How “Amazon HQ2” Might Impact Real Estate
Amazon recently abandoned plans to build a second site for its “HQ2” expansion in New York City. According to news reports, unexpectedly strong local opposition to the plan ultimately scuppered the deal.
Local activists in New York were incensed about several aspects of the potential move: a $3 billion tax incentive they deemed “corporate welfare”, added congestion on already overcrowded infrastructure as well as expected the displacement of local businesses and residents due to rising property values in the area should Amazon move in.
That last part bears some examinations. Often, when huge investments are made in an area by a big company, property values do rise fast. Lower-income residents get priced out of housing in a process known as gentrification.
Proponents of the Amazon deal claim that no such thing would have happened in New York City. Amazon’s proposed new campus may have been a huge deal in other cities, they said, but it would have just been a small increase in New York City’s corporate headcount. Property value impacts would have been minor in an area where housing units already average more than $1 million in price.
Attom: Amazon’s Expansion in NYC Would Have Boosted Local an Opportunity Zone for Real Estate Investing
However, some new research seems to bolster the claims of the anti-Amazon activists. Property database curator ATTOM Data Solutions looked at a potential addition of 25,000 high-wage jobs in New York’s Long Island City neighborhood, and concluded that the move would have indeed provided real estate investors with new opportunities.
ATTOM Data Solutions’ analysis covered Opportunity Zones in the three markets selected for some portion of Amazon’s second headquarters, dubbed HQ2: New York, Washington, D.C., and Nashville.
The analysis found that homes located in Opportunity Zones nationwide and in each of these three markets consistently were sold at a discount but also have appreciated in value more quickly over the past five years compared to homes outside of Opportunity Zones.
The ATTOM analysis looked at housing characteristics, home values and price appreciation for 7.4 million residential properties and 259,000 home sales in more than 3,000 Opportunity Zones.
This analysis found that the average home price in Opportunity Zones so far in 2018 through September is $163,746, 43 percent below the average home price of $287,150 outside of Opportunity Zones.
This trend plays out in the local Amazon HQ2 markets, illustrating that real estate investors who buy in these zones are realizing a substantial discount below home prices in surrounding areas of the market.
Now, it seems, New York will never know if the proponents or the activists were right about the impact of the Amazon expansion.
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