REI INK

Regional Spotlight

Wichita, Kansas

A Window of Opportunity Could be Closing in the “Air Capital of the World” by Carole VanSickle Ellis Wichita, Kansas, has been a destination from its inception. Located near the confluence of the Arkansas and Little Arkansas Rivers, Wichita is named for the Native American tribe that inhabited the area before Spanish explorer Francisco Vasquez de Coronado explored the area in the mid-1550s. Ultimately, the region was acquired by the United States as part of the Louisiana Purchase, and traders began to flock to the area and build small log structures to serve as hotels, a post office, and, eventually, homes for permanent residents. By 1872, the city had been nicknamed “Cowtown” thanks to the many cattle drives that ended there when the herds were taken onto newly built railways, and it also emerged as an entertainment destination thanks to a proliferation of saloons and brothels combined with a dearth of law enforcement. By the late 1800s, Wichita was firmly on the map. Today, of course, Wichita plays up other elements of the municipality than brothels and “light” legal adherence. The Wichita of 2024 proudly claims the title, “Air Capital of the World,” and the city is host to more modern business opportunities, including a vast aviation and aeronautical engineering sector, a substantial aircraft manufacturing sector, and a thriving healthcare industry. Wichita is also the birthplace of a number of iconic fast-food restaurants, including White Castle, Pizza Hut, and Freddy’s Frozen Custard. Not surprisingly, however, the biggest points of pride for local chambers of commerce are the more than 115 aerospace and aerospace-related manufacturers, including Textron Aviation (Cessna and Beechcraft), Spirit AeroSystems, Bombardier Learjet, and Airbus. The chamber also notes the presence of “a comprehensive network of over 450 precision machine shops, tool and die shops, and other aerospace subcontractors.” A “Return to Old Normal” The city’s strong economy is one factor contributing significantly to what Stan Longhofer, director for the Center for Real Estate at Wichita State University, describes as the market “coming full circle…to where we were 20 years ago [in 2004].” He argues that after the housing crisis and financial meltdown in the mid-2000s, the Great Recession and the COVID-19 pandemic wreaked havoc on traditional models and market behaviors. This had a wildly detrimental effect on home construction, which ultimately led to the outsized demand and appreciation experienced nationwide during the global pandemic. For 2025, Longhofer and his research team predicted, “The broad theme…is something of a return to the old normal, and by that, I mean a place we haven’t been in maybe 20 years.” Longhofer explained in his October 2024 forecast at Wichita State University, “It’s been a very unusual two decades.” He continued, describing the years following the financial crisis as “an absolute cratering of new-home construction” during which levels hit their lowest point since World War II. Despite pre-housing crash overbuilding, “[new-home construction in Wichita] never recovered,” Longhofer said. However, with the pandemic largely in the rearview mirror and, thus, no longer threatening the manufacturing bases in Wichita, a slightly softening housing inventory, and relatively affordable housing costs, the city is poised to be both attractive and affordable in 2025. Unlike some markets where inventory volumes are rising so fast the appreciation from the past few years is at risk, in Wichita, it appears demand and a slow increase in listing volume are balancing each other out to keep home values strong. According to one local agent, this trend has been in the making for about 18 months already. “The number of homes that are for sale has increased, but slowly,” he told local news outlet 12News. “Home values are still increasing.” Although home price gains were more modest in 2024 (8%) compared to previous years, which posted double-digit appreciation (11% in 2023 and 2022, nearly 15% in 2021), they remain solid and are expected to come close to these gains again in 2025. With Low Home-Flipping Rates, Wichita Investors Focus on Buy-and-Hold All this appreciation has not led to as much fix-and-flip activity in Wichita as one might expect. In fact, according to ATTOM Data’s report on flipping activity released in 2023, just 5% of transactions in Wichita were home flips. This is one of the lowest rates in the country. Real estate investors in the area today report profit margins “are lower now than five years ago,” as local landlord Mike Heldstab told NPR this past August. Heldstab made headlines at the time for the longevity of his tenant relationships. Some have maintained leases with him for more than a decade. Heldstab’s model of rehabbing and then renting out properties often below market rate (a model he developed after finding the fix-and-flip model was not as effective as he had hoped) has worked for him, but he acknowledged he is also not currently raising rents as much as he said he “probably should,” explaining, “It’s tough for anyone to afford [rental rate increases] when their incomes maybe haven’t gone up.” Rental availability, like housing availability in general, is somewhat precarious in the Wichita area. According to HUD’s October 2024 “Comprehensive Housing Market Analysis Wichita, KS,” the rental vacancy rate in the area is “balanced” at just over 10%, but rental rates are increasing along with demand. HUD estimated there would be a demand for more than 3,100 new rental units in the coming year, but only 2,100 are currently under construction. For-sale housing inventory is likely to undergo starker shortages, with HUD estimating a pending demand for roughly 5,100 units and only 1,400 under construction. Despite this, HUD analysts noted, “[Wichita] remains among the most affordable areas to buy a home in the nation.” The area remains the 59th most-affordable market in the country out of 241 areas ranked. Local government is currently working with investors to incentivize the creation of new housing as well via the Wichita HOME Investments Partnerships Program and the Housing Development Loan Program (HDLP). These grants are intended to support development in areas classified as

