Real Estate News

Beaufort County's housing crisis worsens as rents rival Houston, Atlanta and major cities

What can $1300 a month in rent get you in Bluffton, Beaufort or on Hilton Head?

How does housing compare across Beaufort County? Here's what a monthly rent of $1300 can get you in Bluffton, in Beaufort and on Hilton Head Island.
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How does housing compare across Beaufort County? Here's what a monthly rent of $1300 can get you in Bluffton, in Beaufort and on Hilton Head Island.

Since Joe Pribelsky moved to Beaufort County two years ago, he's been on a constant hunt for affordable housing.

Pribelsky, 29, lived in three rentals before landing in an unlikely place — an apartment with two women in their 50s in Yacht Cove on Hilton Head Island. For his bedroom and shared living space, he pays $550 in rent.

Still, it takes working two jobs as a line chef to make ends meet. And most of his income goes toward rent.

“When you’ve got $900 in bills, it only leaves a little to go grocery shopping for yourself and getting the essentials like new work shoes,” he said.

During the past five to 10 years, the cost of rental units in Beaufort County has risen to rates that rival major metro areas across the country, including Charleston, Atlanta, Houston and Seattle.

In Hilton Head's 29928 ZIP code, which covers Sea Pines and the island's other beachfront neighborhoods, the median cost of rent is now $1.33 per square foot, according to an analysis of listings on the popular classifieds website, Craigslist, in December and January. By comparison, Charleston and Seattle's average rent was $1.36 per square foot, Houston was $1.03 and Atlanta $0.74, according to a 2016 study by the University of California Berkeley that analyzed two months of listings.

Although Hilton Head rents have risen most steeply, rental rates from Bluffton to Lady's Island to Beaufort — and everywhere in between — are experiencing surprising increases, too.

From 2011 to 2016, average rental rates for all types of housing rose by about 49 percent on Hilton Head, 31 percent in Bluffton and more than 12 percent across northern Beaufort County, according to the real estate websiteZillow.

It's a boon for those who own houses and villas they're willing to rent out long term for six months or more.

In January, Robert Rini listed his three-bedroom, 1,200-square-foot beach house in Hilton Head's North Forest Beach neighborhood for $2,200 per month.

"My friends said 'You’re crazy to ask that for a beach shack,' " Rini said. But within two days, he had the house rented, and shortly after, he sold it.

Joe Pribelsky works in the kitchen at Watusi Cafe on Friday, March 9, 2018, on Hilton Head Island, before heading to his other job as a saute cook at ELA'S Blu Water Grille. Delayna Earley

More seniors choosing to rent on Hilton Head

Hilton Head rents are among some of the highest in the nation, partly because so few long-term rentals exist, said Robert Rini, a real estate agent with Remax on the island.

A haven for owners of second homes who spend a few months of the year on the island and vacationers seeking rental homes for a week or two, long-term rentals have always been in short supply.

But recent changes have further eroded the island's offerings.

A growing number of seniors are shedding the baggage of homeownership and choosing to rent instead, said Manesitis, who has noticed the supply of rental units dwindling in the past four years.

"We’re seeing a lot more (lease) renewals and a lot longer leases," he said. "People are starting with two- to three-year leases instead of one year."

Additionally, more than a decade of Act 388 is taking a toll, said Henri Kirsten, owner of Miller Long Term Rentals. The controversial 2006 state law shifted the tax burden of paying for school operations to owners of second homes, rental properties and businesses.

"Owners of investment properties are highly penalized in the way property taxes are calculated," Kirsten said. "Non-primary residents pay nearly three times the amount of property taxes primary residents pay.

"What that does is over time, owners realize the (rental) property is a liability, not an asset. It adversely affects the inventory in the whole rental market," he said.

The situation means competition is fierce for an affordable rental unit.

A day doesn't go by when Manesitis doesn’t get a call from someone looking for an apartment under $1,000.

"The day I do get one like that, I'll get five different people interested in picking it up," he said. "It just doesn’t really exist here, and if it does, there’s more demand for it than you can even imagine."

