Local housing market a boon in luring Amazon, experts say

Housing just might be Pittsburgh’s ace in the hole in its bid for Amazon’s second headquarters.

At least that’s the view of two online real estate marketplaces that give Pittsburgh an edge over other contenders in the battle for HQ2, based on housing affordability and inventory.

Realtor.com rates Pittsburgh, Indianapolis and Raleigh, N.C., as its top picks based on that criteria. Trulia places the Steel City, Chicago and Columbus in the top three.

There’s little doubt the cost of housing will play a role in where

Amazon for proposals lands. In issued the request in September, asked cities the online for information retailer of housing about options, the availability diversity HQ2 of sites, housing and pricing. near potential

The rapidly growing company has been blamed for skyrocketing housing prices in Seattle, where the median price of a house soared 84.6 percent in seven years — from $373,800 in August 2010 to $690,200 in August 2017, according to Seattle-based Zillow. That spike coincided with the online retailer’s growth in the city, from about 5,200 employees in 2010 to 40,000 today.

If Amazon is looking to a city with modest housing prices to blunt the impact of a second headquarters with up to 50,000 employees over 17 years, Pittsburgh could be it, the online real estate sites suggested.

According to Realtor. Pittsburgh had the lowest median list price — $169,900 — of the 19 U.S. cities that made Amazon’s second round for HQ2 in a list released Thursday.

That compares favorably to some of the perceived frontrunners such as Washington, D.C., where the median list price is $550,000; Boston, with a median price of $489,900; and Atlanta, with a median price of $299,900.

Pittsburgh also had the lowest percentage of income needed to buy — 20.6 percent — of the 19 U.S. cities. Toronto, also selected by Amazon, was not listed.

“If you look at that list [of contenders], housing probably has to be our biggest strength. It has to be a factor to someone moving people [into a city]. When you compare average prices, it’s just crazy. We’re so much lower than everyone else,” said Howard “Hoddy” Hanna III, chairman of Howard Hanna Real Estate Services, based in O’Hara. Ralph McLaughlin, Trulia’s chief economist, sees the region as the top contender for two reasons — it’s the most affordable and it “has the best artificial intelligence program in the country at Carnegie Mellon University.”

Allegheny County Executive Rich Fitzgerald said he always thought housing would be one of the region’s key selling points for HQ2, which could bring as much as $5 billion in investment from Amazon.

“I think one of the big, big advantages is housing prices and the capacity to not be as disruptive to the market as it would be in other cities,” he said. “I think it’s one of the strengths, one of the real advantages we have over the other competitors in the Amazon competition. The $800,000 house in places like Seattle, San Francisco and Boston still only costs about $200,000 in Pittsburgh.”

Mr. McLaughlin said housing is one thing that makes it tough to retain talent in the Silicon Valley. Many workers are leaving for second-tier tech hubs where homes are more affordable. Pittsburgh, he added, is better positioned than contenders such as Los Angeles, New York, Boston and Toronto that already have high housing costs and don’t have a lot of capacity for growth.

But some worry that unless local leaders are proactive, whatever advantages the region has in terms of housing could quickly vanish if Amazon moves in.

Pittsburgh already is wrestling with affordable housing issues in neighborhoods such as East Liberty and Lawrenceville. Some believe those problems could worsen given what happened in Seattle.

“It’s definitely a concern,” said city Councilman R. Daniel Lavelle, who cochaired a task force to address affordable housing issues in the city.

If not handled correctly, the influx of tens of thousands of employees looking for places to live could bring potential dislocation, gentrification and a spike in housing costs, Mr. Lavelle said.

The task force already has found an affordable housing shortage for low- to moderate-income city residents.

Crystal Jennings, housing/transit organizer for Pittsburghers for Public Transit, said that in some city neighborhoods, affordable housing is being removed and not replaced or it is being replaced with a much smaller number of affordable units.

A study by Apartment List released Friday gives some reason for concern. It concluded that rents in Pittsburgh could be “severely impacted” by Amazon’s HQ2 compared to other finalists.

It estimated that rents would increase 1.2 percent to 1.6 percent a year (on top of a baseline growth that averaged 3 percent a year between 2005 to 2015) if Pittsburgh lands HQ2. That translates into an additional $6,970 to $9,533 in rent payments over a decade.

Mr. Lavelle said he would like to see such issues addressed proactively through policies that would require a certain percentage of affordable housing to be built as part of developments.

If Amazon selects Pittsburgh, he believes it should contribute to the $10 million city fund set up to address affordable housing.

As part of the city’s pitch to Amazon, which has not been made public, Mr. Fitzgerald said there are strategies in place to account for the potential housing impacts “in a good, sustainable, positive way.”

Mr. Hanna said the region currently doesn’t have the housing to handle the influx of 20,000 to 30,000 people. But he believes that can be addressed through additional building. Doing so quickly could prevent the soaring prices experienced in Seattle, Mr. McLaughlin noted.

Mr. Hanna sees the overall impact of HQ2 as a positive. “If they come here, all tides will rise,” he said.