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Photo by David Ryder/Getty Images
With Long Island City now a likely spot for at least half of Amazon’s new HQ2, many New Yorkers are wondering what’s in store for the local housing market.
Long Island City and the surrounding communities of Astoria, Sunnyside and Woodside are already the most expensive neighborhoods in Queens, with an average rent of just over $3,000 per month.
Throw in that local rents and housing prices have risen 4.7% and 5% respectively over the last year — without Amazon’s help, mind you — and it begs the question: What will happen once HQ2 moves in?
Will History Repeat Itself?
One might start by looking at Seattle’s case study. When Amazon first moved in, Seattle wasn’t even near the top of America’s priciest housing markets. Today, at a median home price of $739,600 and median rent of $2,479, it’s now the third-most expensive housing market in the country. It’s also the second-most competitive.
According to Odeta Kushi, senior economist at First American, home prices jumped more than 35% in Seattle after Amazon hit the scene. And in just the last five years? Home prices rose 73% and rents another 31%, according to Zillow data.
But will these trends follow through to Long Island City and beyond? According to Kushi, though home prices are similar to Seattle’s, with HQ2 being split in half — plus the city’s recent investment announcement and uptick in apartment construction — it could dilute the facility’s impact on housing affordability.
In fact, when you look at the list of 20 finalist cities, Tendayi Kapfidze, chief economist at LendingTree, said Long Island City — and New York City in general — “is one of few cities that can best absorb HQ2 with minimal disruptive impact.”
A recent analysis from HotPads proves as much. According to its data, New York would require the fewest additions to rental stock — just a 1% boost if all 50,000 of HQ2’s jobs landed there. Another analysis by Apartment List also ranks New York last in terms of rent growth. The site’s most recent analysis predicts a “less than 0.1%” increase in rents, equating to less than $1,391 over the next 10 years.
Prices Will Change, Though
With all that said, prices are still going to go up — both on rentals and on real estate for purchase. They’ll just be less aggressive than what Seattle residents saw.
According to Danielle Hale, chief economist for Realtor.com, home prices, property values and rents are all likely to increase — especially in the short-term.
“A look at Amazon expansions in Seattle suggests that the initial home price impact will be strongest in the immediate vicinity — within one mile of the proposed headquarters campus,” Hale said. “Over time, development will catch up in the surrounding areas and we are likely to see sustained price increases within a five-mile radius from the HQ2 campus.”
Beyond Long Island City itself, Yair Tavivian, a New York City real estate broker with Douglas Elliman, expects nearby Hunter’s Point, Astoria, Sunnyside and Greenpoint to feel upward pricing pressure as well.
“Greenpoint rental inventory is very limited,” Tavivian said. “This area would be the closest neighborhood to Long Island City from Brooklyn. Therefore it could see a significant increase in value regardless, as it is in huge demand and the commute would be fairly easy.”
Apartment List also predicts rents near area transit stops to see appreciation.
The Bottom Line For Current LIC Residents
Ultimately, rents and home values are going to rise. And though those increases might be small, they could still have an impact on residents in and around Long Island City.
A 0.1% uptick sounds small, but for some residents, it could have a major impact — especially for renters. According to Gil Chowdhury of Warburg Realty, rent-controlled apartments are rare, and “it is possible for a good amount of people to get priced out.”
In fact, even just a fractional increase could put a serious strain on renters in the area. According to Apartment List, 52% of New York City renters are currently cost-burdened.
“Even an additional fifth of a percent may cut even more into working families paycheck,” Apartment List reported. “Though not a market disruption by any means, this small increase may still be felt in a big way by families in neighborhoods near the new Amazon hubs.”
Homeowners, on the other hand, are the “biggest winners” in the HQ2 move, according to Kushi. Rising property values means more opportunity for owners to cash in — and make some profits in the process.
According to an Owners.com analysis, New York City owners would see an estimated 1.4% increase in property value — around $5,800 — if HQ2 lands in the city.
Martin Eiden, an agent with Compass, said he’s already had at least one property owner ask about taking his home off the market, hoping to re-list it (for $200,000 more, nonetheless) once HQ2 moves into town.
The Trickle-down Effect
At the end of the day, if the HQ2 news is confirmed, Long Island City is primed for serious change — even if it’s not in the way of significant home price or rental spikes.
Yorio, who watched JetBlue move into the area just eight years ago, said the facility will “dramatically change the landscape of LIC and surrounding neighborhoods.”
Evan Metalios, a broker with RE/MAX TEAM in New York’s Jackson Heights, said it could even bring a “new wave of gentrification” to the community.
“Because Long Island city once was a neighborhood of warehouses, it does not have the classic New York feel of mom-and-pop shops and happening restaurants,” he said. “That said, the announcement of Amazon HQ2 is anticipated to rapidly change that.”
In the long term, if Amazon brings with it the tech hub transformational effect it had on Seattle, it would mean even more growth for Long Island City — and the whole of New York — likely reaching far beyond the housing and real estate markets.
As Alex Lavernov, an agent with Warburg Realty, put it, “A company the size and the stature of Amazon, especially one that is a considered a tech giant, could begin to bill New York as the second home for everything tech, and other companies could start to follow.”
“This would mean there would be an influx of jobs, and therefore an influx of new NYC residents,” Lavernov said. “Since New York real estate is all about location and value for the long-term, Amazon opening up in your neighborhood could be no different than having an Equinox, Whole Foods or Trader Joe’s on your block. It is just another positive selling point; as in, if they made this decision, why wouldn’t you?”
