- A new report explores how much home values may rise in each of the top cities for HQ2, Amazon’s second headquarters.
- A dramatic rise in home values is usually not great for residents overall, but it’s good news for homeowners looking to sell their properties.
- Newark, New Jersey; Raleigh, North Carolina; and Pittsburgh, Pennsylvania could see the biggest gains in home values if Amazon chooses them, according to the analysis.
- Home values will likely increase wherever HQ2 lands.
The $5 billion campus, expected to bring 50,000 high-paying jobs, is bound to transform the character of the city where it lands. City-planning experts also expect HQ2 to bring soaring housing prices, with some areas seeing more dramatic rises than others.
As Seattle has seen, a large increase in housing prices may not be beneficial for the chosen city overall. While Amazon’s first headquarters helped spur a booming tech industry in Seattle, the city is now dealing with an affordable housing crisis, which local housing experts link to the company’s growth.
The company’s rapid growth may have made Seattle’s housing too pricey for some longtime residents, who have accused Amazon of perpetuating income inequality in the city.
Amazon will undoubtedly affect housing prices for longtime residents in the chosen city for the second headquarters. At the same time, a rise in home prices will be good news for most homeowners near HQ2, who could see big profits if they decide to sell.
A new report from Mr. Cooper, the largest non-bank mortgage servicer in the US, explores how property values could rise in each of the top cities from June 2018 to June 2019 with HQ2.
In its analysis, Quantarium, Mr. Cooper’s research arm, first considered how Amazon’s headquarters affected home prices in Seattle. The team then forecasted what home prices might look like in the top potential HQ2 cities with the addition of a new campus, taking into consideration differences in population, GDP, unemployment rate, and average income. (Note: Toronto and Northern Virginia were excluded due to insufficient data.)
The analysis suggests that homeowners would see the biggest gains in Newark, New Jersey and Raleigh, North Carolina, where property values would rise 33.5% and 27.5%, respectively. For these two cities, the researchers project that the rate of increase would be even higher and faster than what Seattle experienced after Amazon arrived in the late 1990s.
Newark, a city with a struggling housing market, is a unique case. New Jersey’s government is trying to lure Amazon with $7 billion in economic incentives, likely because Newark has a lot to gain if HQ2 lands there. Out of all the top contenders, Newark is the only city where property values may decrease (by 5%) over the next year without Amazon.
The smallest increases in home values would be in Los Angeles (3.9%) and Boston (0.4%), according to the report. These cities already have relatively high GDPs and dense populations, two factors that would lead to a lower rate of change.
There is speculation that Amazon will pick a site in the Washington, DC area, which includes Northern Virginia and Montgomery, Maryland. According to Quantarium’s report, Washington, DC would see few increases in home values (3.9%), but Montgomery would experience significant gains (11.3%).
A real-estate fund called Third Avenue is already making bets that HQ2 will land in the Washington, DC area. The fund recently bought $10 million in shares in JBG Smith, a real-estate investment trust working on a massive redevelopment in Crystal City, a neighborhood in Northern Virginia. Bloomberg reported this week that Third Avenue told investors its shares in properties near Washington, DC will “likely be worth a lot more than our current estimates” if Amazon comes.
“Washington, DC seems to rank near the top of the list,” the fund wrote. “Should it ultimately be selected for its second headquarters, JBG Smith is likely to be a big winner as its Crystal City and Pentagon City locations are natural candidates for Amazon to utilize as it initially relocates employees to the region.”