The following blog was written for an online real estate company that connects home buyers and sellers to agents in their market.
Moving to beautiful Charleston, South Carolina, may be an easy decision, but deciding whether you should rent or buy a home once you get there will require extra thought. There are a lot of factors to consider, including your personal priorities, financial situation, future plans and the state of the housing market.
Questions to ask yourself when deciding which option is right for you include:
- How long do I plan to live there?
- How much money can I afford to pay out of pocket?
- Are there any family or job circumstances that may require me to quickly pack up and leave?
- How close do I want to live to the center of the city?
- Is customizing my home important to me?
In general, renting allows you more flexibility if you’re not looking for a long-term arrangement or if you’re unsure of what your future holds. Contracts vary and can often be signed month to month or renewed yearly. If your plans change, you can pack up and move without having to worry about selling a home.
Renting also requires less money up front, so if you’re concerned about immediate costs, renting may be more accessible than buying.
Let’s take a deeper dive into the factors that should come into play as you weigh which option is best for you.
Understanding the housing market
Charleston is known for having a consistently competitive housing market, meaning homes often don’t stay available for long. In fact, the average home is only listed for around 60 days, and “hot homes” — or homes that are expected to be the most competitive ones on the market — are typically under contract in around 42 days¹.
Due to this demand, prices are increasing over time, which could be a good or a bad thing depending on your situation. Higher prices may make your dream home out of the question, but homes increasing in value also makes buying a good investment, as those increases could turn into extra pocket change when you go to sell your home.
A competitive market also means that multiple buyers may put in an offer on the same house, which could cause the house to sell for more than it was originally listed. That’s where working with a seasoned, local realtor can be helpful, as you want to make sure you aren’t spending more than the house is worth.
Current home prices in Charleston
The current average sale price of a home in Charleston is around $375,000¹, which is relatively high when considering that the average list price for a home in the U.S. last month was $340,000². However, as with most major cities, the prices of homes vary depending on how close you live to the heart of downtown.
If you’re willing to take a 20-minute highway drive to get to the city’s core, then the area of Hanahan, which is slightly northwest of downtown Charleston, may be worth a look. The current average sale price for a house in Hanahan rings in at slightly under $323,000³, making it about $52,000 cheaper on average than buying a home in the Charleston city limits.
Prices in Charleston have increased 11.9%¹ since this time last year. The average home sells for about 2% under list price, including in areas like Hanahan, which means you should expect to pay close to the listing price if you want your offer to succeed.
Homes receive an average of two offers, and 17.6% of homes are selling for more than their listing price.
Weighing your upfront costs
Moving is expensive regardless of whether you choose to rent or buy, but it’s important to understand exactly what you’ll be paying in exchange for the keys to help determine what you can afford.
|Upfront costs of buying||Upfront costs of renting|
|Down payment (typically falls between 3% and 20% of the price of the home)||Security deposit (typically equal to one month’s rent)|
|Property taxes||First month’s rent|
|Insurance costs||Last month’s rent (this is often required upfront, but not always)|
|Maintenance costs||Pet fees|
|Moving costs||Moving costs|
|Utilities/activation fees||Utilities/activation fees|
Costs unique to buyers
Buying a home requires more money spent out of pocket, largely due to the down payment. Most loans require you to pay at least 20% of the sale price to avoid having to pay additional money for mortgage insurance, which protects the lender if you can’t afford your payments. Mortgage insurance costs typically range from 0.5% to 1.5% of the price of the loan.
If you bought a home at the median sale price of $375,000, a 20% down payment would be $75,000.
Home buying also comes with extra expenses that don’t apply to renters, including property taxes, any fees required by homeowner’s associations, and homeowner’s insurance. Luckily, South Carolina property taxes are low compared to the rest of the country, and they sit even lower in Charleston County at just 0.47%.
Because most areas in Charleston are prone to flooding, flood insurance is often required and can be expensive depending on the level of risk. Prices are based on which zone you’re in, as determined by the Federal Emergency Management Agency.
Buyers can also expect to shell out additional cash for initial maintenance and repairs to the home that the seller doesn’t agree to cover. Common maintenance items following a move include having the locks changed on your doors and replacing air and water filters.
Costs unique to renters
Renters may get out of paying homeowner’s insurance, but they’ll still need to pay renter’s insurance to protect the value of their belongings. Luckily, this only adds up to an average of about $15 per month.
For renters who plan to bring along their furry friends, many landlords require a one-time pet fee or monthly pet rent, which often equals several hundred dollars for a year-long lease.
Costs shared by buyers and renters
For both buying and renting, you’ll also want to factor in moving costs, such as renting a truck, hiring movers and paying for supplies such as boxes and packing paper. Costs will often be much higher if you’re moving across the country as opposed to an in-town move.
Monthly utility payments for things like internet, electricity, water, sewage and trash services also often apply to both renters and buyers, though utility costs are occasionally covered in a rental agreement. Some service providers charge an activation fee to begin service, and trash companies may charge a fee to drop off your bins.
Renting in Charleston
The average rent price in Charleston is currently hovering slightly above $1,400 per month, meaning you can expect to pay more than $17,000 over the course of a yearly lease.
While renting may cost less upfront, the monthly payments you make to your landlord disappear the second you hand them over. The money isn’t going toward owning your home, so you won’t be getting any money back when you leave except for your security deposit.
Renting has its benefits and drawbacks, as it can allow you to change locations more easily but can also restrict your freedom. Landlords may impose rules that limit things like the number of occupants who can live in the home or how long visitors can sleep on your couch.
|Pros of renting||Cons of renting|
|Short-term contracts can help you decide if you like the city or neighborhood before committing long term.||You can’t make aesthetic or structural changes to the home, and you often can’t even put nails in the walls.|
|When something breaks or storms cause damage to your residence, maintenance and repair costs are covered by your landlord.||Contracts can be strict, and the downfall of forgetting a rule can be costly during your move-out inspection.|
|The process is simpler — you won’t have to deal with loads of paperwork and negotiations with a seller.||You have no control over the fate of the home and could be forced to move if the home is sold or if the rent price rises beyond your budget.|
Another less obvious thing to consider before renting a home is whether your furniture will fit in the space or clash with the wall colors. If your existing furniture won’t work, you may have costs associated with buying new items or renting a storage unit where you can keep your extra belongings.
Buying in Charleston
While buying a home can be costly and risky since the value of your home may not always increase, being a homeowner also comes with its perks, including more freedom to make your space feel like home.
|Pros of buying||Cons of buying|
|You can work with a realtor (free of charge!), who can help you find exactly what you’re looking for.||The next time you want to move, you’ll have to buy and sell a home at the same time.|
|You have the opportunity to build wealth as your home’s value rises.||If you decide you don’t like your neighbors, commute or area of town, it will be trickier and likely more expensive to leave than if you were renting.|
|You have control over which companies tackle your maintenance projects, so you can ensure they’re done well and on time.||You may need to live in the home longer than you’d like to ensure you turn a profit or break even.|
Pride in homeownership is also real, and you’re more likely to form connections with your neighbors and your community when you’re financially and emotionally invested.
Plus, you can make all the changes to your home that you want, so you have an excuse to explore the deepest corners of Pinterest and binge HGTV remodeling shows.
The bottom line
Renting and buying both come with their own set of advantages and disadvantages, and making the right decision for you in your current stage of life will ultimately come down to your goals and your financial comfort level.
If you decide to buy, we recommend connecting with a local real estate agent who can help you navigate current trends in the market, direct you toward neighborhoods that fit your lifestyle and empower you with the knowledge you need to make informed decisions.