDogs minor league baseball team, and the women’s Lowcountry Highrollers roller derby league.

 

Get Out the Map

Where to begin your search? Roofstock created a heat map of Charleston based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.

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DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood

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Jeff Rohde

Author

Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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