Read More

Orlando, Florida

Florida’s “City Beautiful” Endures a Statewide Market Shift by Carole VanSickle Ellis The third-most-visited city in the United States could see a shift in the next few years as formerly happy pandemic-era homebuyers put their properties back on the market and flee inland once more…or the market could “correct” in one of the gentlest “softening” events in the country. Analysts can make compelling arguments in both directions. “Florida’s real estate market has a split personality,” wrote Realtor.com data journalist Evan Wyloge in August 2024. The same is arguably true on an individual level for at least some of the state’s markets, including Orlando. After weathering multiple named storms in 2024 alone, including Hurricanes Helene and Milton, many Orlando residents say they are considering listing their properties and relocating closer to their pre-pandemic stomping grounds. Given how prices have risen over the past four years, many expect to liquidate to great effect and, furthermore, they have high hopes of an expedited experience thanks to rising demand for housing around the country. The sales process, however, may not go as smoothly as many expect. “We could see some price deterioration in some areas,” warned Florida Realtors chief economist Brad O’Connor in an interview with the Wall Street Journal in early October of this year. He added, “[There has] definitely been a sizable increase over the last couple of years in inventory.” The combination could spell bad news for Florida homeowners who purchased at peak pandemic pricing and are now hoping to sell quickly for top dollar and make an exit. While Orlando has not been hit as hard as much of the Gulf Coast of Florida this year, the city did experience tangential economic impact from the rough weather associated with Hurricane Helene. The storm made landfall in northwest Florida but created a preemptive economic impact as Orlando’s theme parks and other tourist attractions and services shut down or cancelled certain seasonal events. Orlando experienced more direct damage from Hurricane Milton’s flooding and extremely high winds, which caused damage in the Orlando area as well as throughout much of the state. Investors should note Orlando may be classified as an “inland market,” but this does not exempt it from looming threats associated with the departure of property insurers and rising rates associated with inland flooding and other natural disasters. Unfortunately, the classification often causes property owners to forego flood insurance if they are not located in an officially designated flood plain. Some insurance companies in the Orlando area will not insure properties once they reach a certain value unless the owner also takes out flood insurance even if the property is not in a flood plain. These storms and others are causing property insurance premiums to skyrocket across the state, including in Orlando. Katherine Frattarola, an insurance agent at a firm catering to high-net-worth clients, noted earlier this fall that many of her clients are reconsidering waterfront Florida property acquisitions in response to these premiums. “People are making different choices as a result of the rise in insurance costs,” Frattarola told WSJ. According to a report from the Florida Policy Project, Florida homeowners saw rates rise 45% between 2017 and 2022. Since 2022, areas hit by hurricanes have posted insurance premium spikes as high as 400%, according to Moody’s Analytics. Moody’s also predicted rates would rise still higher in areas affected by Hurricanes Helene and Milton. Although state legislators have attempted to insulate property owners from instability in the insurance market by creating a $1 billion “reinsurance fund,” disincentivizing “frivolous lawsuits,” and establishing stringent deadlines for the claims process, it appears unlikely that such measures will hold in the face of homeowner discontent and increasingly strong hurricanes and rainstorms. Florida governor Ron DeSantis noted more than one in 10 Florida homeowners do not have property insurance (vs. about one in 20 nationally) and expressed hope that the bill would keep the state’s residents insured at affordable (or at least only gradually rising) rates. Critics of the bill said it would not stop rate increases or cancellations; investors should note ten insurance companies had left the state due to “choice or insolvency,” as the Insurance Information Institute described it, as of August 2024. Florida’s “Split Personality” Could Make Orlando Investing Complicated As the state of Florida experiences volatility in the housing market, markets like Orlando are divided not only by the extent to which they are affected by extreme weather but also by housing sectors. For example, insurance premiums and fees play an outsized role throughout the state, but particularly in prime landfall locations on the coast. On the other hand, state regulations on condominium assessments and related regulations have softened up the condo market substantially in the past few years, including in the condo-flush Orlando market. At present, about one-third of all listings in Orlando are for condo properties. “Nobody can afford the association fees anymore,” realtor Jennifer Levin told Realtor.com in mid-August of this year. She cited legislation enacted in the wake of the tragic collapse of the Miami Surfside condominium building in 2021 as a significant component of the softening condo market. “The big pullback in the market is in the condo market because of rising insurance costs and new laws that require buildings to have full reserves by next year,” Levin said. Realtor.com reported condo prices have fallen about 12% since 2022, while single-family homes have held steady or risen in value in most markets. In Orlando, single-family home median values were up slightly year-over-year in August 2024, reported Bankrate, posting gains of 9.3% year-over-year but falling slightly from a July 2024 peak of $412,000 to $399,000 in August. Readers should note the state of Florida remains one of the most attractive states in the country for new residents and gained a net of nearly 250,000 new residents in 2022 alone according to the most recent available data from the U.S. Census Bureau. The Orlando-Kissimmee-Sanford metro area holds steady in the top three most-popular Florida metro areas and

