New company in area
Member since 2023 · 39 posts · 28 votes
Hello BiggerPockets community!
I would like to learn more about the impact of a big company moving to an area. Why does that impact the home values? I understand that of course that would bring higher paying jobs but how does that drive the housing prices up. For example, the housing in Raleigh went up by almost 40% after Apple announced they were building there. Why is that?
@Kyle Carter People hit on the obvious, hype and excitement of a large name company like apple moving to an area. I live in Raleigh and can tell you that the 40% was not all apple. Raleigh is in a flywheel effect. More companies come, more people come, companies see more talent in Raleigh and move to Raleigh, people see more jobs in Raleigh and move to Raleigh. So on and so on. You are also seeing the covid bump in that 40%. Apple has been quoted a ton in papers and every realtors says it to buyers etc. But for raleigh apple was not the only reason for the bump in prices.
Taking a step back tho some people already touched on it. A lot of research and studies have come out around high paying jobs make large impacts. Apple said it would move 3000 jobs with average salary of 187k. Reports came out that impact would be 7x that. those 3000 jobs would get coffee and need dry cleaners and cars repaired etc. The impact of job growth in the market is something I always look at because of this 1 job is not just one job. I think investors see it the same way and invest that way too leading to bumps in prices if they start to see a trend.
I think you nailed it- the market was reacting to the influx of jobs, which likely comes with transplants looking for housing. When it's a well established company like Apple, they aren't likely to be going out of business so there is some certainty that there will be in increase in demand for quite some time. With that, there will be a need for more restaurants, and many other services.
Very simply, large corporations pay into the tax base of that local community and that revenue is used to improve the community and make it a more attractive place for people to live. They're driving demand.
Communities will use that tax revenue to increase the overall appeal by providing more services, improving infrastructure, etc.
It will also bring a lot of high paying jobs to the community. Those employees want nicer homes, restaurants, community centers, etc. They put more money into the local economy.
It will also attract all types of investors. Local restauranteurs who see an opportunity to open a new restaurant. Real estate investors who see development opportunities. You may see more "higher end" accommodations and hotels being developed.
It's a trickle down effect. But essentially Apple is injecting a TON of revenue into the local economy which attracts investors AND people wanting to move to the area.
@Kyle Carter People hit on the obvious, hype and excitement of a large name company like apple moving to an area. I live in Raleigh and can tell you that the 40% was not all apple. Raleigh is in a flywheel effect. More companies come, more people come, companies see more talent in Raleigh and move to Raleigh, people see more jobs in Raleigh and move to Raleigh. So on and so on. You are also seeing the covid bump in that 40%. Apple has been quoted a ton in papers and every realtors says it to buyers etc. But for raleigh apple was not the only reason for the bump in prices.
Taking a step back tho some people already touched on it. A lot of research and studies have come out around high paying jobs make large impacts. Apple said it would move 3000 jobs with average salary of 187k. Reports came out that impact would be 7x that. those 3000 jobs would get coffee and need dry cleaners and cars repaired etc. The impact of job growth in the market is something I always look at because of this 1 job is not just one job. I think investors see it the same way and invest that way too leading to bumps in prices if they start to see a trend.
Mitch already touched on it but this is a good example of "correlation does not equal causation". The Raleigh market may have increased by 40% after the Apple announcement, but it wasn't because of Apple, at least not solely. A lot of companies are moving to Raleigh and the surrounding areas. Compounding on one another sure that will have a big impact on the market but there are a lot of factors at play. I think smaller markets say sub 50k population would have a larger impact from one big move from a manufacturing facility or something like a Amazon processing center. Depending on the salaries of the new jobs they may also price out the local residents on new home sales which would further drive up the price. Depending on the number of jobs and number of new development going on in the area it may just be simple supply and demand.