Note: Our market forecast includes Charleston data and data from its surroundings, including North Charleston.
A leisurely walk through Charleston's downtown historic district takes visitors back in time, with the city's old-world charm and blend of architectural styles. Routinely named one of the top travel destinations in the world, Charleston has a rich history, world-class cuisine, sandy beaches, and so much more.
However, unlike many vacation spots where travelers only come for a week and then return, Charleston's allure has a growing number of visitors choosing to make it their permanent home. The city's population growth has enhanced its appeal to real estate investors.
Here's a closer look at the local Charleston real estate market.
Why consider Charleston for real estate investing?
Nestled in South Carolina's Lowcountry region along the Atlantic Coast, Charleston has a rich history. Founded in 1670 as Charles Town in honor of King Charles II, the city became a major trading port and was once one of the largest cities in North America. The importance of its port made Charleston a key maritime battleground in both the American Revolution and the Civil War.
While Charleston's port remains a key economic driver in the region -- it handles about 22% of South Carolina's port system's total container volume -- the city has a diverse economy that has grown briskly in recent years. Its GDP has surged 75% over the last decade, according to the Federal Reserve Bank of St. Louis.
As a result, Charleston rates high for job growth and overall business climate. Add that to the city's high quality of life, thanks to its rich history and warm weather, and it has been a magnet for millennials and baby boomers in recent years.
Overall, Charleston's population has grown three times faster than the national average and double South Carolina's growth rate. That upward trend should continue over the next decade, with forecasters predicting that the city will expand by another 25% by 2030. As a result, housing demand should remain robust in the region, making it an ideal location for real estate investors.
The state of the market
The Charleston real estate market remained strong in 2020 despite the impact of the COVID-19 outbreak on the city's hospitality and tourism sector. South Carolina quickly reopened much of its economy after the initial wave and didn't restrict indoor dining or other activities during subsequent waves.
Meanwhile, in-migration to the city continued as the region's economy barely skipped a beat, leading to a below-average unemployment rate. On top of that, retirees and remote workers also kept moving into the region because of its warmer weather, high quality of life, and affordability. As a result, inventory remains low, causing home prices to continue climbing.
Here's a quick snapshot of three important real estate trends for the Charleston market.
Unemployment is low
In January 2021, Charleston's unemployment rate was 4.3%. That's a slight increase from its pre-pandemic level. However, it's well below the national average and much improved from its peak during the initial days of the COVID-19 outbreak. The city benefits from a diversified and overall stable economy thanks to a significant employment base in the healthcare, military, and aerospace sectors.
The housing market is tight
Housing inventory in Charleston remains low at less than three months' worth. The region's housing inventory entered 2021 at a 20-year low. It had only about a quarter of the housing inventory needed for a balanced market. As a result, home prices have continued to rise.
Rentals are abundant
While Charleston lacks single-family housing inventory, the region has a glut of rental units. As a result, its vacancy rate is well above the national average, while the average rental rate is below average. That's due to a significant amount of multifamily development in recent years; the transient nature of some residents, as Charleston has high student and military populations; and a higher number of short-term rentals serving the tourism industry.
Charleston housing demand indicators
All data and charts supplied by Housing Tides by EnergyLogic.
As noted, the Charleston market is strong, as evidenced by the following key housing demand indicators.
Charleston's unemployment rate has been below the national average for several years. While it spiked during 2020 as a result of the pandemic, it quickly recovered, even though the city has a significant number of hospitality-related jobs due to the importance of the tourism industry to its economy.
While some restaurants permanently closed because of the pandemic, South Carolina's government quickly reopened its economy, allowing many restaurants to operate at near capacity for much of the past year. As a result, tourists continued to visit the region, keeping its hotels occupied and its restaurants busy.