Metro Augusta is a mid-sized market, but it punches well above its weight class when it comes to VA loans.
In fact, the Augusta area saw the nation’s ninth-largest increase in VA loans to millennial and Generation Z veterans and active-duty military personnel during the 2019 fiscal year, according to a recent analysis of U.S. Department of Veterans Affairs data by Veterans United, the nation’s largest VA lender.
The Augusta-Aiken area, with just over 600,000 residents, saw a 16.5% jump in VA-backed mortgages to the two youngest categories of American adults, which are generally defined as those born between 1981 to 1996 (millennials) and those born since 1997 (Gen Z).
That strong performance, no doubt a result of the region’s growing cyber-based military population, puts metro Augusta behind No. 8, Tampa-St. Petersburg, Fla., (17.2%) and ahead of No. 10, Las Vegas (14.7%). Both of those metro areas, by the way, have roughly four times our population.
Several cities in Columbia, Mo.-based Veterans United’s Top 35 list are among the largest metro areas in the nation, including Los Angeles (4.5%), Philadelphia (12.2%), Atlanta (9.9%), Houston (9.5%) and Chicago (4.2%). Yet all those markets were topped by metro Augusta’s year-over-year growth in loans to millennial and Gen Z homebuyers.
Augusta’s growth even outperformed military-heavy markets such as San Antonio (13%), Washington, D.C. (11.8%), Virginia Beach-Norfolk, Va. (10.7%), and San Diego (6.1%).
And while metro Augusta’s total volume of millennial and Gen Z loans during the past fiscal year is modest – 1,452 – the number still eclipses the number of loans approved for those two demographics in many larger metro areas, including Minneapolis (1,444), Kansas City, Mo. (1,291), and Tucson, Ariz. (1,068).
The number is fairly significant when you consider roughly 10,000 homes are sold each year the Augusta metro area.
Any way you slice it, VA lending is big business in these parts. And, that business ultimately benefits the overall local economy, as the 0% down, low rate, PMI-free financing help oodles of young households hop on the property ladder – something that is becoming increasingly difficult for many non-veteran consumers.
“…Because of their education benefits, many younger veterans aren’t burdened with mountains of student loan debt,” writes Chris Birk, director of education for Veterans United. “Those advantages have made Generation Z and millennial veterans and service members some of the strongest and most successful homebuyers on the market, and they’re making their presence felt in communities across the country.”
Veterans United focused only on metro areas with at least 2,000 VA purchase loans over the two-year period.
Metro Augusta’s veteran and active-duty personnel has swelled in recent years as Fort Gordon becomes the epicenter of the Army’s information and electronic warfare operations. The relocation of Army Cyber Command from Fort Belvoir, Va., to Fort Gordon is expected to conclude in June 2020.
The installation, which already employs about 16,000 service members and more than 13,500 civilian employees, is expected to continue growing well into the next decade based on Department of Defense forecasts.
In case you’re curious about which cities made the top five on Veteran United’s list, here they are ranked by year-over-year increases in millennial/Gen X loans: Jacksonville, N.C., 44.4%; Killeen-Temple-Fort Hood, Texas, 25%; Oklahoma City, 20.5%; El Paso, Texas, 20.4%; and Fort Walton Beach-Crestview-Destin, Fla., 19.7%.
HOME SALES: Nearly 700 homes were sold in the most population-dense areas of the Augusta-Aiken market during October, according to the Greater Augusta Association of Realtors.
The organization, which oversees the multiple listing service for all of Columbia and Richmond counties and the western half of Aiken County, reports 696 homes were sold during the month at an average price of $191,972, about $3,000 below the average list price. The median – the mid-point between the most- and least-expensive home – home sold in the area was $178,950.
Compare that to the national median of $312,000, as reported by the National Association of Realtors in October, and you’ll notice local homes are priced nearly 40% less.
The average home sold in the Augusta area during October spent 113 days on the market, about 48 days longer than the national average.
Bottom line: Homes take a little longer to sell in the Augusta area, but they’re much less costly than homes in most other parts of the country.
NEW TO YOU: Like the rest of the country, the majority of home sales in metro Augusta are resales of previously owned homes.
Construction of newly built single-family homes in the area is still below levels seen during the housing bubble more than a decade ago – thanks to land and labor cost increases, additional government regulations and lenders requiring applicants have more than a pulse to get a loan.
However, the pace of new home construction appears to be on the rise. According to data from permit-tracking firm Construction Week, builders took out 1,857 permits for new home construction in Aiken, Columbia and Richmond Counties through Nov. 8, a 6% increase from the 1,755 permits taken out this time last year.
