Whichever city Amazon picks for its second headquarters is likely to see speculative activity drive housing prices up and reducing affordability for those already looking to buy.
Even before the site is named, speculators will be out there snapping up properties in expectation of rising prices, said Chuck Silverston, a principal at Unlimited Sotheby’s International Realty in Brookline, Mass.
"An infusion of relocating people is going to increase the demand for housing stock in the area. We saw that with GE," he said, particularly in the growing Seaport district, where the conglomerate is moving its headquarters.
When there was talk of putting a casino in Suffolk Downs, a horse racing track that is being closed and redeveloped located in the East Boston neighborhood, speculators snapped up properties there, Silverston added. That is a site being associated with Boston’s bid for HQ2.
But at first, renting a home, not buying, will be the likely focus for many of those moving, he said.
"When people relocate to a new city, they often want to rent for a year first to kind of get their feet wet and figure out where they want to be and then go from there," said Silverston.
After that initial period, they consider transitioning into homeownership.
Of the 19 U.S. cities on Amazon’s shortlist for its HQ2, 10 are already considered overvalued, while only two, Indianapolis and Pittsburgh, are undervalued, according to CoreLogic (Toronto is the 20th city in contention).
"Some of the contenders have home price increases that are trending higher than the national average of 6%," said Frank Nothaft, chief economist for CoreLogic in a press release. "Adding a job creator like Amazon would add further housing demand and upward pressure to housing costs."
Large companies typically employ a relocation management company to help facilitate the move including connecting the relocating employees with key suppliers such as mortgage lenders, household goods shippers, real estate agents and others, said David Fowler, a regional vice president for the Wells Fargo Relocation Mortgage Program. Wells Fargo did not comment on what corporations it works with.