Paying the price
Rents to climb $100 a month if Amazon HQ2 picks Austin, according to new study
Yet another study shows the price we could pay if Amazon picks Austin for its second headquarters. A new report from data and analytics provider CoStar Group forecasts the Capital City will see a 10-year rise in apartment rents if Austin lands Amazon’s so-called HQ2 project.
CoStar forecasts that without HQ2, the average apartment rent in the area will jump from $1,206 a month this year to $1,450 in 2028, or 20.2 percent. But if HQ2 does come here, rent would climb from $1,206 to $1,553 during the same period, or 28.8 percent, the CoStar report says. In other words, HQ2 alone could cause a $103-a-month surge in Austin rents from 2018 to 2028.
The estimates apply to apartments of all sizes.
Among the 16 U.S. metro areas that are finalists for HQ2, Austin would see the fourth highest increase in apartment rents from 2018 to 2028, according to CoStar. Raleigh, North Carolina, would experience the biggest spike in rental rates, the CoStar study says, followed by Nashville, Tennessee, and Columbus, Ohio.
Dallas-Fort Worth, the only other HQ2 finalist in Texas, would see a modest increase in apartment rents if the Amazon project goes there. CoStar predicts DFW rents will go up 14.8 percent from 2018 to 2028 without HQ2 (from $1,116 to $1,281) and 17 percent with HQ2 (from $1,116 to $1,307). By itself, HQ2 would be responsible for a $26-a-month rise in DFW rents during that period.
John Affleck, director of analytics at CoStar, says that for Austin, the HQ2 effect on the apartment market would be relatively “muted.”
“Austin’s apartment market has a lot of supply underway, so it could readily absorb the additional Amazon demand,” Affleck tells CultureMap. “Also, as a relatively inexpensive housing market, we expect many Amazon employees would buy a home rather than rent.”
Apartment List, an online marketplace for apartment hunters, forecasts rents will climb an extra 0.8 percent to 1 percent a year in the Austin area if HQ2 ends up here. For DFW, it would be 0.2 percent to 0.4 percent.
Earlier this year, a report from Amherst Capital Management LLC, a real estate investment firm, predicted demand for single-family homes in the Austin metro area would jump by 13 percent if Amazon picks the region for HQ2. By comparison, demand would inch up by just 4 percent in Dallas if that region scores HQ2.
Mr. Cooper, a Dallas-based mortgage lender, forecasts home values in Austin will rise 5.9 percent from June 2018 to June 2019 without HQ2 and 15.8 percent with HQ2. For Dallas, those same numbers would be 3.7 percent and 12.4 percent.
For both Austin and Dallas, “home prices would see some uplift from a favorable Amazon announcement,” Mr. Cooper says, “but it won’t be profoundly different from the current trajectory.”
