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.
It is rare that a company mandates an employee use that relocation specialist, he said.
There were growing pains in Seattle when Amazon grew from being a book selling website to becoming a dominant player in online retail, said Aaron Terrazas, the senior economist at Zillow, which is also headquartered in that city.
"Seattle home values have almost doubled and rents have increased by half, straining affordability," said Terrazas in a press release. "Of course, Seattle's tremendous growth and some of the tensions it has created can't all be laid at Amazon's doors alone."
But Amazon's growth attracted other employers to the region, and Zillow expects that to happen in which of the 20 finalist cities gets the nod.
Amazon's HQ2 "will boost overall local economic growth — all of those highly skilled engineers will need doctors, real estate agents, barbers, babysitters and baristas, too," Terrazas said.
Amazon has opened three facilities in the Denver area in recent years. Google has opened one in Boulder and it took three years, said Kelly Moye, a real estate broker at Remax Alliance in Bloomfield, Colo.
"The perception of Google coming to Boulder created — I'll call it arrogance among homeowners," said Moye. Current homeowners decided their house was worth more than it was before and marked it up accordingly. "Before Google even showed up, our market boomed just by the pure fact they were going to come."
Such speculative activity could end up making housing unaffordable for her current clients, said Jennifer Aleman Salazar of Service First Mortgage in Garland, Texas. She supports the Dallas area's bid for the HQ2.
Toyota recently relocated its North American headquarters from Torrance, Calif., to the Dallas suburb of Plano and brought in 5,000 jobs. That contributed to the strain on the housing market.
Amazon will be creating 10 times as many jobs.
Without Amazon, prices in the area are expected to increase by 5.6% according to data she saw on Realtor.com. With prices and interest rates expected to rise through the end of the year, she finds herself rerunning numbers of customers looking to qualify for a loan.
At that pace, a $200,000 home in Dallas should appreciate to $208,000 by the end of the year. But at the 18% rate of appreciation she saw for Seattle, that home would sell for $236,000.
Using a 20% down payment and 5% interest rate and including taxes and insurance, the monthly payment goes from $1,327 in the first scenario to $1,692 in the second.
"We really, as lenders, are going to have to keep up with making sure they still qualify," said Aleman Salazar. "Because so many of our buyers are pushing their numbers anyway" and the increase could keep them from buying a home, especially as salary growth does not keep pace with price growth.