Despite the need for conventional apartments and workforce housing, developers in southern Beaufort County are primarily building profitable retirement, high-end resort and luxury housing.

For example, the 240-unit luxury apartment complex at Shelter Cove Towne Centre, WaterWalk, is set to be finished this spring and will be first large-scale apartment complex to be built on Hilton Head Island in years.

But a one-bedroom starts at a little more than $2,000 a month, so many people searching for a place to rent won't be able to afford it.

Since the U.S. Department of Housing and Urban Development advises that households should spend no more than a third of their income on housing and utilities, renters would need to earn an annual salary of more than $80,000 for a one-bedroom unit at WaterWalk.

Bluffton's popularity, pricey impact fees limit rentals

As more shops, restaurants and other businesses have moved into Bluffton in the past decade, the demand for rentals has risen significantly, said Brian Tierney, owner of ForShore Rentals.

"People who would have never considered it (moving from Hilton Head to Bluffton) before are now entertaining the idea," Tierney said. "They’re starting to see this as a viable option where they can live and work and don’t have to commute."

Tierney manages about 260 properties — condos, houses and townhouses— in Bluffton and Hilton Head.

When it comes to renting a home in Bluffton, Tierney said rental rates can be expensive because many of them are new homes purchased by soon-to-be retirees.

"In the past, investors were primarily renting out houses. But now we’re seeing people buy a home, rent it for a year and then move into it," he said. "It’s the baby boomer deal."

A lot of the new homes are accompanied by pricey neighborhood association dues, so owners must charge higher rents to cover their costs, Tierney said.

"People don’t usually think of rentals as never being touched before" because they're brand new, he said. "But as a result, there’s a demand for them, and it’s often a competitive demand."

Housing experts say Bluffton and the county overall need more apartments, which offer affordable living for the middle class.

In the Bluffton area, less than 5 percent of apartment units are vacant, according to property data from the commercial real estate information company, Costar.

"Generally speaking, if a developer looks at a market and all of the projects are over 95 percent occupied, they view that as an opportunity, because they know there's probably very good demand for additional supply in that market," said Tom DeMint, a commercial real estate broker with SVN Real Estate.

But high impact fees, water/sewer capacity fees and a low supply of sites zoned for high-density development stand in the way.

In 1999, Beaufort County enacted impact fees — costs developers must pay to help fund roads, fire service, libraries and parks. Today, Bluffton developers must pay nearly $5,000 per apartment unit. In Hilton Head, it's about $2,500, and in Port Royal, it costs less than $1,000 per unit.

Bluffton's pricey impact fees, along with water and sewer capacity fees, stopped developers from building apartments for nearly 10 years, according to DeMint. In the past year or so, developers have started to return to the area because rents finally have risen enough to warrant paying the high fees, he said.

"Essentially (County) Council unwittingly created a housing shortage in Bluffton because you had a lot of growth in Bluffton, but the rents weren’t high enough to justify paying the land costs, impact fees, water/sewer capacity fees and construction costs. So nothing (as far as apartments) got built," he said.

To avoid those fees, developers went just over the county line to Jasper County and built apartment complexes such as Brooke Mill Apartments and Courtney Bend on Argent Boulevard.

On Hilton Head Island, DeMint has run into a different issue, but one that is just as difficult to tackle: a lack of sites zoned for high-density development

Most three-story, garden walk-up apartments in South Carolina are built on properties that allow 12 to 16 units per acre, according to DeMint. But on Hilton Head Island, most properties are zoned to allow only four or eight units per acre, he said.

"There’s no shortage of quality developers who want an opportunity to develop on the island. The problem is finding an appropriate site because they’re very difficult to find," DeMint said.

Historically, it has been difficult to get higher density residential zoning on Hilton Head, so DeMint and other commercial brokers are going to need help from the town in order to get anything done, he said.

Wanted in Beaufort: Rental homes for families, retirees

While a $1,300 monthly rental payment gets a studio apartment on Hilton Head, the same amount pays for a three-bedroom house in northern Beaufort County.

