2. The coming Amazonian housing crunch
Judging from Seattle's experience, Amazon's planned second headquarters could bring a housing crisis to the as-yet-unannounced city where it will be built, pushing up home prices by as much as 30%, according to a new analysis.
Why it matters: Amazon HQ2 will take up 8 million square feet, employ up to 50,000 people and cost some $5 billion. A footprint of that scale will strain any city's infrastructure and trigger economic impacts that will reverberate for decades, Axios' Erica Pandey writes.
For a picture of how HQ2 will shake up housing markets, Mr. Cooper, a home loan and mortgage company, analyzed home price changes in Seattle after Amazon expanded its headquarters there in 2010. It says it attempted to isolate Amazon's influence from other factors — and the impact in Seattle hinted at what’s in store for Amazon’s second home.
Of the 20 finalists to host the new Amazon complex, Mr. Cooper looked at the 18 cities that had adequate data from which to draw conclusions:
- Newark would see the greatest potential impact. Without Amazon, home prices there are expected to drop 5%. But with the behemoth in town, prices are projected to rise 28.5%.
- Next in line are Raleigh and Phoenix, where housing prices would soar by 27.2% and 12.1%, respectively.
- At the lower end of projected impacts are D.C. and Los Angeles, which would have 3.9% price hikes.
- The lowest is Boston, whose prices would go up by 0.4%, per the analysis.
"Wherever Amazon goes, they're going to change that city landscape completely," says Alexander Lowry, a professor of financial analysis at Gordon College. Even in a city like Boston, where the report predicts only a slight price bump, the market is hot, he says.
Many of the bigger cities on Amazon's shortlist are already straining to provide affordable housing to residents, and the e-commerce giant moving in would shift the market further toward pricier homes, says Lowry.
- "If you're lucky, and you've been there a long time, you can sell at a good price," but if you're a renter, you may be in trouble, he said.
But, but, but: Amazon has said it's determined not to do to its new home what it did to Seattle. By way of preparing HQ2 bids, "all of the cities have had to do some planning already," Lowry said. "Every city has some different problems, and they've all had to speak to those."