SC has a more overvalued housing market than CA and NY, new study shows. Here’s why

South Carolina has the fourth most overvalued housing market in the U.S. this year, a new study shows.

According to the analysis from Moody’s Analytics, South Carolina home prices are 37.33% over their fundamental value. Higher than 10% is considered overvalued, while 20% higher is considered extremely overvalued, the analysis states.

In comparison, the study estimates that national median home prices are about 15.7% above their fundamental value. Meanwhile, markets in states like California and New York are deemed undervalued — with California at at -1.81% and New York at -1.65%.

But why is this the case?

Why SC housing market is overvalued

The analysis considers factors such as household formation rates, construction costs and where home prices stand compared to median incomes. Over the last couple of years, home prices in South Carolina have continually skyrocketed, far outpacing income.

According to Redfin, the median home sales price is currently $370,500 in South Carolina, up 3.2%, year-over-year.

A recent analysis by Redfin shows that in a city like Charleston, a resident would need to earn $112,231 a year to afford a home in 2023 — a 17.9% jump from a year ago.

According to current U.S. Census data, $58,234 is the median household income in South Carolina.

And while housing prices have jumped in other states too, such as California, income growth has kept up at a relatively better pace than in states like South Carolina, the Moody analysis shows.

10 states with most overvalued housing markets

1. Idaho: 41.87%
2. Tennessee: 40.81%
3. North Carolina: 37.66%
4. South Carolina: 37.33%
5. Georgia: 32.92%
6. Indiana: 32.39%
7. Arizona: 30.08%
8. Nevada: 29.79%
9. Hawaii: 29.63%
10. South Dakota: 29.02%

10 states with most undervalued housing markets

1. Maryland: -9.17%
2. California: -1.81%
3. New York: -1.65%
4. Illinois: -0.78%
5. Alaska: 2.37%
6. West Virginia: 3.79%
7. Pennsylvania: 4.74%
8. Delaware: 5.26%
9. Mississippi: 6.54%
10. Connecticut: 6.92%

10 SC metros with fastest growing median home sales prices

1. Litchfield Beach: $540,000/ 44% year-over-year
2. Bluffton: $620,000? 35.1% year-over-year
3. Beaufort: $395,000/ 31.2% year-over-year
4. Fort Mill: $640,000/ 29.8% year-over-year
5. Charleston: $589,990/ 20.1% year-over-year
6. Red Hill: $321,000/ 19.4% year-over-year
7. Fountain Inn: $368,450/ 18.9% year-over-year
8. Five Forks: $515,000/ 14.8% year-over-year
9. North Augusta: $289,900/ 11.5% year-over-year
10. Mount Pleasant: $812,500/ 11.8% year-over-year

This story was originally published November 2, 2023 at 6:00 AM.

Patrick McCreless

The State

803-771-8353

Patrick McCreless is the Southeast service journalism editor for McClatchy, who leads and edits a team of six reporters in South Carolina, Georgia and Mississippi. The team writes about trending news of the day and topics that help readers in their daily lives and better informs them about their communities. He attended Jacksonville State University in Alabama and grew up in Tuscaloosa, AL.