Savannah Chamber

15 4 Housing Recovery Housing and real estate development will be a powerful driver of Georgia's economy in 2016, helping the state's economy to outperform the nation's economy. The number of single-family home starts for new construction will increase by 23 percent. New multi-unit homebuilding will rise by 10 percent. Georgia's housing market is responding to a more favorable balance of supply and demand. As of mid-2015, the price of an existing single-family home in Georgia had risen to within 3 percent of its peak value. These prices will rise by 5 percent in in 2016. Lower priced homes will appreciate the fastest, and reflects investors' interest in purchasing inexpensive homes for use as rental properties. In contrast, price appreciation for more expensive homes will depend mostly on the trade-up market, which is still not functioning normally. As potential homebuyers see a record of price appreciation, more will opt to become homeowners. Rapidly rising rents will reinforce this trend. But, as home prices rise and the number of distressed properties shrinks, home sales to investors will drop. Sustaining the recovery of the housing market through 2016 means that trade-up buyers and first-time buyers must become more active. There is tremendous potential for more active housing markets because a huge pent-up supply of household formation has accumulated. As economic and housing market conditions continue to improve, that potential will be unleashed. Demographics Due to job growth and the housing recovery, geographic mobility continued to recover in 2015. As net domestic and net international migration increased, Georgia's population began to grow more quickly. Corporate relocations and expansions brought more people to Georgia. In 2016, that trend will continue to bolster the state's population growth at a pace that exceeds the national average: 1.1 percent for Georgia versus 0.8 percent for the U.S. Our forecast estimates that domestic net migration will rise to about 25,000 people in 2015 and to 30,000 in 2016. Georgia's higher rate of population growth will be dependent on net international migration of about 28,000 people in 2015 and 30,000 in 2016. Georgia's population growth also will benefit from a slight increase in number of births. Small Business Expansion The lack of new business formation is one underappreciated reason why Georgia's job recovery initially lagged the nation. It is new companies that typically create almost all net new jobs. Business formation requires cash. The typical entrepreneur often obtains the funds needed to start, or expand, their business by borrowing, using their home as collateral, and that's been a problem for Georgia's entrepreneurs because Georgia's relatively high number of bank failures restricted relationship-based lending. The good news is that Georgia's home prices are up about 36 percent (as of mid-2015) from their lowest point. So, home equity will be much more available to finance new business startups and small business expansion. Educational Achievement To fully leverage its new economic development policies, Georgia must adjust its priorities to emphasize educational achievement. This will be critical in terms of improving Georgia's competitiveness, which ultimately determines Georgians' standard of living. The challenge is immense: Georgia trails many other states when it comes to educating its children. According to the National Center for Education Statistics, Georgia's eighth graders rank 40 among the states in math, 34 in reading, and 28 in science. Ultimately, a failure to educate our children lowers our relative standard of living, a fact that is becoming more evident. The data for 2014 clock per capita person income in Georgia at only 85 percent of the national average, a level last seen in 1982. We dropped 15 places in the national rankings from 26 highest in per capita personal income in 1999 to 41 in 2014. Prospects for Selected MSAs Atlanta A revival of population growth and the housing recovery will strongly underpin Atlanta's ongoing economic recovery. A high concentration of college-educated workers, business partners, high-tech companies, and research universities will continue to attract high technology companies in life sciences, research and development, IT, professional and business services, and advanced manufacturing. Life sciences companies are attracted by the presence of the CDC and nonprofits such as the national

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