PRICED OUT AN OCCASIONAL SERIES

Two years of huge rent increases inthe already-expensive Charleston area have caused some tenants to take extra jobs, consider relocating to the rural edges of the suburbs or leave altogether for more affordable cities.

Stress-inducing monthly rates have radiated out from the pricey Charleston peninsula and Mount Pleasant to once-affordable places such as West Ashley, North Charleston and Summerville.

In September, according to Apartment List, the median yearly rent for an apartment in Ladson — some 20 miles from downtown Charleston — was $5,292 higher than it was two years earlier.

“I went in (to the rental office) today in tears,” said the Rev. Jo Anna Fallaw, a disabled single mother on leave from her work as a Methodist pastor. “I can see how someone could end up on the street.”

A rent increase and a slew of new mandatory fees have added hundreds of dollars to her monthly cost of living at an apartmen complex in Dorchester County near Summerville.

Fallaw said she’s been saving for a down payment to buy a home in a more affordable area, such as Cottageville, but rising rent has made that increasingly difficult.

“A few hundred dollars for a fixed-income single mom, that’s a lot to give up,” she said. “Now I feel stuck, and it just stinks.”

For years after the Great Recession, renters in most parts of the tri-county metropolitan area saw steady but manageable annual increases, and in 2020, when the COVID-19 pandemic hit, average rents briefly went down. That changed dramatically in2021 and 2022, a two-year period when rents jumped by 30 percent or more in Charleston, North Charleston and Mount Pleasant, and 22 percent in Summerville according to Apartment List’s database.

Rents have also jumped in Columbia and Greenville, but median rents in those cities are hundredsless each month than in the Charleston area’s large towns and cities, according to that data.

While cities around the nation have seen fast-rising rents, “renters will generally find more expensive prices in Charleston than most large cities,” said Apartment List’s October 2022 Charleston report.

Over the past 12 months, South Carolina saw a greater increase in rent (10.8 percent) than did the nation (7.5 percent), andrentsintheCharleston area grew even more.

Economists say soaring rents are a significant cause of inflation. Housing costs are a large component of the consumer price index, so rising rents account for a large portion of inflation calculations.

Robust job creation and low unemployment have created more demand for housing, straining supplies and driving prices up, and that’s even more the case in fast-growing metropolitan areas such as Charleston.

The tri-county area gained 137,515 residents from 2010 to 2020, according to the census reports, and has been adding about 20,000more every year — on track for a million residents by 2030. That demand is key to housing prices, but thereareother factors,aswell.

The rent was manageable

Retired teacher Peggy Sweeney moved from Florida less than three years ago to be closer to Charleston-area family and found a two-bedroom apartment she liked at The Charthouse on James Island.

“The rent was manageable, $1,300 or around there,” she said. “In three year’s it’s shot up to $1,700, and they’re saying at the end of the lease it will go up another $300.

“I have a pension and I still work part time to supplement, but this is ridiculous,” said Sweeney, 70. “When my lease is up I’llprobably move.”

Among the reasons for soaring local rents are:

The supply of housing has not kept up with demand driven by the area’s ongoing population growth.

A sharp increase in mortgage interest rates since 2021, combined with high prices and limited supply of homes for sale, have kept many would-bebuyers renting instead.

Large investors have bought many apartment complexes and tend to set rents as high as the market will bear.

In some towns and cities, hundreds or even thousands of rental properties are used asshort-termrentals for vacationers instead of housing residents.

The shift to remote work prompted people to want or need more space.

The Federal Reserve Bank of San Francisco in September published an economic research paper that concluded the huge increase in employees working from home has played a central role in housing costs.

“Analysis shows that the shift to remote work may account for more than half of overallhouse price increases and similar increases in rents,” a trio of researchers wrote.

Charleston-area business groups have become increasingly concerned. Both the Charleston Metro Chamber of Commerce and the Charleston Trident Association of Realtors supported a 2020 ballot measure that asked Charleston County voters to approve a modestly higher property tax to fund affordable housing efforts.

It narrowly failed .

“From aneconomic development point of view, housing is becoming a liability,” said Josh Dix, government affairs director for the Charleston Trident Association of Realtors.

He said wages have not kept up with the increases in rent and for-sale home prices, and people considering jobs in Charleston might decide they would be better off in a different popular city such as Austin, Texas, or Nashville, Tenn., or Greenville.All three of those cities have ongoing, multimillion-dollarefforts to create more housing people can afford, he noted.

In June, the Federal Home Loan Mortgage Corp., also known as Freddie Mac, published a report on which metropolitan areas homebuyers migrated to from other states from the time COVID-19 hit in early 2020 until February of 2022. Three South Carolina metro areas made the top-35 list in that report — Myrtle Beach, Columbia and Spartanburg — not high-priced Charleston.

Throughout the tri-county Charleston metro area, according to the Zillow Observed Rent Index, middlerange rents slowly increased from $1,229 inAugust 2015 to $1,459 in August 2020. Then they took off like a rocket, hitting $1,698 in 2021 and $1,963 this year.

Out of 566 metropolitan areas, just 83 had a higher rent than Charleston in the Zillow index. Zillow’s index uses a different methodology than Apartment List.

