Large corporations frequently relocate their headquarters to new cities. How will that affect you as a home buyer or seller?
Why do companies relocate headquarters?
The U.S. is always evolving. Changes in demographics, education growth, infrastructure development, and many other factors can prompt companies to relocate to new headquarters or, in the case of Amazon, to establish additional headquarters. For example, job demand has exploded in technology-related fields. As a result, the tech industry has gravitated toward areas with top universities such as central California, Texas and North Carolina, where millennials go to school and want to remain after graduation.
Infrastructure also affects new headquarter location decisions too. Companies that ship a lot of goods want to locate where air, trucking, rail, and even oceanic shipping have strong support. And state and local governments frequently offer tax abatements and credits, spread over a number of years, to companies that relocate.
The bottom line is that businesses establish new headquarters in places that will help the company’s profits.
How do relocations affect a local economy?
Relocating companies promise to create a certain number of new jobs in their adopted city. Companies recruit the talent base locally and bring new people into the area.
Local officials count on a multiplier effect in job growth when new headquarters come to town. For each new job the company directly brings, other jobs are created in service industries such as retail, new home construction, and transportation to support those new employees.
Though a city may “win” economically when a new headquarters comes to town, the city being left behind suffers an inverse impact in lost jobs and diminished growth prospects.
How does relocation affect homebuyers and sellers?
For existing homeowners, new headquarters should generally be a boon to home values. A population influx, planned new transportation, retail shopping, new schools, and recreational amenities boost valuations. Unfortunately, these higher home prices bring with them higher property taxes.
If a new headquarters is coming to your city and you want to sell your home, connect with a real estate professional about timing. It pays to stay on top of news about the relocation and the development that accompanies it so you can strike when the iron is hot. If you are a prospective buyer, similar strategies apply, but in reverse. Follow the news and purchase near areas where improvements are to be developed. Buy in as early as you can before prices soar out of reach. Buying early will also allow you to enjoy the maximum increase in your equity over the coming years.
Interest rates are still near historical lows, so if you live in the area where Amazon is expanding — Arlington, Virginia — you can still get a mortgage at great rates. Combined with rising home valuations, your purchase now could pay off nicely in the future.
Related – 6 Benefits of Partnering with a Relocation Savvy Agent