RESEARCH TRIANGLE PARK – Housing prices in the Raleigh area would be most affected by the arrival of Amazon HQ2 and its 50,000 related jobs, according to a new study from the National Association of REALTORS.

“While HQ2’s injection of jobs and higher incomes could boost the local economy, it could also cause the most dramatic impact on home prices, among all the HQ2 candidates,” REALTORS says in its assessment of the housing markets that are listed as finalists for HQ2 as announced by Amazon.

Growth already is raising prices for Raleigh-area homes, the report adds.

“With a median home price of $345,000, Raleigh, N.C. is inching further away from its reputation as a relatively affordable housing market,” REALTORS says.

Real estate statistics for the region reflect REALTORS’ view of the market.

Triangle’s market is hot already

The capital area housing market already is tight with prices rising and sellers getting on average 98 percent or more of their asking prices, according to the Triangle Multiple Listing Service. And the REALTORS study doesn’t mentioned the impact a new Apple campus would have on housing prices in the area should the tech giant decide to build a new campus in RTP.

Across the entire Triangle region of Wake, Johnston, Durham and Orange counties, the average sales price year-to-date are up 5.6 percent with an average selling price of more than $303,000.

In Wake County, average closing prices have climbed 5.6 percent this year to more than $342,000.

Although the REALTOR study focused on Raleigh and Wake County, Amazon has made clear that it is considering the entire Triangle as a location for HQ2.

Even for renters, HQ2 would mean greater demand. A recent study that focused on rental properties said demand from new residents would require more rentals be built. Other studies published over the past year also have noted HQ2 would have an impact on prices and housing demand.

The price of growth

The study also points out the impact of other tech development projects has had on local housing costs: The new Apple headquarters in Cupertino, Calif., and Toyota’s North American headquarters in Plano, Texas.

  • The Apple impact: “At the time Apple Park was approved by the Cupertino City Council in 2013, the median home sold within 1 mile of the new headquarters was $992,000, compared to $667,000 for all of Santa Clara County. Just before the new headquarters opened in April 2017, median sale prices of homes within 1 mile had jumped 54.7 percent to $1,535,000, while prices in  Santa Clara County had jumped 29.8 percent to $865,000. Additionally, only six months after opening, the median sale price within one mile of the headquarters jumped 24.4 percent to $1,910,000, while Santa Clara County saw a 18.3 percent increase to $1,023,000 during the same time period.”
  • The Toyota project: “Prices also increased when Toyota announced that their new North American headquarters would be located in Plano, Texas, May 2014. That announcement coincided with accelerated growth in Plano County, where the median sale price growth increased from 6.1 percent in 2014 to 9.9 percent in 2015.”

The HQ2 impact by city

Here is the REALTORS assessment for the other 19 Amazon HQ finalists:

  • Los Angeles-Long Beach-Anaheim, CA  

After months of strong growth in home prices, the Los Angeles market is finally showing hints of deceleration. The median home price reached $749,000, up 6 percent from last year, after growing 42 percent since 2013. The pace of sales is now stable, with the median age of inventory at 40 days, flat over last year, and decelerating significantly from the 14 percent drop a year earlier. An HQ2 move to this metro could break this cooling trend and drive demand and housing prices back up. At the same time, Los Angeles is big enough to absorb the population growth.

  • Chicago-Naperville-Elgin, IL-IN-WI     

HQ2 would provide a nice stimulant to the Chicago housing market, which has lagged behind other major metro areas. With a median list price of $295,000, up 5 percent over last year, Chicago’s prices have more room to grow than similar-sized metros, such as Los Angeles and New York. Although housing prices would likely rise in the most sought-after neighborhoods and suburbs, Chicago isn’t limited by space constraints. There are many areas throughout the city and suburbs ripe for development, making it fairly easy for the housing market to quickly adjust to the demand that would accompany winning HQ2.

  • New York City

HQ2 would have a small impact on the New York housing market overall.  While it would likely drive up prices in hot markets like Brooklyn, N.Y. and Queens, N.Y., it would also provide a nice stimulant to the city’s high-end housing market. Over the past year, we’ve seen the New York luxury market cooling off with Manhattan and Brooklyn seeing luxury prices down 1 percent and 6 percent, respectively. On the flip side the luxury scene in Queens has picked up speed and is growing by 16 percent with an entry point of $1.3 million, making it a comparable alternative for Seattle transplants where the entry point is $1.5 million.

  • Miami-Fort Lauderdale-West Palm Beach, FL 

At $390,000, homes in Miami remain unaffordable for locals, which has resulted in a slow time on market of 93 days. Although HQ2 would likely double the pace of job growth in Miami,  it it could also expand the affordability gap between existing lower income households and new higher income households. This would require Amazon and city planners to make investments in housing projects, not just around the chosen location but in the broader city area.

  • Atlanta-Sandy Springs-Roswell, GA    

The sheer size of the Atlanta housing market, as well as its high relative affordability and under developed suburbs, put it in a better position to absorb potential HQ2 population growth. However, with prices heating up and anemic levels of new construction, low inventory within commuting distance of HQ2 could become an issue. Asking prices for homes in Atlanta have reached $320,000, up 10 percent over last year. Inventory is down 4.3 percent as of August and earlier this spring, it reached a decline of 13 percent due to the high demand in the area.

