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Savannah-Economic-Trends-2025

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23 17 that housing markets will not crater and are likely to respond quickly as the Federal Reserve reduces policy interest rates. Housing is likely to expand in 2025. In the wake of the pandemic, the home is fundamentally more important to a larger proportion of the population. The economic slowdown will not change the higher regard people have towards home ownership. We expect the number of single-family housing permits authorized to rise by 9 percent in 2025. The considerable number of new jobs created over 2021-24, strong population growth, excess savings, good household balance sheets, bigger paychecks, and slightly lower mortgage rates will support higher demand for new single-family homes. Limited supplies of existing homes for sale will increase demand for new homes. Builders will respond by building more single-family homes in 2025 than in 2024. Single-family homebuilding will be an economic driver in 2025 and beyond. That is particularly important because Georgia gets a five for one from housing: (1) home builders and realtors benefit directly and (2) demand increases nationally for goods produced by Georgia's large floor covering, building materials, and forestry industries. Plus, (3) our large transportation and logistics industry benefits from higher levels of activity in construction – a very transportation intensive activity. In addition, (4) appreciating US home prices makes it even easier for companies and people to relocate to Georgia. This was a factor behind the recent surge in net domestic migration to Georgia. Finally, (5) the home equity generated via recent home price appreciation boosts small business formation and expansion as well as consumer spending. We are pessimists with respect to the immediate prospects for multi-unit residential homebuilding. In Georgia, new multi-unit homebuilding will decrease by 8 percent in 2025. High deliveries of new units started over 2021-2022 will increase vacancy rates causing rents to decline. Tight lending standards for multi-unit projects as well as high financing costs will be major problems, too. Home Prices As of mid-2024, Georgia's existing home prices were 65 percent higher than prior to the COVID-19 pandemic. The year-over-year gain was 6 percent. We do not expect home prices to rise much higher in 2025. Recent home price increases and high mortgage rates have reduced affordability enough to limit additional home price gains. Also, by traditional metrics homes are already overvalued. Nonetheless, we do not expect home prices to decline. Instead, home prices will either increase slightly or hold steady. Beyond 2025, there is tremendous potential for much more active housing. Georgia's population growth is strong. In addition, many young people are still living at home, or are doubled up with roommates rather than living in their own apartments or homes. Faster economic growth, lower mortgage rates, and larger supplies of homes that are for sale, in combination with a strong preference for detached housing will cause more of that potential to be unleashed. Demographics Demographic forces are another factor behind Georgia's above-average economic performance and comparative good prospects. Census data shows that Georgia's population surged in 2022, growing by 1.1 percent, or almost three times faster than the US population. In 2023, Georgia's population also grew by about 1.1 percent. The 2022-23 surge was likely due to changes brought by the pandemic such as the increased acceptance of remote work and a desire to live in less densely settled locations. The 2022-23 pace of population growth is not sustainable, but we are confident that above-average population growth will be sustained. In 2024-25, Georgia's population will grow at an annual pace that is more than double the national average – 0.7 percent for Georgia versus 0.3 percent for the US. Census data show that Georgia is an attractive destination for mid-career movers. Georgia also performs well when it comes to attracting top-career movers and retirees. According to United Van Lines, the primary reason people move to Georgia is a job, followed by family connections, lifestyle choices, retirement, and a lower cost of living. In 2025, domestic net migration will be higher than in 2020-21 and higher than prior to the pandemic, but lower than in 2022-23. Prior to the pandemic net migration to Georgia was about 40,000 per year. Domestic net migration will be about 40,000 in 2025 compared to about 45,000 in 2024 and 58,000 in

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