Read More

2024 Election Could be a “Wash”

The Impact of Elections on the National Housing Market by Carole VanSickle Ellis Conventional wisdom states that uncertainty in almost any element of the economy will usually result in “bad news” or short-term negative behavior in most financial markets. Presidential elections have historically been considered a prime example of how uncertainty affects investor behavior, with financial markets typically responding to the election process and months following the actual vote with less movement and lower gains. While this holds true for many areas of industry, the housing market seems to stand apart from the trend. New research published by the Yale School of Management and Northwestern University could hold the key to identifying how any given election cycle could affect housing on national and local scales. “There is good reason to believe that just uncertainty by itself is bad, but we also know that when there is high volatility, there is also high opportunity,” said study lead Stefano Giglio, Yale’s Frederic D. Wolfe professor of finance and management. Although the study focused primarily on financial markets, the research team said the broad array of sources from which it drew data for analysis meant the study “has implications for both financial markets and the broader real economy.” In financial markets, investors tend to react to the potential for volatility by “shoring up” portfolio defenses, sometimes paying “heavy premiums to insure against the risk of an actual loss.” However, in nonfinancial markets, such as real estate, investors actually tend to take the opposite approach, attempting to insure “against periods of low volatility,” Giglio said. He concluded, “Periods of high uncertainty are not necessarily ‘bad’ economic states, but possibly times of innovation, creative destruction, competition, and, ultimately, growth.” Sharper Business Solutions founder Gary Harper, whose company helps entrepreneurs and real estate investors scale their businesses, agreed with Giglio’s assessment that high uncertainty is not necessarily bad for business as long as investors are cognizant of how external factors, such as consumer confidence, affect their company’s performance during election years. “Consumer confidence often fluctuates during election years, so it is important to gauge market sentiment and adjust your strategies accordingly,” Harper said. He suggested implementing strategies that emphasize stable, long-term investments during times of broader economic uncertainty. “While election years can bring volatility, they also present unique opportunities for savvy investors,” he said. Monick Halm, a California-based real estate investor and founder of the REI Goddesses mastermind, observed election-year reticence on the part of some investors could represent opportunity for others. “While others are holding back due to fear or uncertainty, there may be less competition in the market, which can lead to more favorable buying conditions,” she said. Halm continued, “This is the time when strategic investors step in, take advantage of potential price adjustments, and set themselves up for future gains. The key is not to get distracted by the ‘noise’ or the headlines. Instead, focus on your long-term goals and stay adaptable.” Establishing Causal Relationships Between Politics, Consumer Confidence & Housing Although consumer sentiment surveys have been around for roughly three-quarters of a century (the Consumer Confidence Index, or CCI, made its debut in 1967), economists have historically struggled to establish clear causal relationships between sentiment and specific areas of consumption. However, since 1991, one relationship has emerged as an increasingly powerful driver of consumption of everything from household appliances to home purchases: a November win for a consumer’s preferred political party and increased short-term spending. Hector Sandoval, director of the Economic Analysis Program and a research assistant professor at the Bureau of Economic and Business Research (BEBR), explained that a party shift, in particular, seems to improve consumer sentiment and increase spending on the part of the party entering office. As politics become increasingly partisan and consumers’ feelings on the topic become increasingly passionate, the fallout for local housing markets could be stark, particularly in markets where there is a marked political shift in the wake of November’s elections. Sandoval’s research focuses primarily on consumer sentiment and spending within the state of Florida, where there have been relatively few major power shifts in the last 30 years at a state level. As a result, he said, his team was unable to determine “a statistically significant relationship” when it came to gubernatorial elections, but a study of national politics revealed that the “widening gap between Democrats and Republicans” is affecting actual consumer spending. Based on their beliefs, consumers were likely to make larger purchases when their preferred party was in power, with this trend becoming more pronounced when the preferred party was reentering office after a period of absence. Interestingly, if Sandoval’s conclusions hold on a national level, the 2024 election might not necessarily have a substantial net impact on consumer spending or the national housing market simply because the nation is divided relatively evenly over the perceived unsuitability of theopposing candidates. For former president Donald Trump, in particular, it may surprise readers to discover that the country is split roughly down the middle when it comes to his presidential performance. Pew reported in March 2021 that 38% of Americans believed he had made “progress toward solving major problems facing the country during his administration,” while 37% said he “made these problems worse.” The remaining respondents said he had either “tried but failed” (15%) or “did not address [major problems]” (10%). At that time, Pew analysts observed that although “Republicans and Democrats offer starkly different assessments of Trump’s presidential legacy,” the actual numbers indicated public sentiment could be considered something of a wash, since 47% ranked the Trump administration as “great,” “good,” or “average,” and 53% ranked it as “poor” or “terrible.” In 2024, these sentiments became more passionate (and more evenly split), with 51% of Americans rating the former president “very coldly” and 49% stating their feelings were “very warm,” “warm,” or “neutral.” As a result, if studies like Sandoval’s hold true for the 2024 election, one half of the population’s shifting sentiments and spending patterns are likely to cancel