  • Boston-Cambridge-Newton, MA-NH

Boston’s housing market has been rapidly heating up in recent months and an HQ2 move would only increase price growth in high-density residential areas. The median listing price for homes in Boston is $500,000, which is up 3 percent year-over-year. Half of all homes in this area sell in less than 47 days, which is 8 percent or 4 days faster than last year. This combination of low housing inventory and rising prices, has the potential to jolt home prices up substantially in the event of a HQ2 opening.

  • Denver-Aurora-Lakewood, CO

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 percent increase from five years ago. Inventory continues to move quickly in Denver, with homes typically selling in 38 days, 23 days faster than the national rate. Increased demand from HQ2 would make it even harder for mid-to low income families to enter the market.

  • DC area markets

If any of the three potential candidates in the Washington D.C. metro area (Montgomery County, Md.; Washington D.C. and Northern Virginia) are selected, it could be a game-changer for the region’s economy and housing market.

An HQ2 opening in Washington D.C. would likely result in a surge in home prices, because it is already facing low available inventory compared to its population. Today, homes in the D.C. area are typically listed for $600,000, an increase of 9 percent since last year. Half of all homes in the area sell in less than 41 days, 3 days faster than last year. Both price increases and fast home sales would only be exacerbated by a sudden influx of HQ2 workers.

Montgomery County, Md. faces similar inventory challenges, and while home prices are virtually flat at $503,000, inventory is still moving quickly. Half of all homes in Montgomery sell in under 45 days, 3 days faster than last year.

With more inventory relative to households, Northern Virginia may be the best suited of the three markets to absorb the hit to inventory. The median home price in the area is $511,000, up 2 percent year over year, with homes selling in 44 days, 2 days faster than last year.

  • Dallas-Fort Worth-Arlington, TX        

The Dallas housing market has already seen tremendous growth in jobs and home prices. The median listing price is now at $340,000, after years of double digit growth. Compared to other city candidates, the market is better equipped due to land availability to deal with HQ2 growth. However an HQ2 move would heat up housing in the urban core and outlying areas and further increase the cost to buy.

  • Philadelphia-Camden-Wilmington, PA-NJ-DE-MD    

Philadelphia’s housing market remains affordable compared to other finalist cities and could absorb the population growth resulting from an HQ2 pick. Housing prices have reached $265,000, up 6 percent year-over-year, but still 10 percent below the U.S. median home price. However, inventory has been decreasing rapidly this year, with the total number of homes for sale down 14 percent over last year.

  • Pittsburgh, PA      

Pittsburgh is the least expensive housing market on the HQ2 list. With a median listing price of $180,000, the cost of housing is significantly lower than other candidates such as New York and Los Angeles where homes are $1.1 million and $749,000, respectively. If HQ2 opened here, it could prompt city planners to make investments in infrastructure and give a much-needed boost to Pittsburgh’s employment rate of 4.4 percent, which is above the national average of 3.9 percent. However, affordable home prices have already created an inventory shortage in Pittsburgh, with inventory down 8 percent. An additional influx of demand could exacerbate the problem for first time buyers.

  • Columbus, OH

Columbus ranks as the second least expensive housing market on the HQ2 list with a median listing price of $250,000. Its small size and relatively low home prices make it more vulnerable to the influx of demand that will be created by HQ2. Columbus is already the fastest moving market among the candidate cities, with half of all homes selling within 37 days. A sudden surge in demand would further strain this already-competitive market, resulting in skyrocketing home prices and further inventory declines.

  • Austin-Round Rock, TX

Austin, Texas is one of the markets on the HQ2 list that’s fairly well positioned to deal Amazon’s second headquarters. Its existing inventory is currently higher than 10 other candidates relative to its size and it’s one of the five candidates that’s seeing growth in new single family construction. Both of which, would give it a head start in absorbing HQ2’s housing demand. Additionally, an injection of HQ2 jobs could help it recover the job momentum it lost after its surge earlier in the decade, and put it back on top as one of the fastest growing markets in the country.

  • Indianapolis-Carmel-Anderson, IN

The Indianapolis housing market gained significant momentum this summer with home prices growing 4 times faster than the rest of the U.S. Its inventory declined 23 percent year-over-year due to ferocious buyer demand for affordable homes. While it still remains one of HQ2’s lower priced candidates at $260,000, the new headquarters could further fuel price gains in areas within commuting distance. It could also significantly benefit Indianapolis, by tripling its job growth and bringing it back in line with the rest of the country. An influx of new residents is likely to prompt Amazon and city planners to invest in infrastructure and housing in the metro overall.

  • Nashville-Davidson-Murfreesboro-Franklin, TN

After record-breaking growth the last five years, prices in the Nashville have just now started to slow down at $356,000. If it is chosen for HQ2, it could reignite price gains and job growth and turn it back into one of the fastest appreciating markets in the U.S. Although inventory is up 23 percent over last year, its relatively small infrastructure could pose challenges in absorbing a significant influx of demand and  potentially widen the wealth gap between lower and higher-income earners.

  • Newark, N.J.

Newark is the fastest-growing housing market among all Amazon finalist cities. Listing prices are up 21 percent year-over-year, driven by demand from neighboring New York City. Despite this growth, the region has flat job growth projections and a high unemployment rate  of 5.6 percent, well above the national rate of 3.9 percent. An injection of HQ2 jobs could help jumpstart Newark’s local economy and keep it growing for years to come.

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