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 paused construction due to falling demand for electric vehicles, Hyundai recently announced production at its plant should begin in Q4 2024 with a “grand opening celebration” scheduled for Q1 2025.
Investors hoping to serve the housing needs of the roughly 8,500 new workers at the metaplant and the indirectly created 40,000 jobs the Center for Automotive Research predicts will accompany those workers will not need to confine themselves to the Savannah metro area when looking for opportunities. Effingham County, Bryan County, Bulloch County, and Chatham County all expect a surge of new residents as the plant comes online and ramps up to full capacity over the next five years.
In addition to fortifying and building up infrastructure in all four counties, the metaplant may contribute another valuable asset to the Savannah area: direct passenger rail from Atlanta, Georgia, to Savannah. At the end of 2023, the Georgia Department of Transportation received $50,000 from the Federal Rail Administration to study its Savannah-Atlanta transportation corridor. This happened in the wake of the Georgia Ports Authority approving a new $127 million rail terminal in northeast Atlanta. Some proposals for the rail service include Macon, Georgia, in the corridor evaluation and ultimate rail construction.
Amit Bose, the Federal Rail Administration administrator for the U.S. Department of Transportation, observed this type of evaluation and planning helps create best-case scenarios for eventual rail construction. “It is important to do this work now and to take these steps,” he said. The administration believes the influx of people moving into the state could support the new rail line.
Investors should track the development of this potentially valuable high-speed rail project closely since it will dramatically affect home values in destination areas. For the most part, this type of development tends to be positive for local markets, but it can change the nature of these markets as they become more accessible. In Savannah’s case, increased accessibility is not necessarily a new element in the market since the city has benefited from the massive economic growth associated with the Port of Savannah almost since its inception. However, tracking the ability of smaller markets to create and sustain the infrastructure needed to support larger populations will help investors identify potential opportunities and pitfalls ahead of the crowd.
SIDEBAR
By the Numbers
$1.3 Billion // annual economic impact of the Savannah College of Art and Design in 2023
$17 Million // annual visitors to the Savannah area
422 // number of manufacturing businesses in Savannah
418,000 // population of the Savannah metropolitan statistical area (MSA), which includes Bryan, Chatham, and Effingham Counties
$29 Billion // value of Savannah’s economic output, placing it third in the state behind Atlanta and Augusta
561,000 // number of jobs supported throughout the state of Georgia by the deepwater ports and inland barge terminals associated with the Port of Savannah
$207 Million // amount of annual direct spend by entertainment productions in 2022 in Savannah
2 // Savannah’s rank on MovieMaker Magazine’s “Best Small Cities and Towns to Live and Work as a Moviemaker” (2022)
22 // percentage of east-coast container trade moved by the Port of Savannah alone
