As the city of Austin vies to become the new home of Amazon’s HQ2, we’ve heard questions from residential investors and potential investors wondering how the tech giant will affect Austin-area home prices and rents.
First and foremost, the Amazon effect is real. In Seattle, Amazon’s hometown, the now-booming tech giant spiked housing prices and gentrification. From 2005 to 2015, Seattle’s median rent went from $1,008 to $1,286 – three times more than the national median. Housing has experienced an even more drastic increase as recent data shows Seattle’s median home price hit $777,000 in February – an 18 percent increase from the year before.
Rents and home prices will increase no matter which city Amazon chooses, but some metros will change more than others. This is based mainly on the city’s current state – population, room for growth, etc. According to the professionals, Indianapolis, Columbus, Chicago, Atlanta and New York City are the least likely to see a considerable change in the housing market. Meanwhile, Washington DC, Miami and Boston will most likely see the most significant impact.
What about Austin? According to CoStar Coup, a data and analytics provider, Austin will see a 10-year rise in rents. What are the details? The average apartment rent in the area will rise from $1,206 a month in 2018 to $1,450 in 2028 – a 20.2 percent increase. However, if Austin lands HQ2, the increase will likely be much more drastic. According to the report, rental rates would climb to $1,553 in 2028 – a 28.8 percent increase, equalling a $103-per-month surge in Austin rents. While the CoStar Coup study analyzed apartment rents, it is safe to predict that something similar will occur to Austin-area residential rental properties.
What’s the bottomline? For those interested in residential property investing, there has never been a better time. Reach out to us today to learn how to get started.