By Shelley Sakala
North Phoenix is about to get an economic boost. The forthcoming Taiwan Semiconductor manufacturing plant will reportedly add 1,900 new jobs to the area – but that’s just the beginning. Building a 3.8 million square foot plant requires huge construction contracts, which means a lot of work and a lot of workers. Steel, concrete, electrical, HVAC, tech, paint, plumbing, and carpentry. Plus, road construction, exterior landscaping, and furnishings. The economic impact from the construction will be significant. But what about impact on home values?
Research indicates a relationship between businesses and home prices. Communities that get a new Starbucks, for example, appreciate in value faster than communities that don’t. This is called, appropriately, The Starbucks Effect. It’s an unofficial signal that a neighborhood is on the rise. But the relationship between homes and businesses can be a negative one. Neighborhoods with a nearby hospital or a shooting range may experience a drag on home values. We happen to live in a community with both, although it hasn’t hurt local home prices whatsoever. With the semiconductor plant, it’s safe to assume many of the 1,900 new employees will be relocating here from somewhere else. For this reason, we anticipate an uptick in demand for housing, which lifts home prices. At the same time, there may be an increase in congestion on the surface streets, which can hurt home values.
So, which is it?
An industrial facility might not be the amenity residents were hoping for, but I don’t expect a negative impact on home values. The plant will be at the outer edge of our community, making it “close, but not too close.” Until and unless it starts emitting excessive noise, odors, or pollution, we probably won’t see any negative effect on local home values.
Will prices rise?
This will be an interesting scenario to watch. I believe the semiconductor plant will indirectly boost our home prices. Here’s why: we will see more people relocating to the area, as well as those commuting here each day. Every new person will be a consumer who frequents local shops and restaurants, which in turn, attracts more shops and restaurants (which all require employees). These new employees will frequent local shops and restaurants, continuing the cycle. Larger stores take notice of this population growth, and respond by opening new locations in the community (which requires even more employees). A perfect example of this is Fry’s, which is building their second supermarket in the community in a span of five years. Big companies like Kroger (the parent company of Fry’s) don’t break ground on new locations unless they have the population data and projections to support the expansion. If you see a new grocery store going up, it’s a safe bet that the population is expected to grow. Call it The Fry’s Effect.
More people equals increased housing demand, which equals higher home values. Not a guarantee, but a pretty safe bet.
Shelley Sakala is a local Realtor and owner of The Sakala Group Real Estate.