Macon, Georgia
Despite COVID-19, the “Heart of Georgia” Market is Holding Strong.
by Carole VanSickle Ellis
Macon, Georgia, sits squarely in the geographic center of the state, a location that earned the city its nickname, “The Heart of Georgia.” And while the Georgia’s “heart” may have been historically overshadowed by its capital, Atlanta (“Hotlanta”), real estate in Macon has taken an unprecedented turn skyward in 2020 thanks in large part to a pandemic-resistant economy and the housing affordability that the entire southeastern state is known for. Although local real estate professionals in the area were initially taken by surprise when the market recovered and skyrocketed in the wake of March 2020’s near-national lockdowns, they reported that by Fall 2020 the Macon market was showing an unprecedented level of competition.
“2020 has been a crazy year,” said mortgage loan officer Kacy Discher. “This is the first time I can ever remember Macon having bidding wars,” she added. The last documented evidence of this trend in Macon was around 2006. Low interest rates combined with relative affordability, proximity to drivable outdoor recreation destinations, and an emerging COVID-driven surge into the single-family housing market have driven Macon home prices upward while sending active housing inventory downward. Georgia’s history of investor and business friendly policies have somewhat insulated the state and its major metro areas, of which Macon is one, from much of the economic fallout affecting other states in the wake of the coronavirus pandemic.
In fact, Macon’s employment metrics, while certainly not as positive as they were in January of this year, indicate unemployment as of September 2020 was hovering around 6 percent, below both the national average and rates in harder-hit cities of similar sizes. In fact, according to the Georgia Department of Labor, Macon’s unemployment rate is only about 1.6 percent higher this fall than it was at the same time last year.
Georgia Department of Labor commissioner Mark Butler cited businesses’ increased preparedness for COVID-19 going into the fall as a positive sign that Middle Georgia, including the Macon-Bibb County area, would likely have an advantage in the post-pandemic recovery. “As long as economic conditions stay the same, I think you are going to see us get back to where we were back in February at historical lows,” he predicted at the end of September 2020.
The Perfect Location to Win Homebuyers’ Hearts
Prior to the emergence of COVID-19 in the United States, Macon was already “ticking the boxes” for many homeowners, business owners, and major employers. With three colleges ranked in WalletHub’s “Best Colleges in Georgia” list for 2020, employment options in a variety of recession-resistant sectors like healthcare, insurance, and education, and the close proximity of Robins Air Force Base in the city of Warner Robins just 10 miles away, home values in the area had been rising steadily since 2012, gaining nearly 5 percent in 2019 and projected (prior to COVID) to gain another 2-3 percent in 2020.
In the wake of the COVID-19 pandemic, however, things in Macon shifted and the market heated up. Based on market activity between April and August 2020, Zillow analysts now predict home prices will rise another 4.5 percent. Like most other markets across the country, Macon’s available housing inventory has fallen dramatically, with available inventory down nearly 40 percent compared to this time a year ago. Demand is likely to continue to rise, particularly for what many investors refer to as “bread-and-butter” properties that appeal to first-time homebuyers and renters who value single-family housing. With Georgia tied for seventh place in the nation for the lowest unemployment rates in the country and Middle Georgia’s unemployment even lower than that, the job market in the area is sustaining the local economy and attracting new residents both to buy and rent.
The municipal governments in Macon and Bibb County are working hard to make sure those new residents have the types of housing options they need, issuing nearly double the number of home-building permits in 2020 than were issued in 2019. Even the local retail sector is tentatively back in hiring mode, with one local employment agency specifically courting out-of-work and furloughed restaurant, hospitality, and retail workers to fill around 1,000 positions at local companies. Many of these positions will be considered “light warehouse jobs,” said Michael Chalmers, who owns Spherion Staffing and is helping fill this type of position. He added that the temporary employees will have the opportunity to potentially gain fulltime employment at the companies for which he is hiring.
Chalmers noted that local businesses are already in “holiday shopping” mode thanks to coronavirus, which has forced many businesses to shift their focus from brick-and-mortar operations to online retail. This has necessitated an employment shift as well, with more workers being necessary to handle pulling, packing, and shipping. “Normally, we do this business pretty heavily in the fourth quarter because of the Christmas season, but we have been seeing upticks…since May,” Chalmers told The Macon Telegraph at the end of September.
The city also has its own initiative to keep local businesses open and residents safe and employed. In September, local economic development agency NewTown Macon partnered with the Greater Macon Chamber of Commerce, Macon-Bibb County, the Macon-Bibb Emergency Management Agency, the local Urban Development Authority and Visit Macon to “unify businesses and residents committed to slowing the spread of COVID-19 while supporting the local economy.” Through that initiative, local businesses were able to formulate a clear plan of action to help consumers feel safe and continue to patronize local establishments. More than 90 businesses signed up for the campaign, Josh Rogers, director of NewTown Macon, reported mid-September.