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Photo by David Ryder/Getty Images
With Long Island City now a likely spot for at least half of Amazon’s new HQ2, many New Yorkers are wondering what’s in store for the local housing market.
Long Island City and the surrounding communities of Astoria, Sunnyside and Woodside are already the most expensive neighborhoods in Queens, with an average rent of just over $3,000 per month.
Throw in that local rents and housing prices have risen 4.7% and 5% respectively over the last year — without Amazon’s help, mind you — and it begs the question: What will happen once HQ2 moves in?
Will History Repeat Itself?
One might start by looking at Seattle’s case study. When Amazon first moved in, Seattle wasn’t even near the top of America’s priciest housing markets. Today, at a median home price of $739,600 and median rent of $2,479, it’s now the third-most expensive housing market in the country. It’s also the second-most competitive.
According to Odeta Kushi, senior economist at First American, home prices jumped more than 35% in Seattle after Amazon hit the scene. And in just the last five years? Home prices rose 73% and rents another 31%, according to Zillow data.
But will these trends follow through to Long Island City and beyond? According to Kushi, though home prices are similar to Seattle’s, with HQ2 being split in half — plus the city’s recent investment announcement and uptick in apartment construction — it could dilute the facility’s impact on housing affordability.
In fact, when you look at the list of 20 finalist cities, Tendayi Kapfidze, chief economist at LendingTree, said Long Island City — and New York City in general — “is one of few cities that can best absorb HQ2 with minimal disruptive impact.”
A recent analysis from HotPads proves as much. According to its data, New York would require the fewest additions to rental stock — just a 1% boost if all 50,000 of HQ2’s jobs landed there. Another analysis by Apartment List also ranks New York last in terms of rent growth. The site’s most recent analysis predicts a “less than 0.1%” increase in rents, equating to less than $1,391 over the next 10 years.
Prices Will Change, Though
With all that said, prices are still going to go up — both on rentals and on real estate for purchase. They’ll just be less aggressive than what Seattle residents saw.
According to Danielle Hale, chief economist for Realtor.com, home prices, property values and rents are all likely to increase — especially in the short-term.
“A look at Amazon expansions in Seattle suggests that the initial home price impact will be strongest in the immediate vicinity — within one mile of the proposed headquarters campus,” Hale said. “Over time, development will catch up in the surrounding areas and we are likely to see sustained price increases within a five-mile radius from the HQ2 campus.”
Beyond Long Island City itself, Yair Tavivian, a New York City real estate broker with Douglas Elliman, expects nearby Hunter’s Point, Astoria, Sunnyside and Greenpoint to feel upward pricing pressure as well.
“Greenpoint rental inventory is very limited,” Tavivian said. “This area would be the closest neighborhood to Long Island City from Brooklyn. Therefore it could see a significant increase in value regardless, as it is in huge demand and the commute would be fairly easy.”
Apartment List also predicts rents near area transit stops to see appreciation.
The Bottom Line For Current LIC Residents
Ultimately, rents and home values are going to rise. And though those increases might be small, they could still have an impact on residents in and around Long Island City.
A 0.1% uptick sounds small, but for some residents, it could have a major impact — especially for renters. According to Gil Chowdhury of Warburg Realty, rent-controlled apartments are rare, and “it is possible for a good amount of people to get priced out.”
In fact, even just a fractional increase could put a serious strain on renters in the area. According to Apartment List, 52% of New York City renters are currently cost-burdened.
“Even an additional fifth of a percent may cut even more into working families paycheck,” Apartment List reported. “Though not a market disruption by any means, this small increase may still be felt in a big way by families in neighborhoods near the new Amazon hubs.”
Homeowners, on the other hand, are the “biggest winners” in the HQ2 move, according to Kushi. Rising property values means more opportunity for owners to cash in — and make some profits in the process.
According to an Owners.com analysis, New York City owners would see an estimated 1.4% increase in property value — around $5,800 — if HQ2 lands in the city.
Martin Eiden, an agent with Compass, said he’s already had at least one property owner ask about taking his home off the market, hoping to re-list it (for $200,000 more, nonetheless) once HQ2 moves into town.
The Trickle-down Effect
At the end of the day, if the HQ2 news is confirmed, Long Island City is primed for serious change — even if it’s not in the way of significant home price or rental spikes.
Yorio, who watched JetBlue move into the area just eight years ago, said the facility will “dramatically change the landscape of LIC and surrounding neighborhoods.”
Evan Metalios, a broker with RE/MAX TEAM in New York’s Jackson Heights, said it could even bring a “new wave of gentrification” to the community.
“Because Long Island city once was a neighborhood of warehouses, it does not have the classic New York feel of mom-and-pop shops and happening restaurants,” he said. “That said, the announcement of Amazon HQ2 is anticipated to rapidly change that.”
In the long term, if Amazon brings with it the tech hub transformational effect it had on Seattle, it would mean even more growth for Long Island City — and the whole of New York — likely reaching far beyond the housing and real estate markets.
As Alex Lavernov, an agent with Warburg Realty, put it, “A company the size and the stature of Amazon, especially one that is a considered a tech giant, could begin to bill New York as the second home for everything tech, and other companies could start to follow.”
“This would mean there would be an influx of jobs, and therefore an influx of new NYC residents,” Lavernov said. “Since New York real estate is all about location and value for the long-term, Amazon opening up in your neighborhood could be no different than having an Equinox, Whole Foods or Trader Joe’s on your block. It is just another positive selling point; as in, if they made this decision, why wouldn’t you?”