Read More

Gatlinburg, Tennessee

“The Gateway to the Great Smoky Mountains” Attracts Visitors & Investors By Carole VanSickle Ellis Gatlinburg, Tennessee, has always been an attractive destination. Hundreds of years before the city was settled in 1806 as the settlement White Oaks Flats, Native American tribes traversed the area regularly as they hunted up and down the peaks and valleys of the mountain range we know today as the Great Smoky Mountains. Gatlinburg would have been founded three years earlier, but the original settler, a South Carolinian named William Ogle, died of malaria after prepping enough logs to build a cabin and then returning to his native state for the winter. Three years later, his widow and her remaining family returned to the area and assembled the cabin Ogle had left behind him in what is, today, the heart of Gatlinburg. In the wake of the American Revolution, the area around Gatlinburg attracted veterans from both that war and the War of 1812 who were eager to convert their war pay, 50-acre deeds for U.S. land, and become landowners in the beautiful and fruitful area that Ogle had dubbed “The Land of Paradise.” Many of their descendants make up the roughly 3,600 permanent residents of Gatlinburg today. Although fewer than 4,000 people live in Gatlinburg proper, which is often referred to as “The Gateway to the Great Smoky Mountains,” roughly 12 million people visit Sevier County, where Gatlinburg is located, each year. The area attracts tourists during every season thanks to a host of activities for history buffs, skiers of all levels, and nature lovers who want to visit the Great Smoky Mountains National Park or enjoy a vast array of activities designed to highlight different recreational elements in the region. “With the formation of the Great Smoky Mountains National Park [in 1945], tourism began to boost the area’s economy,” explained the Gatlinburg Convention & Visitors Bureau on their official Gatlinburg timeline. The group continued, “[Gatlinburg] has since developed into a four-season resort and convention setting.” The area is home to many artists’ communities thanks to investments around the same time into the Arrowmont School of Arts and Crafts and Pi Beta Phi’s public school, the first of its kind in the area, which was founded in 1912 and dedicated to “practical and academic education” and “the rebirth of Appalachian culture through arts and crafts and the ‘cottage craft industry’ movement.” A “Land of Paradise” for the Short-Term Rental Investor Today, those 12 million annual visitors not only spend heavily in the area during their stays; they support a vast real estate sector dominated by short-term rental options. “The combination of low property taxes, easy accessibility, and a supportive community makes Gatlinburg an ideal destination for short-term rental property owners,” according to a 2023 report published by local brokerage Colonial Properties. According to short-term rental resource hub Chalet, average property taxes in Gatlinburg hover just over 2.5%, lower than both state and national averages, and local short-term rental regulations are relatively permissive. Gatlinburg does have regulations in