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February 25, 2018

Where Amazon’s HQ2 May Help Housing Most

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Where Amazon’s HQ2 May Help Housing Most

Amazon has narrowed its choices for the home base of its second headquarters, known as HQ2, down to 20 cities, and the stakes are huge. The winning city will garner up to 50,000 new high-paying jobs as well as a promise from Amazon to invest $5 billion in the local economy. In total, 238 cities and regions submitted applications to Amazon, promising tax breaks and other incentives to lure the online giant.

“Amazon’s decision on where it will locate its second U.S. headquarters has the power to transform the local housing market,” says Javier Vivas, director of economic research at realtor.com®. “The city that gets selected will immediately see a boost to jobs and wages, pushing home values up and triggering new construction in neighborhoods within commuting distance of the headquarters location.”

Amazon narrowed the list to 20 finalists on Thursday:

  • Atlanta
  • Austin, Texas
  • Boston
  • Chicago
  • Columbus, Ohio
  • Dallas
  • Denver
  • Indianapolis
  • Los Angeles
  • Miami
  • Montgomery County, Md.
  • Nashville, Tenn.
  • Newark, N.J.
  • New York
  • Northern Virginia
  • Philadelphia
  • Pittsburgh
  • Raleigh, N.C.
  • Toronto
  • Washington, D.C.

“The impact is likely to be more material for smaller markets and those equipped to handle the growth,” Vivas says. “From a housing perspective, Pittsburgh, Indianapolis, and Raleigh, N.C., all offer relative affordability and less inventory constraints, and they would benefit from a new wave of jobs. New York, Los Angeles, Denver, and Boston are markets that have already seen a fair share of growth and inventory challenges, and affordability would be further constrained.”

Amazon has been relatively quiet during its selection process and what all it is looking for, except to say it prefers a metro with a population greater than 1 million and a city that has the ability to attract and keep strong technical talent.

“Getting from 238 to 20 was very tough; all the proposals showed tremendous enthusiasm and creativity,” Holly Sullivan, Amazon’s head of economic development, said in a statement. “Through this process, we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.”

Amazon plans to select a winner for its HQ2 site later this year, but its current headquarters will remain in Seattle, where it employs 40,000 people. The company has exploded in growth since it was founded in 1994, and it is seeking to expand to accommodate its growth nationwide. Meanwhile, Apple is starting a race of its own to find a location to build a second campus. However, Apple says it will not be conducting a public bidding process. The company estimates it will bring up to 20,000 jobs to the selected city for its second campus.

Housing markets can benefit from new corporate headquarters. Vivas points to the example of Toyota moving its headquarters to Plano, Texas, a Northern Dallas suburb. Toyota's announcement in May 2014 coincided with major growth in Plano. The median home sales price in the city increased 3.8 percent between 2014 and 2015. Price increases have been minimal since Toyota opened its Plano campus last year.

Source: “Amazon Chooses 20 Finalists for Second Headquarters,” The New York Times (Jan. 18, 2018)