Whatever city Amazon.com Inc. selects to host its second headquarters is set to see an immediate construction boom in areas close to its new campus. In addition, real estate experts say that existing homes will likely see a rapid price hike. The local economy will also benefit too, with Amazon promising to invest $5 billion into the winning city, and create 50,000 high-paying jobs.
These impacts are not just wild guesses, as similar effects have been witnessed in other cities that welcomed big companies moving into town, CNN Money reports. For example, when electric car maker Tesla opened up its new factory in Reno, Nevada, home prices jumped by 43 percent. And when Apple decided to relocate to Cupertino, California, the price of homes located within a mile of the campus grew by 3 percent more than other homes in the area.
But the true impact of Amazon’s HQ2 on home prices will depend on numerous factors, said Daren Blomquist, senior vice president of communications at real estate data firm ATTOM Data Solutions. He explained that existing inventory, recent home price performance, buyer demand, and the space available for new construction will all factor into the equation, and says the cities on Amazon’s shortlist that are most likely to benefit would be Columbus, Indianapolis and Pittsburgh.
“The impact in markets where there has been single-digit appreciation … we could see a jump, at least in the short term, to double digits of 10 percent to 20 percent or even more appreciation for the first year,” Blomquist said.
But some cities could see an adverse effect, with one expert warning that Amazon’s Hq2 could prove to be bad for Boston if it’s chosen. Fernando Ferreira, an associate professor at The Wharton School of the University of Pennsylvania, told CNN Money that if Amazon moved to Boston it could cause “chaos”, making the housing market there “three times worse than it already is,” due to the city’s extremely tight supply of homes.
Still, this won’t impact on current homeowners, who’re set to benefit massively if their city is chosen.
“If you are in a larger house and ready to downsize or move, this will be a pure gain for you,” said Stijn Van Nieuwerburgh, a professor of finance and director of the Center for Real Estate Finance Research at New York University’s Stern School of Business.
One side effect of the increased home prices that residents should be aware of however, is that property taxes will likely rise following Amazon’s move. Even so, higher tax collection could well have benefits, as the city’s budget for schools and community services would likely increase.