The Georgia real estate market has found itself in the same position as every other state in the country. Local housing trends are the direct result of indicators created in the wake of the pandemic. The impact of the Coronavirus on the real estate market has simultaneously decreased inventory levels, catalyzed demand, and altered the investing landscape. As a result, home values have tested new highs each month in 2021, which begs the question: Is Georgia a good state for real estate investing?
The Georgia housing market remains a great place to invest in real estate. It is worth noting, however, that the most viable exit strategies have changed. While rehabbing was once the most prominent form of real estate investing, increases in home values have decreased profit margins. That isn't to say real estate investors in Georgia can't rehab real estate, but rather that long-term strategies look more attractive at the moment. In particular, the new market created by the pandemic seems to favor landlords and rental property owners; let's take a look at why.
The Top Georgia Real Estate Markets
While the best real estate market in Georgia is up for debate, here’s a list of the cities investors may want to pay special considerations to:
Average Days On Market: 78 (43 days to get an offer, plus 35-day closing period)
Unemployment Rate: 3.2% (latest estimate by the Bureau Of Labor Statistics)
Population: 10,617,423 (latest estimate by the U.S. Census Bureau)
Median Household Income: $58,700 (latest estimate by the U.S. Census Bureau)
Total Foreclosures (Q3): 1,252
Increase In Foreclosures From Q2 To Q3: 45.2%
Georgia Median Home Prices
The median home price in Georgia, at least according to Zillow’s Home Value Index, is somewhere in the neighborhood of $262,707. Today’s home values surpass pre-recession price points and are now easily higher than they have ever been. Every increase in value throughout 2021 has represented a new all-time high. It is worth noting, however, that the road to today’s prices wasn’t without its own obstacles.
For a decade, real estate in Georgia (not unlike the rest of the country) has experienced a significant price variance. As recently as April 2012 (when the Georgia real estate market bottomed out), the median home value in Georgia was approximately $109,000. In that time (from April 2012 to today), median home values in the Georgia real estate market appreciated 141.0%. To put things into perspective, the median home value in the United States increased 87.9% over the same period to get to where it is today: $308,220.
The drastic increase in prices is primarily the result of the same indicators that have lifted prices across the country since 2012: Growing optimism in the real estate sector, a strengthening economy, and a distinct lack of available housing. If for nothing else, more buyers can actively participate in the market thanks to improving working conditions, opportunities, and wages. The Georgia real estate market is widely believed to be the primary beneficiary of a record-long economic expansion.
In the last year, however, increases in home values were the direct result of the pandemic and its lasting impact on the local housing sector. Due, in large part, to low inventory levels and increased demand, the Georgia housing market has seen its median home value increase as much as 20.3% over the last 12 months. The typical home value of homes in the United States, on the other hand, increased about 18.4%.
Simply put, there aren’t enough homes to meet the demands of today’s buyers. Homeowners have been able to increase asking prices in response to growing competition. Moving forward, home prices in Georgia are expected to continue rising—albeit at a slightly slower pace. The increase will result from the same factors increasing home values in 2021: low inventory, high demand, cheap borrowing costs, and a lack of new construction.
Georgia Median Rent Prices
The Georgia housing market's latest increase in home values has impacted the local rental market. If for nothing else, higher home values and a lack of listings have prevented a large population of prospective buyers from participating in the market. As a result, many people want to buy but can’t, which lends itself to another issue: the same supply and demand crisis facing would-be buyers is impacting renters.
Since more people are priced out of the buying market, we see more renters than average competing over fewer available properties. Landlords have found themselves in a position of power in Georgia, and their asking prices reflect as much.
According to the latest data released by Apartment List, the median rent in Georgia has increased 22.7% in the last year and now sits around $1,345. The latest increase in rents has outpaced home value appreciation over the last year. As a result, renters can expect to pay the following in rents (on average):
For context, the national average rent price is about $1,302, or 3.3% lower than the average renter pays in the Georgia housing market. The difference is modest, and appreciation forecasts suggest the discrepancy will only grow for the foreseeable future. As long as inventory remains tight, landlords will be able to justify rent increases. That said, the Georgia real estate investing community still has time to get into the long-term rental space.
Georgia Foreclosure Trends & Statistics
According to ATTOM Data Solutions’ Q3 2021 U.S. Foreclosure Market Report, "there were a total of 45,517 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — up 34 percent from the previous quarter and 68 percent from a year ago."