place governing noise and occupancy, but short-term rentals are permitted in nearly all residential zoning districts. Furthermore, at present, the city does not limit the number of rental properties owned by any one person or business entities, nor does the city restrict length of stay for short-term renters. The average daily rate (ADR) in Gatlinburg is higher than $300, and seven-bedroom houses post ADRs of nearly $600. “The town’s proximity to the Great Smoky Mountains National Park ensures a constant influx of tourists, driving demand for short-term rentals,” wrote Mashvisor analysts earlier this year. “[Proximity to the park] has led to a 15% increase in rental income for vacation homes compared to the previous year,” they continued. At time of publication, Gatlinburg’s average Airbnb occupancy rate was roughly 70%, with summer and fall occupancy rates exceeding 80%. Those numbers held firm across room counts from studio to 5+ rooms. “It is just explosive popularity,” said Airbnb spokesperson Ben Breit of the massive influx of tourists into the Gatlinburg and nearby Pigeon Forge areas. “The weather is perfect; you’re up in the mountains…I just can’t imagine a better place to be.” Investors should note Gatlinburg is also a hotbed for exotic, adventure-based short-term rentals, including treehouses. Treehouse rentals flourish in the area, with some investors reporting generating hundreds of thousands of dollars in annual revenue with these assets. However, investors must remember treehouses and “tree forts” come with many additional factors including zoning and safety ordinances that might not apply elsewhere. “Treehouse maintenance is required every year to ensure the structure and the tree(s) remain safe and secure for years to come and, more importantly, that its users are not put at risk,” explained Pete Nelson, master treehouse builder and host of Animal Planet’s “Treehouse Masters.” Owners of all treehouses, but particularly those who own short-term rental treehouses and may not be in regular, on-site contact with their properties, must be aware that treehouse hardware can shift over time, thus changing the load-bearing abilities of the massive treehouse attachment bolts (TABs). Vigilant monitoring is the only thing that can prevent disaster. A Booming Market Leaves Locals Concerned About a Correction At present, the Gatlinburg market does appear to be veering into a buyers’ market, with most homes selling below list price (see “By the Numbers” sidebar) and local housing inventory rising. Of course, this does not necessarily mean a crash is imminent. However, as pandemic-era investors who may no longer be able to work remotely or who find Sevier County’s decision to classify some short-term rentals as commercial properties (resulting in higher tax rates on related income) does not work within their budget leave the area, there will likely be a significant slide in investment-property prices. “The tourists are leaving the industry and the professionals are coming in and making the market better,” observed New York-based short-term rental operator Paul Kromidas in July 2023. At the time, he predicted this shift would happen “over 24 months.” This