Local business owners say the initiative is working. “[Customers] feel safe to come here. They feel safe to eat at our restaurants and shop in our stores,” said the owner of a local brewery and restaurant.
Ticking the Boxes for Post-Pandemic Real Estate
Given its middle-Georgia location, Macon is primed to attract first-time, post-pandemic homebuyers and new residents participating in the emerging “urban exodus” that has accelerated as COVID-19 continues to affect working conditions, living situations, and schooling into the fall. “The pandemic seems to have accelerated a trend we were already starting to see, which was a migration from urban renter to suburban homeowner,” said Rick Sharga, executive vice president of marketing at RealtyTrac. “There is a very strong level of demand for housing in suburban areas.”
With Macon’s proximity to Georgia’s capital city of Atlanta (about a one-hour drive) and its vastly more affordable housing market (median home price in Macon is considered in the “affordable” range for about 88 percent of potential buyers in the market), the city has much to offer to households who want more room in which to live, work, and potentially remote school in 2020 and beyond.
“Homebuyers are looking for more room and a more family-friendly environment than they can access in an urban area,” Sharga explained.
Macon’s proximity to the Georgia coast also gives the market an edge. Macon residents are a mere three-hour drive from the Georgia coast, meeting yet another post-COVID buyer preference that a property be four hours’ drive (or less) from an attractive outdoor recreation option. According to a report published in July by Fortune magazine, the combination of “reasonably priced real estate,” relatively relaxed virus-related mandates, and relatively close access to both urban centers and vacation destinations is an intoxicating one. Macon offers all these benefits along with a job market that is recovering faster than most states’ job markets.
The College Market Conundrum
Of course, no investor can look at the Macon market with its five colleges and universities and fail to consider the student-housing angle of the equation. Historically, college markets have been notoriously popular with investors thanks to the economic insulation that comes from having a guaranteed renting population and year-round, recession-resistant employment. However, the pandemic has knocked these pleasant academic investment “bubbles” for a loop as many students left campus last spring and have yet to return.
“I had been keeping an eye on the Macon market in 2019 because I was interested in acquiring some rentals close to Mercer University,” said Atlanta-area investor Lorraine Beato, who is also an active Georgia agent and works with out-of-state investors who want to acquire properties in emerging markets around the state. “However, with all the students leaving and the months of vacancies we might be dealing with, I put those investments on hold.”
Beato’s concerns echo those of many investors who historically would have jumped into the student-housing rental market in Macon. At present, the University System of Georgia is in the process of bringing students back to campuses across the state, and Mercer, Georgia College and Wesleyan College have all instituted at least some on-campus learning. However, the academic term has been shortened and will end after Thanksgiving and many courses remain online.
Wesleyan provost Melody Blake noted the school is limiting the amount of time students must spend in the classroom, with most classes equipped with virtual systems that will permit students to attend class remotely. She said every classroom has a camera that “moves to the sound of the speaker” to enable quarantining students to engage in discussions via Zoom, and warned, “every plan that we make might and probably will change.” This feeling of uncertainty has many investors leaning toward the more predictable sector of single-family residential housing simply because there is no question that there is and will continue to be demand for this type of property.
Investor Attention is Shifting to Macon
If you have been watching the Middle Georgia market but not yet made your move, you might find yourself in the middle of a lot of other investors looking in the area as 2020 progresses. According to a report from ATTOM Data Solutions, more than half of the total sales in Macon during the first half of 2020 were all-cash. With some of the highest potential annual gross rental yields early in 2020 and a solid employment base to keep renters in place, the “Heart of Georgia” is likely to remain in many real estate investors’ hearts (and portfolios) in 2020 and beyond.
3 – BEDROOM SINGLE- FAMILY RENTAL PRICES
The Macon, GA MSA is a small to midsize metro with nearly 230,000 residents. Current 3-bedroom single-family rental (SFR) prices average $1,065 for the MSA. High-rent areas in Forsyth down to Roberta range between $950 to $1,150. The least expensive areas (white) in Macon are quite low, from $800 to $900. The remainder of the light red areas of rental prices trend between $900 and $1,050.
5 YEAR RENTAL PRICE APPRECIATION
In the last five years, 3-bedroom SFR average rental prices over the Macon MSA have increased a moderate 18.3%, ranking the metro 115th place for five-year rental price appreciation. Rental price increases have increased the most in West Oak, Forsyth and Jeffersonville near 18% (dark green). The sage green areas have a moderate five-year increase of 10% to 15%. Nearly half of the remaining zips in the MSA (white) have only mild rental price appreciation under 10%.
