South Florida among ‘overvalued’ housing markets to make Amazon cut

Jan 23, 2018
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As Amazon decides which of 20 metro areas to name the home of its second headquarters, how heavily will it weigh housing costs?

That’s an open question, but the ecommerce giant seems not to be turned off by frothy housing markets. More than half of the 20 finalists — including South Florida — have home prices that are “overvalued,” according to real estate data firm CoreLogic. Just two of the finalists — Indianapolis and Pittsburgh — are considered “undervalued.”

On CoreLogic’s overvalued list: Austin, Dallas, Denver, Los Angeles, Miami, Montgomery County, Nashville, Northern Virginia, New York City and Washington, D.C. CoreLogic doesn’t rate Toronto, but others do — and say it’s in a major housing bubble. In a report leading up to this week’s confab in Davos, Switzerland, the World Economic Forum says Toronto’s housing market shows “signs of stretched valuations.”

CoreLogic, for its part, defines an overvalued housing market as one with prices “at least 10 percent higher than the long-term, sustainable level.”

CoreLogic considers some of Amazon’s finalists to be fairly valued. They are Atlanta, Boston, Chicago, Columbus, Newark, Philadelphia and Raleigh, North Carolina.

“As leaders at Amazon continue to narrow their location choices, the housing situation is an important consideration,” Frank Nothaft, chief economist for CoreLogic, said in a statement. “Adding a job creator like Amazon would add further housing demand and upward pressure to housing costs.”

The median home price for the Miami-Fort Lauderdale-West Palm Beach metro area in the third quarter was $340,000, according to the National Association of Realtors, ranking among the priciest finalists.

Los Angeles’ median price was $595,100 in the third quarter, followed by Boston ($464,100), New York-Newark-Jersey City ($419,100), Denver ($418,100) and Washington-Arlington-Alexandria ($408,500).

Indianapolis was the cheapest market among the finalists, with a median price of $173,700.

Economic developers from Miami-Dade, Broward and Palm Beach counties submitted eight potential sites to Amazon, although just one is in Palm Beach County.

States and cities are competing fiercely for the prize. Maryland Gov. Larry Hogan offered a $5 billion package of incentives to bring Amazon to the Washington, D.C., suburb of Montgomery County. New Jersey leaders this past year offered some $7 billion in perks to sweeten Newark’s bid. And Chicago reportedly is offering $2 billion in various perks.