Housing crunch will grow if Atlanta lands Amazon’s HQ2

0

If Atlanta wins Amazon’s second headquarters, the region will get wealthier, but the demand for homes will soar and the gap between haves and have-nots will also likely surge. ALYSSA POINTER/ATLANTA JOURNAL-CONSTITUTION

If Atlanta wins Amazon’s second headquarters, the region will get wealthier, but the demand for homes will soar and the gap between haves and have-nots will also likely surge.

According to housing experts and economists, the metro area would get a flood of well-paid and mostly young professionals within a short time. In general, companies move in and out of a region and nobody really notices, said John Rainey, region vice president of Re/Max Georgia.

“But 50,000 people is going to be quite an impact,” he said.

Especially since Amazon says it plans to put them all in one corporate campus.

Moreover, along with Amazon, Atlanta would also get a stream of supporting service workers and businesses that would feed off the company. By some estimates, the arrival of 50,000 Amazon workers will quickly translate into several hundred thousand more residents – suppliers, accountants, lawyers, public relations pros, as well as blue-collar workers cleaning offices, making deliveries and serving Seattle-style java.

All of them will need a place to live.

Current construction of homes, condos and apartments – barely keeping pace with the current growth of metro Atlanta – could initially be swamped by the tidal wave of demand.

The housing market is already unbalanced, Rainey said.

Steady economic growth has produced strong demand for houses and apartments while inventory — the number of homes listed for sale — badly lags. That will get worse before the builders get a chance to make it better, he said.

“If Amazon comes to Atlanta, there will be some stress on inventory,” Rainey said. “You know that supply will react to the demand, but it will take some time.”

The number of homes for sale in April represented just 1.9 months of sales – less than one-third of the level in a healthy normal housing market, according to data from Re/Max of Georgia.

That scarcity of listings gives the advantage to sellers, which has meant a steady rise in prices: Zillow this week said Atlanta’s median home price was up 10.6 percent in the past year, and the increase has been accelerating.

There is nothing now that keeps the price trajectory from moving ever-higher, said Clive Bellar, Atlanta-based chief marketing officer for ValueInsured, a company which offers insurance for downpayments on homes.

And that means that — especially in the area around an Amazon HQ2 – even more pressure to send housing prices and rents into the stratosphere.

Concern at lower end

Steadily rising prices should be incentives to builders – but Atlanta prices have been steadily rising for more than six years and that hasn’t yet been enough yet for construction to catch up with demand.

An average one-bedroom apartment in the city of Atlanta rents for more than $1,400, Bellar said. “Rents are already high. That is up 7 percent year over year. And that is without Amazon coming to town.”

For homeowners, the median price of a metro Atlanta home is $200,600, according to Zillow’s most recent report.

They estimate that it would take 3.8 years for a working couple here to save enough money to make a down-payment on a home. And, with two incomes, they’d be able to afford up to $440,000 for a home.

In contrast, it would take 8.3 years for the typical single person to save enough money for a downpayment, and the maximum home he or she could afford would be about $205,000.

Throw in tens of thousands of new, highly-paid residents and – even if many are headed for apartments – the market value of homes is destined to rise. Those with good incomes – especially couples – will have to settle for a slightly smaller or less desirable home, Bellar said.

“I am more concerned about the lower end of the market. Rentals and housing costs are already outpacing incomes,” he said.

Because little of the new construction has been at the low end of the price range. By adding a flood of higher income people, Amazon would likely make the problem worse – especially in areas that are already short on affordable homes.

No one says that Amazon’s arrival would make Atlanta poorer. But as reporting from Seattle by The Atlanta Journal-Constitution showed, it would mean dramatic change.

“The winners are people who own property and the losers are people who rent,” said Dan Immergluck, Urban Studies professor at the Georgia State’s Andrew Young School of Policy Studies. “If you are a property owner, you’ll like this. That is, if you can afford to pay the property taxes.”

Assuming Atlanta wins, the impact on housing will be shaped by which location is the site of the 8 million square-foot campus that Amazon says it wants. The most commonly mentioned candidates:

the Gulch, roughly the downtown area between Five Points and the CNN Center; Midtown, around Georgia Tech.; the site of the former General Motors plant in Doraville; a spread of land off Hammond Drive near Perimeter Center.

The exact make-up of Amazon’s employees is also uncertain, but their preferences are not that hard to guess, Immergluck said. “At least at their headquarters, there are a lot of younger, technically-oriented folks. And those kind of people tend to prefer walkable, denser, urban locations.”

Some will have to move

Is there a danger in overreacting? After all, metro Atlanta last year added about 56,000 jobs. Wouldn’t Amazon just be like an extra year of job growth, a splash easily absorbed in a labor market of 3 million people?

Not really, Immergluck said.

For one thing, the impact will be concentrated in one area, not spread across a huge region, he said. “Tech workers like places like Midtown or the [Atlanta] Beltline. They won’t want to live in Paulding County.”

Just how much will all that move rents and home prices? That is hard to pin down, Immergluck said.

“To answer that requires a year-long, well-funded research project,” he said. “But the impact is sizably bigger than 1 percent and it will accumulate over time.”

And the more it is desirable to high-paid techies, the more unequal the housing market will become.

The more that young, well-paid professionals move into a city, the more it becomes what they tend to like: denser, more urban, more walkable and more affluent, Immergluck said. “The folks serving coffee will have to move out.”

About one-third of metro Atlanta households have income of less than $35,000, according to calculations by Governing magazine from the most recent statistics available. About 36 percent of households make more than $75,000.

Georgia is the 13th most unequal state, according to a 2016 analysis by the Economic Policy Institute. In metro Atlanta, the average incomes of the top 1 percent of wage earners is more than $1 million, while the average income of the rest is $48,356.

KNOW WHAT’S REALLY GOING ON

Atlanta is one of the cities Amazon says is in the running for its next headquarters. The Atlanta Journal-Constitution will provide continuing coverage of Atlanta’s bid to lure Amazon. Our journalism will focus on the urgent questions posed by this potentially transformative business deal. Follow this continuing coverage on AJC.com, MyAJC.com and PoliticallyGeorgia.com.

Source Article