Craig Logan is leading a new Charleston Metro Chamber of Commerce effort to form a tri-county coalition to address housing costs.

“When you look at, say, economic development and bringing companies and organizations to the Low country, one of the number one things people want to talk about is housing and the affordability of housing,” he said. “When talented candidates do their research and find that it’s more expensive to live in Charleston than in Atlanta or other metro areas, it gets hard.”

Starting over, elsewhere

For Michael Close, the solution to soaring rent was to leave the Charleston area, where he had an apartment in West Ashley. He still works for a Charleston business, but he works remotely from the more-affordable Columbia area, where he was able to buy a house in the North Main Street area for $185,000.

He wasn’t happy to make that move after living in the Charleston area for a decade, but said a more than 40 percent rent increase this summer forced his hand.

“Personally, it feels like I’m starting over,” said Close, who works as a paralegal. “The saddest part was that my life was there, my network.”

Continuing to pay rent in West Ashley would have meant sacrificing financially, he said, and trading large purchases and travel for rent payments.

“To put it bluntly, it sucks,” he said.

Even before the two-year spike in rents, workers with moderate incomes were increasingly relocating within the Charleston area in search of more-affordable housing. Hospital staff, municipal and school employees, and food and beverage industry workers faced long commutes and added to the area’s traffic due to a lack of affordable housing near their workplaces.

Now, even once-affordable outer suburbs offer no escape. Close’s decision to move to a different city is one example of what business groups fear is to come. And unlike Close, Charleston-area police officers, classroom teachers and waiters can’t move to Columbia and work remotely.

$1,660 is a lot of tips

Bartender Brendan Murphy is a career food and beverage worker who moved to Mount Pleasant from Atlanta in 2015. At first, he was paying less than $800 to rent a onebedroom condo in Seaside Farms, but now he’s paying $1,660for a 500-square-foot studio apartment in that subdivision.

Murphy said he loves Mount Pleasant and being able to walk to shops in Seaside Farms, but his rent increased just this yearby $200, up nearly 14 percent.

“There was nothing gradual about it,” said Murphy, 60. “It was dramatic.”

“It’s a big deal,” he said. “For the first time since I’ve lived here — for the first time ever, really — I am considering leaving because it’s just too much.”

According to rent.com, Murphy’s rent is below average for a studio apartment in Mount Pleasant. The average studio apartment rent in the town was $2,100in October, according to the company.

That’s a great dealof money, particularly for a person living alone. For rent to be affordable, consuming no more than 30 percent of gross income, a tenant needs an annual income that’s 40 times the monthly rent.

However, many people spend 30 percent or more of their income on housing. In 2014, long before the recent run-up in rents, more than 52 percent of renters in S.C. and a larger share of renters in Charleston County were spending 30 percent or more of their income on rent.

Murphy said he figures he can make a good living tending bar until he’s 70, but that he needs to be careful with his finances, and renting in Mount Pleasant conflicts with that goal.

“There’s such demand to live here — I can’t tell you how many people I meetwho want to live here,” he said. “The fact that no new apartments are being constructed, it seems like rents are going to keep going up.”

That is a part of the problem, said Dix.

“Until we produce enough (rental housing) we’re not going to get prices in a stable environment,” he said. “We continue to have cranes in the air, and that’s what people see, but we don’t have the volume.”

Mount Pleasant, which was among the nation’s fastestgrowing cities in recent years, imposed strict limits on residential construction in2019 and has had a series of moratoriums prohibiting new apartment construction. The latest one runs into 2023, but amid the pushback against residential development, affordability in the state’s fourth-largest city has become an increasing concern.

“I don’t think my kids will ever be able to afford to live here, and that’s sad,” Councilman Jake Rambo said at a September Town Council meeting.

But rents and housing prices have also soared inneighboring citieswithno such restrictions on apartment construction, including Charleston and North Charleston.

There are, nationally, some hints that the spike in rent prices has hit a plateau. That would be good news for tenants, and good news about inflation.

According to RealPage Analytics, apartment demand nationally hit a record highin the third quarter of 2021, but in2022, demand went negative during the third quarter for the first time in 30 years.

That means more tenants moved out than moved in, and, as a result, asking rents fellslightly in September, the first time since 2020.

That doesn’t mean rents will decrease inthe Charleston area, but on a national level, big rent increases have stalled.

“We are starting to see conditions start to turn, a little bit,nationally and inCharleston,” said Chris Salviati, senior economist for Apartment List. “Unfortunately, I’m not seeing any signs in our data that rents are going to come down meaningfully.”

“I would not expect to see that happen unless we enter a recession, and even in that case I would not expect a reduction on the scale of the increases we have seen,” he said. “At a certain point, rents can only go up to the amounts people are able to pay, and I think we are maybe hitting that breaking point.”

Local governments are not allowed to “regulate in any way” rents charged in privately owned buildings in South Carolina, due to a 1985 state law forbidding the practice. So landlords can charge whatever the market will bear, and the Charleston area’s ongoing population growth has kept the demand high.

Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.

“Until we produce enough (rental housing), we’re not going to get prices in a stable environment. We continue to have cranes in the air, and that’s what people see, but we don’t have the volume.”

Josh Dix Government affairs director for the Charleston Trident Association of Realtors