Savannah Market Still Has a Ways to Go Before It Hits the Ceiling
5 Things to Know About Savannah’s 2022 Housing Market
By Strategic Passive Investments
Savannah, Georgia, has been on most savvy real estate investors’ “markets-to-watch” lists for years now. Thanks to its location in the sunny southeast, Savannah boasts a temperate climate permitting enjoyable outdoor recreation all year, access to multiple Atlantic Ocean beaches, beautiful opportunities for hiking, boating, and fishing among the Georgia Barrier Islands, and a (relatively) affordable cost-of-living that has been drawing homebuyers for years.
Since the advent of the COVID-19 pandemic, the advantages of the Savannah market have become even more pronounced and attractive to homebuyers. At present, the market is hotter than ever, and many investors have a hard time acquiring properties below retail and getting renovations done without problematic delays. However, there are still ways to get these deals done in the city if an investor knows how to go about it.
If you are considering investing in the Savannah market, there are five things you should know before you get started:
Buyers are looking farther and farther afield.
When most people think of Savannah, Georgia, they think of the city on the Georgia coast that is home to beautiful city blocks filled with lush greenery, historic statuary, and incredible views of the Savannah River and the Atlantic Ocean. However, people who live and work in Savannah know there is far more to the city than just the riverfront – and that is good news for real estate investors! It means there are a lot more opportunities to seek out leads and acquire assets in areas as far as an hour away from the historic neighborhoods of the downtown area.
Renters are prioritizing upgrades over square footage.
Housing is in such demand in the Savannah area right now that many investors are discovering they can improve relatively small, existing rental spaces – either single-family properties or small multifamily assets – without having to expand the square footage or the footprint of the home and still find their upgraded property in high demand. This is particularly relevant in the historic Savannah area where it can be complicated to make exterior changes to properties anyway. Be sure you know what your options are before you invest. While some renters are complaining publicly about the limited square footage, it is not slowing demand for these properties.
The city has new taxes for short-term rentals.
It is nothing new to hear about a municipality targeting short-term vacation rentals and Airbnb units for extra fees and taxes. In Savannah and neighboring Tybee Island, both tourism hot spots, the situation is much like many other places. Many neighborhoods are trying to eliminate or at least dramatically reduce the number of short-term rentals permitted in a given area while the city is trying to figure out new ways to tax them. Last July, Airbnb and VRBO properties faced a small but significant “lodging tax” that was tacked on to all stays and paid by the guests as well as a local excise tax, paid by the owner of the property. In areas surrounding Savannah, you will likely be subject to similar fees as well. In Georgia, these fees and taxes tend to be less punishing than in some other states, but it still should factor in when you are considering a new acquisition and investment strategy.
The port system is much, much bigger than you think.
The Georgia Port Authority, which recently completed a huge deepening project on the Savannah Harbor that will expedite the flow of cargo both in and out of the enormous port, expects projects like this one to net more than $291 million annually in national benefits. That’s a big number, and the port is much bigger than most people realize, stretching far inland and including multiple terminals and container-handling facilities. If you want to invest “ahead of the curve,” watch where port and freight facilities are being built, then buy there. Port workers of all types need housing and may work much farther from the actual harbor than you expect.
There is a thriving film industry in the “Hostess City.”
Savannah has the nickname “The Hostess City” because it is so welcoming – typical of southern hospitality! However, many think it should also be nicknamed the “Southern Silver Screen City” because of the thriving film industry located in the area. The picturesque views, wide variety of outdoor settings, and low state and local taxes for filmmakers make Savannah a big reason Georgia ranks first in the nation for the production of top-grossing feature films. In fact, the state actually beat not just California and New York, but also the U.K. and Canada! The city also actively courts technology workers from out of state, which has been creating a booming I.T. sector and startup community in the area.
The Market is Hot, but It’s Not Done Rising
Savannah has been on an upward trajectory for years, and the COVID-19 pandemic accelerated this. However, that does not mean that the city has peaked. In fact, list prices rose by $50,0000 in just six months last year, and most analysts agree that the city is due for more price appreciation before the trend is done. With more than half of the city’s households renting, if fix-and-flip deals are not for you, the renting options are strong as well. Median rents have risen 31 percent in the area since 2019, but cost-of-living is still about 3 percent below the national average and Forbes ranked the city as “one of the best places for businesses and careers in the U.S.”
The real estate market is getting really heated in many areas of the country, and more and more investors are looking southward. Do not get left behind! Savannah and the surrounding areas still have plenty of options for determined investors.