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Indy a top spot for Amazon HQ2 if home prices guide its choice

January 18, 2018

If Amazon wants to locate its HQ2 in the most-affordable spot for housing, there’s an obvious choice: Pittsburgh. But Philadelphia and Indianapolis aren't far behind.

The tech giant’s list of 20 potential sites for its second North American headquarters includes the Pennsylvania city, where the median home price in the fourth quarter was $129,900, according to data prepared by Trulia.com. By comparison, prices in the Los Angeles metro area were four times more expensive, making it the costliest option.

Philadelphia's price was $149,600 and Indianapolis' was $149,900.

The next-priciest markets among the 20, according to Trulia, are Boston, New York, Washington (which includes Northern Virginia and Montgomery County, Maryland) and Denver. The firm doesn’t track Toronto, where housing costs for both buyers and renters have skyrocketed and show no signs of retreating. The least-expensive after Pittsburgh, Philadelphia and Indianapolis are Columbus, Ohio; and Atlanta.

Cheap housing isn’t explicitly on Seattle-based Amazon.com Inc.’s list of preferences for the $5 billion project, which includes populations of at least a million, a business-friendly environment and urban or suburban areas with the potential to attract and retain tech talent. But in its request for proposals, the company asked communities to provide information on a “diversity of housing options, availability of housing near potential sites for HQ2, and pricing” as well as cost-of-living data.

The winning city stands to gain 50,000 high-paying jobs over the next 10 to 15 years. In releasing its shortlist on Thursday, culled from a total of 238 entries, Amazon said it will make a final decision this year.

“Pittsburgh stands out as one of the best markets for Amazon; it’s the most affordable on the list,” Ralph McLaughlin, chief economist for Trulia, said in a phone interview. “It’s also got a world-class institution in Carnegie Mellon, which cranks out well-educated and trained data scientists.”

Housing supply

Pittsburgh hasn’t been hit as hard by the nationwide housing-supply crunch, helping to keep prices low, according to McLaughlin. The metro area has about 9,000 homes available for sale, compared with about 10,000 in Los Angeles, whose population is four times larger, he said.

Nashville led Amazon’s 20 finalists with the biggest gain in home prices, a 14 percent jump from the end of 2016. Pittsburgh, where prices slipped 0.1 percent, was the only market that didn’t have an increase.

Local home prices

Trulia's data differs from the numbers released for November by the MIBOR Realtor Association. MIBOR's report found median prices in the 15-county area had risen 8.5 percent, to $164,900. In Marion County, median prices were $138,000 in November, up 9.3 percent.

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