Read More

Santa Fe, New Mexico

“The City Different” Continues to Stand Out from the Crowd in 2024 By Carole VanSickle Ellis In 1912, when New Mexico became the 47th state in the United States, its capital city, Santa Fe (“Holy Faith,” an abbreviation for the original name La Villa Real de la Santa Fe de San Francisco de Asís, or the Royal Town of the Holy Faith of Saint Francis of Assisi), was already more than three centuries old. Founded in 1610, Santa Fe boasts incredible weather with more than 320 days of sunshine each year, carefully preserved historic architecture, and a booming real estate market. However, while the city is still making lists for housing appreciation and even made the 2023 nSkope Predictive Analytics list of cities where retirees are most likely to sell their homes for a profit, the real estate market in the “City Different” appears likely to remain, well, a little bit different for investors interested in the American Southwest. “We continued to see some price appreciation at the end of 2023 and into the first quarter of 2024, however…we are seeing pullback from buyers,” wrote Barker Realty analysts in the brokerage’s Q1 2024 Market Digest residential market report. The team noted Santa Fe “feeder markets” like Austin, Texas, have already begun to show signs of cooling and observed, “Santa Fe has typically lagged behind the major markets when these shifts occur, and, in March, we began to see the first signs of a cooling locally with homes staying on market longer than they have since before the pandemic.” Total units sold in Santa Fe County dropped by 28% year-over-year in March 2024. By May of this year, the decline in demand seemed to be leading to a leveling off of home prices in the Santa Fe area as well, with home values hovering just over $580,000, a 4.2% price change year-over-year (vs. a 51.9% price increase since May 2019). In 2023, in response to skyrocketing home values during and after the COVID-19 pandemic, the Santa Fe city council had resurrected a Great Recession-era 3% tax on transactions for homes valued at $1 million or more. At that time, more than 400 homes priced higher than $1 million were being bought and sold annually in the Santa Fe area. However, that effort was struck down by a First Judicial District Court judge in May. Interestingly, it appears nearly three-quarters of Santa Fe voters support the so-called “mansion tax,” so investors in the area should monitor developments around the policy. Relaxed Building Codes Create a Friendly Environment for New Multifamily Construction Another result of local concerns about the lack of affordable housing in the Santa Fe area has been the ongoing relaxation of regulations governing “vertical building” in the metro area. Vertical structures have multiple floors, and most people think of skyscrapers and high-rise multifamily condominiums or apartments when they hear this term. In the Santa Fe area, there is a centuries-old trend of intense concern over the preservation of the city’s historic architecture, which is reflective of the low-slung (horizontal), adobe structures encountered by the Spanish when they began exploring the region in the 1500s. At that time, Pueblo Indians were living in much of the Rio Grande Valley in “multifamily” buildings that could house hundreds of households and were sometimes several stories high. Spanish colonists used the same mud-earth-and-straw construction materials to make bricks for homes with round walls, corner fireplaces, flat roofs, and covered porches. These buildings were the predecessors of the Spanish Pueblo style that remains popular (and in the case of older buildings, protected) in Santa Fe today, and they played a key role in Santa Fe’s decision to dub itself “The City Different” in response to the “City Beautiful” movement of the early 20th century. Local planners at the time explained the city was already beautiful, so they would focus on elements that made it unique instead. In an effort to protect historic buildings and cultivate architectural tourism, buildings erected in the original style and original “horizontal” height of just a few stories in the Santa Fe region are often protected by historic preservation policies. Santa Fe is one of the National Trust for Historic Preservation’s “Dozen Distinctive Destinations in America” as a result of this architectural heritage, and construction higher than 25 feet in height is still carefully regulated, although housing ordinances passed in 2016 did remove many roadblocks to developing multifamily residential development for builders willing to pay a fee to the Santa Fe Affordable Housing Trust Fund. “Our version of density is three stories,” said then-mayor Alan Webber in a statement about the policy. He explained the move was designed to create more housing in the area while preserving “Santa Fe’s small-town feel, architectural heritage, and mountain views.” Because the fee negates developers’ obligations to preserve 15% of new multifamily units for affordable housing, the result of this policy has been a slew of mid-rise, luxury-living developments. Local investors report the most attractive of these are located in walkable areas, pet-friendly, and offer high-end amenities like quartz countertops, “wood-style” flooring, and high ceilings. These buildings offer high-end, multifamily living and cater mainly to affluent professionals and their families. A Concerted Effort to Support Construction & Renovation Since 2020, when Santa Fe was fully involved in the pandemic-era “zoom town” phenomenon, city planners and legislators have remained laser-focused on creating policies to support the creation and construction of properties priced in such a way as to be realistically available to buyers and renters in the area. Examples of these programs include $50,000 no-interest loans and grants for homeowners to renovate existing homes after purchase and financial support for developers building affordable rental units. The local lack of affordable housing has impacted Santa Fe school systems because even with recent pay raises, many Santa Fe teachers say they cannot afford to live in the metro area unless they opt to rent with roommates. In response, the city’s branch of the National Education Association (NEA)

