from CoreLogic
— this post authored by SHU CHEN
There’s been endless analysis, comparisons and speculation ever since Amazon announced this January that it was considering 20 finalist cities for its second U.S. headquarters – a so-called HQ2 competition.
In July, six economists and analysts from CoreLogic’s Office of the Chief Economist each picked a city from that finalist list and discussed why it might win the HQ2 competition. They are Washington D.C., Chicago, Dallas, Pittsburgh, Los Angeles, and Atlanta.
Amazon says its new headquarters will accommodate 50,000 employees, who will swell the ranks of homeowners and tenants in the region. So, is there an adequate housing supply in the finalist cities? How affordable are these locations, and what might happen to the housing market of the city that wins the HQ2 competition? Using CoreLogic data, we can see how the housing markets in these cities stack up.
Among the 20 markets [1], supply is lowest in Denver and highest in Miami (Figure 1). Denver had the lowest months’ supply of 2.4 months in August, only two-thirds of the national [2] level and 0.3 months less than in Amazon’s hometown Seattle. Median days-on-market in Denver was only 12 days in August, about a quarter of the national level. On the other hand, Miami, which is oversupplied with luxury condos, had the highest months’ supply of 9.2 in August, almost four times the months’ supply in Seattle, and the median days-on-market in Miami was almost double the national level.
The months’ supply in a market impacts home prices. CoreLogic MLS data shows that buyers aren’t able to negotiate much of a price discount relative to the initial list price in cities with a very low supply. While there is not much difference in the months’ supply in most of the finalist cities, the average discount from the initial asking price varies a lot. Among finalist cities, Miami’s average discount in August was highest at 7.5 percent, followed by Philadelphia with a 5.3 percent discount. However, in Los Angeles and Raleigh, the average price discount was only 0.8 and 1 percent, respectively. On average in August buyers didn’t pay a premium over the initial asking price in any of the cities.