LOCAL REPRESENTATION: Congrats to Doug McMonigle, president of Hephzibah-based MRC Construction Co., who was recently installed as the new president of the Home Builders Association of Georgia.
McMonigle, a past president of the Builders Association of Metro Augusta, was named head of the statewide association during its annual meeting in Hilton Head Island, S.C., last month.
I would have acknowledged the honor sooner, but I was out of the country on vacation (the reason this column was on hiatus for the past two weeks).
APARTMENT BOOM PERSISTS: Let’s keep the housing theme going and talk about renters for a bit. It’s fairly obvious from multifamily construction in the area during the past few years that local apartments have gone increasingly upscale.
One needs to look no further than the market’s two newest “luxury” apartment communities under construction in west Augusta – the 296-unit Rivershoals Apartments at the Village at Riverwatch development, and the 252-unit Alexander Heights apartments on nearby Alexander Drive.
Both communities – like their recently built “class A” peers Ironwood, The Clubhouse, Residence at Riverwatch and Grand Oaks at Crane Creek – will have one-bedroom rents starting in the $1,000 range, about $225 a month higher than the city’s median one-bedroom rate calculated by data firms such as Apartment List and Zumper.
That median, or course, is skewed by the large number of 20- to 50-year-old class “B” and “C” apartment complexes that were built before high-end features – granite countertops, wood-laminate flooring, stainless appliances, etc. – became the norm. Newer complexes also boast resort-style amenities, such as saltwater pools, swanky community pavilions, garages, massive fitness centers and lounge-like clubhouses.
Rivershoals, which is being constructed between the Residence at Riverwatch complex and the future Topgolf entertainment venue, will have all the bells and whistles plus views of the historic Augusta Canal when it opens in summer 2021. Alexander Heights, which is being built just north of upscale apartments The Glen at Alexander (not to be confused with the upscale TEN35 Alexander apartment community just across the street), will have walking trails and a pet park when it is completed in late 2020.
“Augusta is a great place to live, with a strong, growing and diverse employment base and an attractive quality of life,” said Alexander Heights developer Jim Borders, president of Atlanta-based Novare Group, which is building the complex with Batson-Cook Development Co.
A common theme among the new communities is they appear to be angling for the market’s growing number of cybersecurity and medical professionals, as well as other upper-income millennials seeking home-like features without home-like commitments and hassles.
It’s not a stretch to say many jobs created by metro area’s cyber boom pay above-average wages. According to 2018 figures from the Bureau of Labor Statistics, the Augusta-Aiken metro area’s average hourly wage for all occupations (from doctors to ditch-diggers) was $21.62. That works out to about $45,000 a year. The average salary for cybersecurity/intelligence analysts in Augusta – depending on your source – range from the mid-$50s to the low-$70s.
Another commonality to the area’s luxury multifamily boom is that the lion’s share of it is happening in Richmond County and North Augusta rather than Columbia County, the market’s fastest-growing and most density-averse region.
PRICED OUT?: Based on social media chatter, news about the Rivershoals Apartments development appears to have dismayed some locals.
“More apartments?” appears to be the chorus.
I’m not in the multifamily-development business, so I can’t say if the metro area has “enough” or “too many” high-end apartments. I only know from Economics 101 that the market won’t see apartment construction subside until occupancy rates and rents flatten.
That could be years from now – when Fort Gordon’s job growth levels out – or it could be as soon as the next economic downturn cycle.
What is clear about multifamily housing in metro Augusta is that a large share of apartment dwellers are choking on rent payments. According to a recent Apartment List report, the number of “cost-burdened” renter households in Augusta has increased by 6,750 since 2008.
The San Francisco-based firm says 33,804 renter households in metro Augusta, or 53.9% of all renters, spend more than the recommended 30% of their income on rent. That exceeds the national average of 49.5%.
And out of that struggling 53.9%, 30.5% are considered “severely cost-burdened,” meaning half or more of their income goes to rent. Apartment List bases its findings by comparing metro Augusta’s median rent of $859 to the median income of its renter population, $30,591.
A separate Apartment List report says metro Augusta’s 2.5% year-over-year increase in rents during October makes it No. 20 on the list of mid-sized cities with the fastest price appreciation. Nationally, rents increased just 1.4% during the same time period.
Times like these make me glad I’m a homeowner, but I digress.
The main takeaway from the firm’s national cost-burden report is that rates for many renters have increased faster than their wages. What I find most interesting, however, is that the number of U.S. renter households earning more than $100,000 per year more than doubled from 2.8 million in 2008 to 6.1 million in 2018.
I suppose that explains why developers are building so many upscale apartment complexes.
Reach Damon Cline at (706) 823-3352 or [email protected]