Stacee Krasinski and her boyfriend Bobby Miller live with their daughter Mara in a mobile home in Burton. Submitted

The cheaper rates are attracting families to Beaufort, including Stacee Krasinski, 36, who lives with her boyfriend and 5-year-old daughter in a mobile home in Burton.

The home was a good fit when the couple moved in seven years ago, but with the addition of a child and two dogs, they need more room, Krasinksi said. The couple has searched unsuccessfully for more than two months for a rental home in Beaufort.

"There are very (few) places to rent. Everything seems to be geared toward the rich or doesn’t accept dogs," Krasinski said. "We want to expand for our family, but that’s not looking like it’s going to be possible."

Experts in northern Beaufort County say the construction of apartments has helped alleviate some demand in the rental market, but most retirees and families are looking for a home or a townhouse, which are lacking.

The current demand for rental units is the highest Lura Holman Macintosh has ever seen. Macintosh, the property manager in charge at Palmetto Shores Management, has been working in northern Beaufort County for 30 years and currently has just one vacant rental out of her 100 condos and homes.

As the economy has recovered from the Great Recession, more homeowners are taking their properties off the rental market and selling them, she said.

"I lost a lot of great properties in 2017," she said. "The owners were not going to move back into them, so when the economy started getting better, they decided to sell."

Kristi Cline, property manager at For Rent In Beaufort, said she can’t keep up with the rental market. Of the 60 family homes she manages, not one is vacant.

"I can tell you that we have a shortage of rentals. We need more," Cline said. "If a house goes on the market today, it will be rented today. The rental market is really strong right now."

Cline said her clients primarily consist of retirees, young military families and those who are not in a financial position to buy in the wake of the 2008 housing market crash.

Similar to the sentiments expressed in southern Beaufort County, Cline said retirees moving into the area are a major cause of the rising costs of rent in the Beaufort area.

"I get phone calls every day from older retiree couples, who want to move to Beaufort and want to rent," she said. "I think that is one of the main reasons why rental rates are going up, because they’re able to afford a little more than other people like the military and the younger professionals."

Beaufort Mayor Billy Keyserling, who spent more than 25 years as a real estate broker, said Beaufort County is part of several national trends: younger generations shying away from homeownership, retirees looking to shed mortgages and rent instead, and people who must rent because they don't qualify for home loans following the recession.

"There are way more renters in the market than when I was involved 10 years ago," Keyserling said. "Renting has become more of the norm, and as people who could afford to buy decide to rent, that just puts more pressure on the market."

‘A foundation for a community’

The county's rental rates are rising at a pace that far exceeds salaries.

From 2013 to 2016, wages for the county's educational and health services employees rose by 8 percent and wages for recreational and hospitality workers rose by 10 percent. Meanwhile, the cost of rent in southern Beaufort County and some northern areas of the county grew by double that.

The growing gap between median income and rental rates means many young professionals and working-class families are finding it difficult to live where they work.

Over the past three decades, Beaufort County and the local municipalities have produced dozens of reports, action plans and studies to find solutions for the lack of affordable housing.

Although some progress has been made, most officials feel as though they still have a long road ahead of them.

Angela Childers, director of the Beaufort County Housing Authority, said the community members in need of affordable housing differs in each area of the county, but the demand remains strong across the board.

The authority provides subsidized housing to about 1,000 families per month, but that number is small compared to those waiting for assistance.

Every two to three years, the Housing Authority accepts new applications for its voucher program, which provides low-income families with a subsidy to secures a rental property. Last November, the authority accepted more than 900 applicants in one week, creating a wait list for the program of nearly 1,000.

"Something as simple as stable, affordable housing can be a foundation for a community," Childers said.

In spite of nearly two years of paying rent above his affordable level, Pribelsky says that moving to Hilton Head was one of the best decisions of his life.

"I love it here. I think this is a great move for me, personally, lifestyle-wise and career-wise," he said.

But like so many other young people who move to the island for a position, he imagines he can’t stay forever. When his girlfriend finishes graduate school in December, he knows he will be forced to move yet again.

"Trying to get a house or apartment on island seems almost impossible for us," he said. "We might be looking to move elsewhere just so we can afford a two-bedroom apartment instead of being crammed up in a studio or flat."

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