RENT-TO -INCOME
The 3-bedroom SFR rent- vs-income ratio in the MSA is a moderate 30.5%, only slightly below the national average of 32%. Working class families near central Macon, Jeffersonville and Roberta have low house- hold incomes between $25,000 to $35,000—lead- ing to some of the highest rent-vs-income ratios in the metro at 32% to 45%. Light-blue areas around Forsyth and Gray have affordable rent-to-incomes between 22% to 25% due to higher household incomes ranging from $50,000 to $55,000. White colored areas coincide with lowest R/I near 20%, thanks to highest area incomes over $60,000.
YIELDS
Median SFR home prices are approaching $160,000, gaining 22% in the last five years. Gross Rental Yields (GRY), excluding expenses, across the top 200 U.S. markets average 8.7%. The weighted average GRY in the Macon MSA is one of the top in the country at 13.6%. The high yields are sustained by low home prices and relatively high rents.
Sidebar 1:
Breaking Down the COVID Controversy in an Investor-Friendly State
Georgia has long been a favorite location for real estate investors thanks to investor and business friendly policies on rent practices and evictions and business-friendly tax policies. These policies are designed specifically to keep Georgia “on your mind” when you are thinking of starting a business, delving into new construction and development, or building up your portfolio of investment properties. However, as the COVID-19 pandemic continues to affect absolutely every angle of our lives up to and including where and how we live in our own homes, real estate investors find themselves subject to federal mandates and policies they never expected to deal with firsthand in the southeastern market.
The greatest of these, of course, is the wide-reaching eviction moratorium established by the U.S. Centers for Disease Control and Prevention (CDC) at the end of this past summer. Georgia, like many other investor-friendly states, has permitted some ongoing evictions for illegal activities, destruction of property, and non-COVID-related lease violations. However, because many municipal courts have remained closed past official economic “reopening dates” across the state, eviction cases are backed up along with other hearings and proceedings.
In Macon-Bibb County, the courts began hearing cases again at the end of August. Local judge Pamela White-Colbert reported that many landlords in the area continued to file evictions during earlier moratoriums to get the cases on record, and those cases are now being heard. “It’s a quick process,” she noted. “It’s not the 30 days like in other civil lawsuits.” White-Colbert said that many local landlords are working with tenants to keep them in their homes. If a tenant in Georgia loses an eviction case under the current pandemic guidelines, they will have at least three days’ notice and seven days to move out. This is among the fastest timelines in the country. “I always advocate paying your rent before you pay anything else,” White-Colbert said.
Local tenant advocate Susan Reif, who serves as director of the Eviction Prevention Project at the Georgia Legal Services Program, noted there are many programs available to help tenants pay rent and, in the process, help the investors who own the properties as well. Macon investors may benefit from familiarizing themselves with local assistance options so that they can direct struggling tenants in the right direction. “Because the process moves so quickly, tenants who need rental assistance really need to contact their rental assistance provider before they are served notice,” Reif explained.
Real estate investors holding or acquiring rental properties in Macon, Georgia should be prepared to acquire and hold those properties at least until the end of 2020 if there is a tenant living in the property. Investment properties in some degree of distress are emerging as one of the few “bargain” options for investors in today’s real estate market. Be sure you are familiar with all aspects of the property, including rental history and local pandemic policy as well as national guidelines, before making a purchase.
Sidebar 2:
New Construction Could Signal a Real Estate “Takeoff” in 2021
As consumer demand for single-family homes holds strong toward the end of 2020, many markets are feeling the pinch as limited inventory drives home values skyward. In Macon, Georgia, developers are ready to meet that demand with new single-family developments in 2021. Many are building with real estate investors in mind rather than retail buyers as rising material and labor costs send some new-home prices out of reach for would-be homeowners. If retail buyers cannot make the purchase, developers believe those would-be buyers will choose to rent in attractive, affordable markets like Macon rather than look elsewhere.
“There are a lot of jobs being created. You’ve got affordably priced homes,” explained local broker Alex Vento, who reported seeing rising numbers of investors entering his local market. “It’s a good thing because they see we are a value, and I think the market is just primed to take off,” he said. “This area is poised to really experience good things here in the near future.”
Employers like Amazon, Geico, the local universities and colleges, and neighboring Robins Air Force Base (which has a federal payroll exceeding $1.8 billion) all are currently bringing new jobs to the area and sustaining existing payrolls. Even the hospitality sector is showing signs of life, with a new boutique hotel project that had stalled early this spring now back on track thanks to a $23 million bond deal with the county. The renovation on the property alone is expected to create more than 200 construction jobs and at least 80 permanent jobs. Local developers are also optimistically constructing several luxury senior communities in the area that will open in Summer 2021.
