RALEIGH – If Amazon HQ2 comes to the Raleigh metro area, residential rents will increase by hundreds of dollars a year, according to a new study by real estate research firm Zillow.

Raleigh rentals would increase 2.4 percent annually with competition from new residents hired by Amazon making up more than three fourths of that increase at 1.9 percent, Zillow said in the study released Wednesday.

Based on the median rental price of $1,436 as cited by Zillow, rents would grow at $34 a month, or $408 a year, with Amazon HQ2 factoring in at $28 a month, or $334 a year.

The impact in Raleigh on rents would be the third highest among the 17 U.S. metro areas that are Amazon-declared finalists for the project, with a decision expected this year. Impact would be highest in Nashville (2.4 percent) followed by Denver (2.3 percent). Raleigh is tied with Pittsburgh and Los Angeles for third.

Zillow’s real estate index calculates Raleigh rents at a median price of $1,436. The index identifies the Raleigh metro area as having a population of 1.1 million people.

However, there’s a caveat that could mean the overall impact on rents would be less.

The state of North Carolina submitted multiple bids to Amazon from across the Triangle region, and Amazon has acknowledged that fact. According to US Census data, the entire Raleigh-Durham metro statistical area population numbers more than 2 million. Zillow reports that average Durham rental rate at slightly less than Raleigh – $1,400.

Zillow assumes that Amazon will take more than seven years to hire 50,000 people and in the Raleigh metro that 30-40 percent would be local hires.

However, the real estate firm points out that the numbers are not cast in concrete. (See study methodology below).

“In many respects, the results are intuitive,” Zillow said. “Smaller markets and/or markets with a record of less responsive (or “elastic,” in economist-speak) housing supply should expect a larger increase in rent growth. Bigger markets and/or those with a history of rapidly expanding the local housing supply should expect a smaller impact. And in larger markets with more diversified labor forces, fewer workers would likely have to relocate to the area to fill the new jobs, which is also likely to blunt rent growth.”

Impact on rents would be minimal in some markets such as Atlanta, the Washington, D.C. area, Chicago and Philadelphia, Zillow noted.

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What city will win?

Zillow also surveyed “housing experts” to predict a winner.

It’s not Raleigh.

“A panel of more than 100 housing experts recently surveyed by Zillow ranked Atlanta and Northern Virginia as the two most likely cities to be chosen for Amazon HQ2. Both can expect a relatively modest boost to rents if selected – an additional 0.4 percentage point boost to rent in Atlanta, and a 0.6 percentage point boost in the Washington, D.C., area which includes Northern Virginia.”

More HQ2 coverage:

Study Methodology

To estimate how rents might respond to worker inflows associated with Amazon’s second headquarters, we compiled:

We then estimated six different models of how rents have responded to inflows of workers from outside the metro, scaled by total metro employment in the previous quarter. We scale worker inflows since the arrival of a given number of workers will represent a larger shock to relative demand in a smaller metro than in a larger metro. The six models include:

The annual percent change in rents as a function of worker inflows, scaled by total employment

The quarterly percent change in rents as a function of worker inflows, scaled by total employment

The annual percent change in rents as a function of the four-quarter change in worker inflows, scaled by total employment

The quarterly percent change in rents as a function of the one-quarter change in worker inflows, scaled by total employment

The change in the annual percent change in rents as a function of the four-quarter change in worker inflows, scaled by total employment

The change in the quarterly percent change in rents as a function of the one-quarter change in worker inflows, scaled by total employment.

Read the entire study online.

Source: Zillow