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UGA Economists: Housing Shortage Is Holding Down Athens’ Economic Growth

UGA economist Jeff Humphreys speaks about the Athens economy at the Classic Center Jan. 23. Credit: Richard Hamm/UGA

The U.S. economy will cool this year, according to the University of Georgia Terry College of Business’s Selig Center for Economic Growth, but Georgia’s economy will grow faster than the nation’s, and the Athens economy will grow even more than the state average.

The chance of a recession is about 25%, Terry College Dean Ben Ayers told a crowd in Athens’ Classic Center on Jan. 23.

“We are expecting continuing robust growth in our state,” Ayers told perhaps two-thirds of the 500 people originally expected on Jan. 22, before wintry weather forced the event to be rescheduled a day later.

Each year, the business school tours the state with its economic forecast, stopping at each of Georgia’s major cities. Athens’ turn was last week.

U.S. economic output, measured as gross domestic product, is expected to grow by about 1.6%, down from 2.5% in 2024, Ayers said. Georgia’s GDP is predicted to grow by 2.4% in 2025, down from 3.1% in 2024.

Much of the state’s growth will be because of manufacturing and other big projects already in planning or coming online now, such as the huge Hyundai manufacturing plant in Bryan County. The outlook is good for some Georgia economic sectors such as logistics, cybersecurity, healthcare, manufacturing and data centers, not so good for some others, including banking and commercial real estate, according to the Selig analysis.

Jobs growth will slow, and unemployment will rise, Ayers said. Georgia’s unemployment rate is projected to rise from 3.7% to 4%, while the U.S. rate will move from 4.1% to 4.3%, he said.

After inflation rates of 8% in 2022, 4% in 2023 and 3% in 2024, inflation is likely to remain steady around 3% this year, according to the Selig Center.

Housing prices will hold steady or increase only slightly statewide, although they may continue their upward flight in Athens, where house prices grew by 7% just in the past year, according to the Selig Center. Since the beginning of the COVID pandemic in late 2019 to the middle of 2024, the price of a house is up by about 53% nationwide, up 65% in Georgia and 72% in Athens.

A number of things could push growth rates up or down, Ayers told the crowd. More consumer spending could drive growth up, for example, while possibilities including an expanding federal budget deficit, a stock market crash, bank failures or expanding military conflict—all unlikely, Ayers said—could do the opposite.

“Growth will slow but will not stop,” said Jeff Humphreys, director of the Selig Center and author of the forecast.

Humphreys paid particular attention to the Athens economy as he spoke to the Classic Center crowd. Mainly because of the University of Georgia, the Athens economy and many of its jobs are dependent on state spending. That’s both good and bad, Humphreys said—state funding tends to be stable, less dependent on global cycles than others, but when the state does cut its budget, Athens can suffer.

Athens is successful compared to other cities its size in attracting economic development, Humphreys said, citing among other examples life sciences manufacturer Meissner Corporation, bringing 1,700 jobs over eight years, and RWCD International, founded at a UGA innovation lab, now adding 200 jobs. “A cluster of biotech industries with links to UGA has developed a critical mass,” and UGA’s decade-old engineering school and new medical school will help bring more jobs with good pay to the Athens area, according to Humphreys.

Health services and entertainment are also prospering in the Athens area. The new Akins Ford Arena will have a $33 million annual economic impact, Humphreys said.

But Athens growth faces a dark cloud—increasingly unaffordable housing. “Because Athens is a college town, and UGA does not have enough on-campus housing, renters play an outsized role in the area’s housing market,” according to Humphreys. “This in turn leads to a shortage of existing single-family homes and subsequently drives high demand/prices for new homes.”

Higher housing costs have helped push the cost of living in Athens up to now about 97% of the national average. Among other effects, high prices could discourage retirees and creative types from settling here, he said.

About 41% of Athens housing units are renter-occupied—one of the highest rates among American cities—and the vacancy rate here is about 4%, less than half the 10% state rate.

“High mortgage rates and the recent run-up in home prices will be a headwind for single-family housing, but the ever-expanding student population will be a tailwind for multi-unit housing,” according to Humphreys.

The University of Georgia’s enrollment grew by 1,531 students last fall over the previous year—enough to fill several apartment buildings—to reach 43,146.

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