Solving the Post-Close Challenge with Intelligent Automation

Join our upcoming webinar as SoftWorks AI CEO and Avanze CEO explore the advances in tech that allow for greater levels of automation and cost reduction, especially in support of post-close and pre-fund review.

Spruce’s Patrick Burns on innovation in title technology

In the season finale of Housing News season 5, Spruce CEO discusses heightened investor interest in title tech, innovation and fintech adoption.

The 100-years-war over real estate commissions

HousingWire plunges down the rabbit hole of residential real estate commissions, uncovering the past, present and future of this wholly unique part of the economy.

How borrower education can make housing more attainable

The current housing market is making it difficult for prospective buyers to afford a home. Housing professionals need to find ways to better meet buyer needs.

Real Estate

Amazon pick for second HQ likely in already overheated housing market

CoreLogic report shows home prices overvalued in half of shortlisted markets

The moment we’ve all been waiting on baited breath for finally happened this week, as Amazon revealed the 20 finalists for its second headquarters, commonly referred to as Amazon HQ2.

According to CNN, Amazon received bids from 238 cities and regions throughout North America, all vying for their chance to be the online retail giant’s second home.

Amazon said that it expects to invest more than $5 billion and plans to grow its second headquarters into a “full equal” to Amazon’s current headquarters in Seattle. Amazon also expects to create as many as 50,000 “high-paying jobs” for the selected area.

But what else might come with that much corporate investment and new high-paying jobs? Higher home prices.

And for half of the 20 markets on Amazon’s shortlist, home prices are already on the verge of overheating.

The 20 markets on Amazon’s list are: Atlanta, Georgia; Austin, Texas; Boston, Massachusetts; Chicago, Illinois; Columbus, Ohio; Dallas, Texas; Denver, Colorado; Indianapolis, Indiana; Los Angeles, California; Miami, Florida; Montgomery County, Maryland; Nashville, Tennessee; Newark, New Jersey; New York City, New York; Northern Virginia; Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Raleigh, North Carolina; Toronto, and Washington, D.C.

Of those, 19 are in the U.S., and a newly released analysis from CoreLogic shows that home prices in 10 of those 19 U.S. markets are already overvalued.

CoreLogic monitors the health of the housing economy through historic home price changes and other market conditions including sustainability of prices in the market, referred to as the CoreLogic Market Condition Indicators.

The MCI analysis defines an “overvalued” market as one where home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one where home prices are at least 10% below the sustainable level.

According to CoreLogic’s report, home prices in Austin, Dallas, Denver, Los Angeles, Miami, Montgomery County, Nashville, New York City, Northern Virginia, and Washington, D.C. qualify as “overvalued” right now, with home prices above 10% of the sustainable level.

On the other hand, home prices in Atlanta, Boston, Chicago, Columbus, Newark, Philadelphia, and Raleigh are all categorized as “normal” in CoreLogic’s view.

Meanwhile, home prices in Indianapolis and Pittsburgh are “undervalued.”

CoreLogic report on Amazon cities

(Click to enlarge. Image courtesy of CoreLogic.)

Regardless of which city Amazon picks (and the retail monolith has given no further indication of which one of the 20 markets it is going to choose), home prices are expected to rise in the winning city.

And for those markets where prices are already arguably too high, being the winning city may be a bit of a housing catch-22, according to CoreLogic Chief Economist Frank Nothaft.

“As leaders at Amazon continue to narrow their location choices, the housing situation is an important consideration,” Nothaft said.

“Some of the contenders have home price increases that are trending higher than the national average of 6%,” Nothaft said. “Denver and Nashville lead the pack with home price increases at more that 8%, but CoreLogic research indicates that these markets are overvalued right now. Adding a job creator like Amazon would add further housing demand and upward pressure to housing costs.”

Most Popular Articles

Fannie and Freddie set dates for their new refi option

Fannie and Freddie revealed new dates for their refi options targeted to low-income borrowers set to be available this summer.

May 05, 2021 By

Latest Articles

What a dismal jobs report means for the housing market

April’s U.S. jobs report on Friday was dismal at just 266,000 new jobs, but economists say they’re not worried about the housing or mortgage market. HW+ Premium Content

May 07, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please