Pittsburg has the lowest housing prices among Amazon HQ2 contenders
Here’s Amazon’s HQ2’s potential impact on the winning city’s real estate market according to Realtor.com. Jeff Bezos has promised to announce which U.S. city will be home to Amazon’s HQ2, by the end of the year. As Realtor.com sees it, the location Amazon chooses will impact the local housing market there for years.
“Some of the areas in the running have changed over the last year. Secondary markets including Pittsburgh, Columbus and Indianapolis have gotten hotter," explains Javier Vivas, director of economic research at Realtor.com. “We’ve seen prices rise and inventory shrink as they heat up,” Vivas adds.
To get a sense of the potential impact of AmazonHQ2, Realtor.com economists looked at real estate values in Cupertino, California starting in 2013, when the City Council approved Apple’s new headquarters. The then-median home selling price within 1 mile of the proposed Apple Park was $992,000 compared to $667,000 for all of Santa Clara County. By April 2017, when the headquarters opened, that number jumped 54.7% to $1.535 million. Clearly, homeowners living close to Apple Park reaped the financial rewards.
Amazon, which briefly hit a $1 trillion market value recently, has the same potential Apple did. Looking at the finalists, Realtor.com analyzed housing trends, employment numbers and population stats to determine the potential impact. The areas included Los Angeles-Long Beach-Anaheim, California; Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin; New York; Miami-Fort Lauderdale-West Palm Beach, Florida; Atlanta-Sandy Springs-Roswell, Georgia; Boston-Cambridge-Newton, Massachusetts; Denver-Aurora-Lakewood, Colorado; Greater Washington D.C.; Dallas-Fort Worth-Arlington, Texas; Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey-Delaware; Pittsburgh, Pennsylvania; Columbus, Ohio; Austin-Round Rock, Texas; Indianapolis-Carmel-Anderson, Indiana; Nashville-Davidson-Murfreesboro-Franklin, Tennessee; Raleigh, North Carolina; and Newark, New Jersey.
Here’s a look at several of the markets and a dive into the numbers from Realtor.com’s research: Denver-Aurora-Lakewood are still hot housing markets. Realtor.com contends, “HQ2 could thwart the inventory recovery in a hot market like Denver, adding further momentum to the cost of land and home prices.” Affordability is already an issue in Denver.“The median list price is currently $542,000, an 86% increase from five years ago. Inventory is still moving quickly in Denver with homes typically selling in 38 days,” Realtor.com’s research shows. Increased demand from HQ2 employees could make it more difficult for first-time buyers to enter the market.
Chicago’s housing market could benefit from Amazon HQ2
The Chicago-Naperville-Elgin markets could use a boost from HQ2. They have fallen behind other metro markets during the housing recovery. “With a median list price of $295,000, up 5% over last year, Chicago’s prices have more room to grow than similar-sized metros, such as Los Angeles and New York,” report Realtor.com’s analysts. Most likely, housing prices would rise in the desirable neighborhoods and suburbs.
The Atlanta-Sandy Springs-Roswell area offers relative affordability and some underdeveloped suburbs. Prices are heating up though with asking prices reaching $320,000, a 10% increase over last year. In August, inventory was down 4.3%, according to Realtor.com
Talk is the Washington D.C. metro market (Montgomery County, Maryland, Washington D.C. and Northern Virginia) is a top contender since Bezos owns a home in the pricey Kalorama section of D.C. along with the Obamas. “An HQ2 opening in there would likely result in a surge in home prices because it is already facing low available inventory compared to its population. Both price increases and fast home sales would only be exacerbated by a sudden influx of HQ2 workers,” Realtor.com predicts.
As the least expensive housing market on the list, Pittsburgh may have an edge. “With a median listing price of $180,000, the cost of housing is significantly lower than other candidates,” Vivas notes. If HQ 2 opened in Pittsburgh, the unemployment rate of 4.4% could drop.
Affordable home prices have already created an inventory shortage in Pittsburgh, with inventory down 8%. An additional influx of demand could negatively impact first time buyers. No doubt though home prices in the area would benefit.
With such swings in housing prices across the country, you’d think it’s a strong contributor to the decision. “Prices that are low relative to major markets could be a good place for Amazon,” Vivas observes.