Savannah Chamber

24 Georgia's housing market is responding to a more favorable balance of supply and demand. Increased demand for housing will come mostly from job growth. Those new jobs, and slightly bigger paychecks – plus appreciating home values – will give more people the wherewithal, and the confidence, to buy homes. On average, Georgia's existing home prices are 14 percent higher than their pre-recession peak, but the degree of home price recovery varies widely within the state. For example, on average, existing home prices in the Atlanta MSA are 21 percent higher than their pre-recession peak level. In contrast, existing home prices in rural Georgia are 2 percent below their pre-recession peak value. Home price appreciation will continue through 2019, but home prices will rise more slowly than in 2012-18. For the state and nation as a whole the home price recovery is complete, but those nominal gains do not consider inflation. Nonetheless, the recovery of home prices in nominal terms will help to sustain the housing market's recovery. In addition, rent affordability is at an all-time low. Meanwhile, mortgage rates remain a bargain from a historical perspective, but mortgage rates are above their recent historic lows and will continue to move higher as the Federal Reserve reverses its easing policies. Supplies of new homes are still constrained by years of underbuilding. In addition, there is a scarcity of listings of existing homes, and it is especially acute for homes in the bottom value tier. That is partially because some of Georgia's homeowners are still underwater on their mortgages and are therefore unlikely to put their homes up for sale. It is especially troubling that the negative equity is extremely concentrated in the low price, or starter home segment of the market. That hurts the trade up market. In addition, many homeowners realize they will not qualify for a new mortgage. Therefore, many homeowners will stay put even though negative equity is receding. The price of the average existing single-family home will rise by 4% in Georgia in 2019. As potential homebuyers see a record of price appreciation, more will opt to become homeowners. Rising rents reinforce this trend. In 2012, investors were the main force behind home sales. In 2013-18, people who buy homes to live in them joined investors to become a second major force powering home sales. Nonetheless, as home prices rise and the number of distressed properties shrinks, home sales to investors have dropped. Sustaining the recovery of the homebuilding industry through 2019 means that trade-up buyers and first-time buyers must become more active. That up cycle has begun, and it is becoming much more vigorous. There is tremendous potential for even more active housing markets because a huge number of young people are still living at home, or are doubled up with roommates rather than living in their own apartments or homes. Improving economic and housing market conditions in combination with soaring rents will cause that potential to be unleashed. Demographics Demographic forces are another factor behind Georgia's improving economic performance. For decades, Georgia depended on growth based on high levels of in-migration. That growth model stopped working during the Great Recession due to a dysfunctional housing market and the weak labor market. In fact, household formation dropped to its lowest levels since the 1940s. Even as Georgia's economic developers began to achieve success in recruiting new industry in 2012, the net migration of people to Georgia continued to decline through 2013. That is because it takes a while for new project announcements to generate jobs. Due to job growth and the housing recovery, geographic mobility turned up in 2014. As net domestic and net international migration increased, Georgia's population began to grow more quickly. In 2015-18, corporate relocations and expansions brought more people to Georgia. The trend of higher migration to Georgia will persist in 2019. The nationwide recovery in home prices gives retirees the wherewithal and confidence to move to Sunbelt states such as Georgia. Georgia's population will grow at a pace that exceeds the national average in 2019 – 1.5 percent for Georgia versus 0.7 percent for the U.S. More specifically, domestic net migration will continue to recover. It rose to 2 3,308 people in 2014, up from a net loss of 5,392 people in 2013. Domestic net migration rose to 34,908 in 2015, to 36,954 in 2016, to 41,107 in 2017; and to an estimated 42,600 in 2018. Georgia is a very attractive destination for mid-career movers. Georgia also does very well when it comes to attracting top-career movers and retirees. Georgia's higher rate of population growth also is dependent on net international migration of about 25,000 people. Foreign born account for about 10 percent of the state's population, up from 7.1 percent in 2000 and 2.7 percent in 1990. Georgia's population growth should benefit

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