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South Carolina is the number one state in the country for Americans seeking a better and more affordable lifestyle. From low taxes to abundant national resources, our state offers incredible opportunities for millions of Americans seeking to escape oppressive state governments that tax and regulate individuals and businesses to death.
But when demand increases, so do prices. The influx of new people has increased rent prices, making it difficult for homeowners and renters to afford to live here. While, on average, living in the Palmetto State is over 10 percent cheaper than the rest of the nation, rental prices have still significantly risen in many parts of the state due to more people and dollars chasing the shrinking supply of properties that are available.
As a local small business owner and builder, I knew years ago that more must be done to ensure homeowners and renters are not priced out of the growing market. Nevertheless, South Carolina eventually rose to this challenge. Over the last ten years, it has spent significant time and resources building to accommodate these new residents, and the results are starting to show. In the last year, rent prices have decreased substantially in many areas of the state, and things are looking up for the future.
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That is, unless the federal government wedges a wrecking ball between us and our building spree.
The President and Vice President seem to think that rents are high because of “rent gouging and greedy landlords.” They seem to have missed the memo that prices are starting to fall in free-market-oriented states like ours, which have resolved the problem of rising costs by building more.
To fix this perceived price-gouging problem, last month, the Biden-Harris Administration proposed implementing nationwide rent control, and this month, its Department of Justice filed suit against a software company – RealPage – that some property owners use to help price their houses and apartments. The administration claims this technology is raising costs, but it’s only reporting what it believes those costs are. Suing RealPage for price-fixing is the very definition of shooting the messenger.
Former South Carolina Attorney General Charlie Condon hit the nail right on the head when he said, “The Biden DOJ taking legal action against these companies will discourage our region’s entrepreneurs and investors from continuing to finance new building projects. And we know what tends to happen when supply decreases — prices rise”
Instead, federal, state, and local governments should consider reducing the size and scope of the regulatory state. Such action will help South Carolina lower prices even further to pre-2020 levels. The areas of the country that recently increased their housing supply – like South Carolina – have watched their rent prices decline. That should tell everyone everything they need to know about how baseless this DOJ suit is.
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Multiple factors must be considered and navigated when constructing a large residential or commercial property, including the rules and regulations imposed by the government.
A prime example of this is property tax. In South Carolina, the property tax rate for rental properties is 6 percent, much higher than the tax on primary residences. This increased tax burden must be included in the rent price and is rightly referred to as a hidden tax on renters.
Other government fees, such as impact fees to local governments, which can add tens of thousands of dollars to a property’s cost, also contribute to the problem.
Another thorny issue is insurance premiums. The insurance crisis in the Palmetto State is at a crisis level, so much so that our elected leaders in Colombia have called for a study to address this problem.
Other costly regulations, like land use and zoning laws, can restrict the type and density of housing built in certain areas, limiting the housing supply and increasing prices. Environmental regulations can also add significant costs and delays to the development process, especially in coastal areas where wetlands and other sensitive ecosystems must be protected.
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The only lasting fix to the housing shortage is to build more, and the building process could be facilitated if our elected leaders — both in DC and in Columbia — reduced regulations, lowered taxes, cut unnecessary spending, and generally took a more cooperative approach with landlords and builders, the very folks who are trying to solve this crisis. Repackaging the failed policies of the past and initiating lawsuits against technology companies might look good in press releases, but it won’t look good in practice.
Kudos to South Carolina Attorney General Alan Wilson for not being fooled by the Biden-Harris Administration´s political maneuvers during an election year. He was right – South Carolina should sit this one out.
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ABOUT THE AUTHOR …
David Hilburn is the president of Hilburn Holdings and the past president of the Home Builders Association of Greater Columbia. Hilburn Holdings specializes in residential and commercial development, with local holdings in single-family homes for rent in the Midlands.
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3 comments
Less regulation? Have you seen some of the shoddy workmanship that goes into most new homes? Have you seen the overloaded roads that can’t keep up with construction as it is today? Oh yeah, the only regulation this site entertains is making sure poors don’t get mixed in with middle class homes.
This blog has its finger on a construction company CEO’s massage chair and swears it is SC’s pulse rate.
I somewhat see what you are saying but things like building code enforcement aren’t real factors in the large-scale supply and demand dynamics of housing. But I agree with you on the roads. Any governmental efforts in increase housing availability really need to shift from the larger urban areas in SC to more of the medium sized towns that can still bring in certain types of manufacturing jobs – like Orangeburg, Georgetown, Greenwood, Camden, Newberry, Clinton etc.
What this guy wants is to do is transfer the actual cost of real estate development, from the developer/builder, onto all taxpayers, to pay for the impact to infrastructure that is the responsibility, i.e., roads, bridges, etc. In furtherance of his socialistic transfer of wealth scheme into the pockets of developers & builders to fund their fourth and fifth exclusive homes in the mountains, by the seas, lakes, and condo high-rises, is to relieve them of their impact on water, sewer and stormwater systems maintained by local governments, paid for by existing rate payers. If you develop 200 homes on 50 acres, you should pay for the infrastructure costs and of course, pass it on the the consumer – just like the Trump Tariffs. Fits gets paid to promote communism!!!