Atlanta Winning Amazon HQ2 Could Mean Billions In Gains For Black Homeowners
Atlanta is a 2-to-1 favorite to beat out 100-plus cities competing to host Amazon’s second headquarters, according to one offshore wagering platform.
The city that wins the prize of Amazon HQ2 will get more than 50,000 high-paying jobs.
Atlanta has already benefited from Hollywood moving a significant amount of production there for lucrative tax credits. More financial inflows may be on the way.
Atlanta checks many of the boxes Amazon is looking for including strong academic institutions (Georgia Tech, Emory), relatively lower costs, mass transit, and affordable housing.
If Jeff Bezos wants to buy some time with regulators in Washington, D.C., setting up shop in Atlanta could go a long way.
Backed by low-wage sorting center jobs, Amazon’s lean automated systems are running over more and more small-to-medium sized businesses where humans do the work.
Considering Amazon’s enormous power and wallet, I would have liked to see its criteria include how it sees its role in the increasing wealth inequality in the U.S.
Here’s why. Forty-eight percent of homeowners in Atlanta are African American. That’s higher than the national average for Black home ownership, which was 42.5 percent in 2012, according to the U.S. Census.
Very little wealth is created through jobs. Wealth is generally created via real estate, stocks, bonds, and owning private businesses. When companies with a big wallet and a big presence set up in a new city, there could be a meaningful impact on real estate prices. For example, after Tesla announced its new Gigafactory in Nevada, the city of Sparks saw real estate prices jump 42 percent. Locals have said there was a broader economic impact across Reno. They called it the “Tesla effect”.
At the request of the Wall Street Journal, Zillow looked at residential areas close to Apple’s headquarters and sought to quantify the lift in real estate prices:
“In San Francisco and San Jose, Apple employees lived in homes with a median value of $1.1 million as of July 2015. In comparison, the median home value for the entire San Jose metro area was $896,000. In San Francisco it was $757,000, according to Zillow.
Homes occupied by Apple workers are appreciating at 18% a year, compared with 11% for San Francisco as a whole and 12% for San Jose. Since iPhone sales launched in June 2007, the Zillow analysis found, the average difference between the median home value of Apple workers and San Jose workers has swelled to 20% from 13%.
The region’s housing problems aren’t easily solved. Because homes are so expensive, many young people must rent. That has created a swell in demand for rentals. New construction has failed to keep pace. The result is that rents also have skyrocketed.”
If Atlanta wins its bid for Amazon HQ2, it is very likely there will be a meaningful lift in home prices close to the headquarters, but we could also see broader-based gains across metro Atlanta.
If Amazon makes a big bet on Atlanta, you could also see many more tech companies follow, creating an “Amazon Effect”.
If 50,000 Black homeowners in metro Atlanta with homes averaging $200,000 saw their homes increase 100 percent in value over the next decade, this could represent an estimated gain of $10 billion, based on many factors including the “Amazon effect.”
In terms of wealth inequality, Amazon coming to Atlanta should not be looked at within the narrow lens of 50,000 high-paying jobs. It’s also about how such a big move could positively impact the local real estate market.