Read More

Savannah, Georgia

The “Hostess City of the South” Continues to Heat Up in 2024 By Carole VanSickle Ellis Long before it was known for its beautiful square gardens, rich history, and the largest and fastest-growing container terminal in the United States, Savannah, Georgia, was known as the capital of the Royal Colony of Georgia. As the oldest city in the state of Georgia today (although no longer its capital), Savannah holds a unique place in the state’s housing market and broader economy thanks to a thriving film industry, a burgeoning tech and manufacturing community, one of the largest ports in the country, and a highly attractive housing market that continues to heat up as 2024 continues. In fact, some analysts believe the entire metro area will become “unaffordable” by 2029 as home values continue to rise in the area. According to a study conducted by GOBankingRates and published in May of this year, Savannah is “outpacing the national average for growth” with home values a year ago of just over $312,000 and expected one-year growth of nearly 9%. The analysts conducting the study projected that by 2029, median home values in Savannah could exceed $511,000, roughly $6,000 more than the U.S. median projected home value for the same time period. By 2033, they wrote, home values could be nearly $712,000 in the area. This growth trend has been in place for a while, now. In late 2023, Urbanize analyst Josh Green observed, “Savannah has bucked a national trend that has seen new housing permits dip by 17.5% vs. the same time period last year,” adding, “Savannah’s total of 2,090 new housing permits in the first six months [of this year] pointed to…a resilient local economy.” Green cited a “booming jobs market, growing port-related industries, and record tourism” as primary drivers for the Savannah market. The Allure of Savannah Real Estate Remains Strong As the population in Savannah and the surrounding metro area (Savannah is the seat of Chatham County, and the Savannah MSA includes Chatham, Bryan, and Effingham Counties) continues to climb, fix-and-flip investors continue to find opportunities in Savannah and the surrounding region. According to data from ATTOM Data Solutions, in 2023, Savannah, Georgia home flips surged in average ROI, rising from 14.3% to 56.8%. New single-family construction appears poised to continue the trend, also, with 7.5% more permits for single-family units issued in 2023 than in 2022. As demand stubbornly rises, Chatham County inventory has responded with slightly lower listing prices (median list price was 4% lower in April 2024 than a year prior) and slightly increased listing volumes (the county’s 764 active listings in April represented a 78.9% increase over the year prior). An increasing number of homebuyers appear unwilling to compromise when it comes to single-family living despite still-low volumes of available inventory, although local developers seem to be counting on eventual capitulation in favor of larger and modern multifamily options. According to data from the U.S. Census Building Permit Survey, applications for small multifamily residences (2-4 units) fell over the course of the past year by nearly 91%, while applications for larger 5+ unit buildings rose by just over 63%. “It seems that Savannah is leaning toward larger housing complexes,” observed Point2 researchers in light of the data. “[This] could be a sign that smaller multifamily residences are going out of style.” In the Savannah luxury market, however, nothing is going out of style yet. Top-tier homes in the area were selling for 137% more in May 2024 than they were the year prior. “In many areas, [luxury] prices came back down or plateaued [when pandemic-related remote work ended], but in some cities, luxury price growth has continued unabated,” wrote Realtor.com data journalist Evan Wyloge. Realtor.com senior economic analyst Hannah Jones observed cities that have retained price growth in the high-end space in the wake of the pandemic often are “strong retiree destinations” or have historically been areas where buyers could obtain “relatively more affordable, wide-open spaces.” She also noted regions like Savannah hold their appeal thanks to “sunny, warm climates and the lifestyle those attributes allow,” concluding, “Even as some markets have seen luxury prices stabilize, these cities continue to attract affluent buyers.”  Savannah’s “Southern luxury vibe, with big, old trees and historic homes,” is the perfect fit for this trend and continues to attract out-of-state buyers seeking affordability and a pleasant location. During the pandemic and in the two years following, California alone contributed nearly 26,000 people to Georgia’s population as homeowners sought the relative affordability of the southeast. The Savannah Economic Development Authority (SEDA) reacted quickly to this trend, establishing the Savannah Technology Workforce Incentive (STWI), a program that reimburses individual moving expenses for tech workers moving to the area. Local planners at SEDA viewed the incentive program as a growth move designed to create a workforce that would attract tech employers in the coming years. “If the next tech company wants to move here and hire 30 people, we want to have people already here who can do the job,” explained Jen Bonnet, who oversaw the program at the time. Incoming Employers Could Change the Face of the City’s Housing Market Savannah’s concerted effort to bring in qualified potential employees for high-value employers in lucrative industries like technology appears to be paying off. As of May 2024, global startup funding and support company F65 was tracking 26 promising tech companies and startups in the Savannah area, including patent developer Team RGE, medical prescribing platform MedView Systems, and 3D development gaming and film studio Tupelo Labs. The region also welcomed the Hyundai Metaplant, a multibillion-dollar electric vehicle plant projected to bring in 8,100 jobs over the next five years and create roughly $1 billion worth of investment from suppliers. This is the second electric vehicle plant to commit to making its home in the state and the first in the Savannah area. Although Rivian, the first EV manufacturer to commit to Georgia with plans to build a plant closer to Atlanta, has currently

Read More