With home prices up, more people in the Midlands are renting, further driving demand (2024)

COLUMBIA — As home prices have increased rapidly throughout the Midlands, potential buyers are looking more and more towards renting, joining throngs of those already on the market.

Rent has gone up in Columbia an average of 1.2 percent since 2023, with the average rent sitting around $1,094, according to data from apartments.com. The increase has been higher in most other parts of the Midlands.

This increase is less than the hike in home prices for buyers. Home prices have continued to rise by an average of 2.5 percent from this time last year, according to data from the South Carolina Realtors association.

The median price for a Midlands home is sitting at $264,000, up from $256,000 this time last year. These high prices are joined by the high federal interest rates, hovering above 7 percent as of April 2024.

Rising interest rates, higher home prices and general population growth are driving up demand for rental properties, said Joseph Von Nessen, Research Economist at USC’s Darla Moore School of Business.

“You see more individuals who are substituting away from looking at buying a home and looking more at rental activity instead,” Von Nessen said.

But not all market professionals agreed.

“People are still buying houses,” Aiken-based McKinney Properties broker Chad McKinney said. “So when people are talking like that, the best thing for them to do is go ahead and buy a house and then if this streak drops back down, do what everybody else does … refinance.”

Homeownership vs. renting in Columbia and its suburbs

The homeownership rate in Columbia is 47 percent, compared to 72 percent in the state at large, according to data from the United States Census Bureau. The rate in Richland County is 63 percent.

The nearly 50/50 split in the Columbia market between homeowners and renters is unique, Karen Yip, realtor and owner of Yip Property Management Services LLC in Columbia, said.

The split can be attributed to Columbia’s still relatively affordable housing market in comparison to the national average, Yip said. In more expensive cities, renting is even more lucrative.

Columbia also has several demographics looking to rent independent of home prices – university students and recent graduates, military personnel, medical field transfers and recent transplants who have yet to buy a home, she said.

There are less renters in Lexington County, with 77 percent of residents owning their homes, according to Census Bureau data. There are more renters in West Columbia and Cayce, with homeowner rates in the upper 50 percent range.

Rent has gone up the most in the Lexington area, with average rent up to $1,289, an increase of 8.7 percent from 2023. Cayce and West Columbia have both seen rents increase 3 percent in the past year to $1,485 and $1,274, respectively.

Suburban and rural parts of Richland County also see more homeowners than renters, with the homeownership rate at 80 percent in Irmo and 82 percent in Blythewood.

Rent prices have gone up in Irmo to $1,364 on average. Prices have held more steady in Blythewood, where rent has remained almost unchanged at $1,239.

Rural renters face stiff competition for units

There are less renters in the outer markets of the Midlands region— Sumter, Aiken and Kershaw counties.

Prices have not increased as quickly in the smaller cities and rural areas in the Midlands market, and prices have generally remained lower than in suburbs closer to the Columbia core.

Average rent is down slightly in Aiken to $1,081. And prices are up slightly in Camden, Orangeburg and Sumter, where average rents range between $700 and $1,126, according to apartments.com.

While prices may be lower, property managers in these smaller markets said there is more competition for available units than ever.

“Lately, a unit probably stays vacant for maybe two or three weeks tops, and typically that's because we're having to have it cleaned and ready for a new tenant,” McKinney said.

Developers have not yet responded to the demand for units in rural areas outside of cities, he said.

“As far as from a tenant standpoint, everyone wants to find something out, away from the city, but there's not a lot of properties outside the city district,” he said.

These areas also appeal to renters who are looking for a more rural lifestyle, Yip said.

“I think for the rural properties, the draw of it is really somebody relocating to the area that is looking for privacy and space,” she said.

How does Columbia's market stack up with Greenville and Charleston?

The amount of renters in the Charleston market is similar to Columbia – both Charleston and Richland counties have a homeownership rate of 63 percent. There are less renters in Greenville County, where homeownership is at 70 percent.

Rents in both Charleston and Greenville are significantly higher than in the Midlands, at $1,716 and $1,216 on average, respectively.

Yip believes the 50/50 split in the Columbia core between renters and owners will continue unless home prices increase even more, she said.

Another limitation on the number of new rental units coming online in some markets is South Carolina’s higher tax rate on rented properties than owned residences, she said.

Yip does foresee an “oversaturation” of the rental market as more and more units come online – more than the new homes being built, she said.

Over 1,500 multi-family units were approved for construction in Columbia in 2022, with over 500 more approved in 2023, according to documents from the city.

“I feel that the rental market will continue to grow and will be strong,” Yip said. It's just probably going a little bit slower than it has in the past, because a lot of multifamily apartments have come online in recent years.”