Foreclosure filings are up across the entire country, and the Georgia housing market is no exception. With moratoriums and foreclosure forbearance programs expiring, distressed homeowners are no longer protected. In Georgia, a total of 1,252 properties entered into the fourscore process in the third quarter of 2021; that's 45.2% higher than the second quarter and 136.8% higher than the same period last year.
There is no doubt about it: foreclosure filings are on the rise in Georgia. Perhaps even more importantly, however, are the expectations that foreclosures will continue to rise. As more and more banks are allowed to initiate the foreclosure process, the number of distressed homeowners across the state is likely to increase. That said, now is the time for real estate investors in Georgia to start lining up financing. Immediate access to funding could simultaneously enable Georgia real estate investors to help distressed homeowners secure a deal.
Tax Lien Investing
Tax Lien or Deed: Redemption Deed State with Penalty
Interest Rate: Penalty of 20% if redeemed after sale
Redemption Period: 1 Year after Tax Deed Sale
Georgia Real Estate Investing
Real estate investors in Georgia, like everywhere else, should prioritize distressed homes. If for nothing else, foreclosures will coincide with today's best profit margins. Perhaps even more importantly, however, distressed property owners are typically more likely to sell. As a result, Georgia real estate investors will want to focus their attention on delinquent homeowners; that way, they'll increase their odds of landing a deal with better profit potential.
The Georgia real estate investing community should be able to step in and simultaneously help distressed homeowners while landing deals. Of course, knowing where to find real estate deals in Georgia is only part of the investing equation. In addition to locating properties with potential, investors need to know what to do with them once they are acquired, which begs the question: Which exit strategies does the Georgia real estate market cater to the most?
Currently, the Georgia real estate market leans in favor of just about every exit strategy: wholesaling, rehabbing, and renting. That said, one strategy seems more viable in today's market than any other: long-term rental properties.
Thanks to historically low interest rates, investors may help offset today's high acquisition costs. As recently as September, the average commitment rate on a 30-year fixed-rate loan was 2.90%. While up slightly year to date, today's rate is historically low and represents a great opportunity for Georgia investors to increase cash flow and offset higher acquisition prices. At the very least, the less money rental property owners have to pay towards their mortgage each month, the more they can pocket from incoming rent.
In addition to lower borrowing costs, Georgia's price-to-rent ratio is 16.27. At that level, it's slightly more affordable to rent in Georgia than to own real estate. The state's price-to-rent ratio will drive more people to become renters; houses are too expensive for many to even consider buying. The lack of affordability driving people to rent will increase demand, and landlords will be able to increase asking rates and mitigate the risk of vacancy.
Georgia Housing Market Predictions
To be clear, every housing market prediction coincides with an inherent degree of error. There are far too many variables that must be accounted for to predict a respective market’s outcome accurately; there will always be a margin for error. That said, it has become good practice to try and anticipate a market’s most likely outcome. Georgia real estate investors with their fingers on the pulse of the local market will maintain an edge over the competition, and the industry in general.
Using historical data, it is safe to assume the following Georgia real estate predictions are the most likely to come to fruition:
Secondary cities will receive more attention: The pandemic has allowed more people to work from home and even move to alternative cities with lower living costs while maintaining their employment status. As a result, homeowners are trading expensive primary cities for more affordable secondary cities like Alpharetta and Warner Robins.
Prices will continue to rise: As perhaps the most likely Georgia real estate market prediction to come true, there’s an excellent chance prices will continue to grow for at least a year. There isn’t enough inventory to meet current demand, which allows homeowners to drive up prices in the face of steep competition. Combined with a strengthening economy and low interest rates, that should increase the number of buyers actively participating in the market. Until there is enough inventory to satisfy demand, it looks like prices will continue to rise.
Optimism in the industry will work in Georgia’s favor: The Georgia real estate market has a lot working in its favor, but optimism might be its greatest resource. While foreclosures and distressed properties have ravaged the state, the worst appears to be in the past, and positivity is all that remains moving forward. Despite exhibiting one of the country’s highest foreclosure rates, employment is relatively high. The economy is improving, which should help a lot of homeowners get out from underwater.
The Georgia real estate market has developed an affordable reputation for both buyers and investors. Despite nearly a decade’s worth of appreciation, real estate in Georgia remains less expensive than its national counterpart. Not only is real estate well below the median home value in the United States, but Georgia’s distribution of distressed homes allows investors to secure deals below market value—with attractive profit margins, nonetheless. That, combined with growing demand and increasing optimism makes Georgia a great place to consider buying real estate.
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