The Atlanta Journal-Constitution
Housing crunch will grow if HQ2 arrives,
If Atlanta wins Amazon’s second headquarters, the region will get wealthier, but 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, a stream of supporting service workers and a whole lot of prestige. That means that — especially in the area around an HQ2 — housing prices would rise, rents would soar and many lower-income Atlanta residents would be forced to find more modest homes.
Meanwhile, the huge cost of luring the company to Georgia will be repaid — to some extent — in spending, wealth and a ripple of tech-spurred growth through the economy.
And there will be other changes — with winners and losers.
Pouring 50,000 new employees into a small area is guaranteed to dramatically boost demand for housing in a market where strong buyer demand already gives the advantage to sellers.
Inventory — the number of homes listed for sale — badly lags demand now. That will get worse before the builders get a chance to make it better, said John Rainey, region vice president of Re/Max Georgia.
“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.”
In general, companies move in and out of a region and nobody really notices, Rainey said. “But 50,000 people is going to be quite an impact.”
If Atlanta gets Amazon, it almost certainly gets more jobs than that: That’s because the presence of the company would spur the need for suppliers, as well as create a slew of jobs in accounting, law or public relations.
And all those new paychecks would add demand for thousands of other people to clean offices, make deliveries and serve java in coffee shops.
Which means rising demand for housing, which can only mean higher prices for area home prices and rents.
“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 makeup 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.”
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 yearlong, 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.
Steadily rising prices are 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. And little of the new construction is 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.
As of now, the price trajectory is already moving ever-higher, said Clive Bellar, Atlanta-based chief marketing officer for ValueInsured, a company that offers insurance for downpayments on homes.
Different reports show metro Atlanta home prices up between 5 and 10 percent in the past year.
Meanwhile, 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 media price of a metro Atlanta home is $220,900, according to Zillow.
They estimate that it would take 3.8 years for a working couple here to save enough money to make a downpayment 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.
The median price of a home in the region has been rising between 6 and 10 percent a year.
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.