D-FW can house Amazon’s thousands of HQ2 workers without stressing the market
27 Jan 2018
If North Texas lands Amazon’s HQ2, housing those thousands of new workers won’t be a problem.
The $5 billion second headquarters complex is expected to employ as many as 50,000 people over a 10-year period. Many of the workers are likely to relocate to the area for the new jobs.
That’s had some cities competing for the huge business center fretting over what the moves could do to their housing markets.
For Dallas-Fort Worth, the Amazon move would barely register on housing radar. We build more homes in North Texas and sell more houses than anywhere in the country. Coming up with new digs for, say, 5,000 more people a year over a decade wouldn’t crimp the local home market.
And D-FW has an edge when it comes to housing affordability compared with other cities vying for the Amazon prize.
“We could handle it,” said Ted Wilson, principal with Dallas-based housing analyst Residential Strategies. “We are one of the top housing producing cities in the nation.
“We can produce the housing.”
Last year D-FW builders constructed more than 30,000 single-family homes. And developers completed about 35,000 apartments in North Texas.
More new housing was built in the area in 2017 than any other U.S. metro area. More than 106,000 preowned single-family homes also changed hands in the area last year — a record number.
“Obviously, if you bring all these people in for Amazon they are not going to be all buying houses — there are going to be a lot of renters as well,” Wilson said.
For buyers, D-FW has cheaper preowned single-family homes than more than half of the other cities competing for Amazon’s HQ2.
“D-FW compared to markets on the east and west coast is still very affordable,” Wilson said.
Home prices in North Texas during the last three years have increased by almost the same rate as in Amazon’s hometown of Seattle. In both markets, median home resale prices in late 2017 were about a third higher than they were in 2014, according to data from the National Association of Realtors.
But D-FW’s median home cost of $250,000 is still substantially below Seattle’s mid-priced house cost of $478,500.
Recent company relocations by firms including Toyota, State Farm Insurance, Liberty Mutual Insurance, Boeing and others have created demand for thousands of new homes in the last few years, builders say.
“I would say its probably 20 percent of our business — it’s a big number,” said Jed Dolson, Texas region president with Dallas-based homebuilding and development firm Green Brick Partners. “Dallas home prices have crept up. But when you factor in no state income taxes and other low costs, it’s still an attractive place for corporations.”
Richardson-based apartment service firm RealPage took a look at rental markets in Amazon’s top 20 list and found that Atlanta, Dallas and D.C. could easily handle the move.
“Dallas and Atlanta are two locations that can take care of Amazon’s immediate housing needs with apartment stocks that exist now or are already coming out of the ground,” RealPage chief economist Greg Willett said in a new report. “Product availability in metro Dallas totals about 57,000 apartments – roughly 33,000 vacant units in existing properties and another 24,000 or so units in projects that are under construction.
“Most of this available stock is in top-tier properties either in the urban core or in high-end suburban neighborhoods – exactly the type of product that Amazon workers would desire.”
The Brookings Institution took a dive into the housing market data of all the Amazon HQ2 finalists and said Dallas has a stable, growth-friendly home market that can handle the move.
“Amazon’s new HQ would make noticeable ripples in the largest cities; for smaller metros, the effect could be more like a tidal wave,” Brookings’ Jenny Schuetz writes in a new report. “Atlanta, Chicago, Columbus, and Dallas have traditionally had stable housing markets that accommodated population growth without price spikes.”
Schuetz says even markets with plenty of housing supply will feel Amazon’s impact to some degree.
“That level of employment growth will almost surely put upwards pressure on housing costs, unless the selected metro has excess housing capacity (high vacancy rates) or the ability to build a lot more housing quickly.”