Will Hosting the 2024 Summer Olympics Boost the Boston Housing Market?

Now that Boston has won the only US bid for the Olympics (we are still up against 4 European cities) it raises many questions – how much will this cost taxpayers?  Where will they put everything?  What is it going to do to traffic?  As a real estate agent, I’ll focus on the most relevant question – what will it do to home values in Boston?  I’ll use Atlanta as our reference point as that is the last time the Summer Olympics was held in the US.  Utah is the last time we hosted the Winter Olympics.

The comparison is not apples-to-apples when you consider that Atlanta was in need of revitalization at the time. Boston is already a thriving city with a very robust housing market.

The most notable change for Atlanta was Centennial Park in the heart of the city which brought people and economic development back to what was a rundown downtown area.   Boston already has many venues that bring people and tourists downtown – the Freedom Train, the Commons and Public Gardens and Faneuil Hall, not to mention all the colleges.

The downtown population of Atlanta has increased from 3.5M to 5.5M in the 20 years since the Olympics were held, arguably in part because of the Olympics, but the growth was already on a steady trajectory.

However they did see slightly stronger than average growth in the years leading up to the Olympics as construction workers flooded into Atlanta for the work and many stayed.

Atlanta Populaton

Below is a chart of projected population growth for Boston through 2030.  These numbers were calculated by the UMass Donahue Institute in Nov 2013 long before the Olympics was a consideration.

Boston Population

I would even conjecture that the growth could be greater than this as I now see more and more Baby Boomers selling their suburban homes and moving into the city.

Housing Prices

Atlanta home prices rose by about 1% more per year than the national average in the five years running up to the 1996 Games. However, since then, they dropped and have only just started coming back.  Atlanta’s home prices are below the level they were in May 1999 (at an index level of 95.8). But after recent improvement, they are above a recent low in March 2012 (the index was at 82.54). At that point, home prices were at the same point they were during the 1996 Olympics. (from Ajc.com)

Would Boston prices rise in anticipation of the Olympics?  Very likely – in particular areas.  Once people know for sure that we have won the bid for the Olympics and know the locations where the venues will be built, both homeowners and investors will want to buy properties in those areas.  Cities that host the Olympics typically pick a part of town that is either run-down or underdeveloped to build the permanent structures such as stadiums and housing.   That makes those the areas with the greatest possibility of upside.

The sad reality is that Atlanta also cleared out the poor and homeless.  Atlanta evicted 6,000 people from public housing to tear it down.  Although the city had given some Section 8 vouchers, many were still without public housing years later.

The homeless were given one-way tickets back to their families or to Augusta.  New laws were implemented making pretty much anything a homeless person would do illegal – sleeping on a bench, entering a parking lot, etc.  Citations were given to over 9,000 people. Once arrested, these people were ineligible for public housing.

On a side-note – a shout-out to our local Ropes & Gray who were hired by MATF – a task force who helped five homeless men file a federal lawsuit against the city of Atlanta. The city settled with those 5 men and a judge ordered the illegal arrests be stopped.

All this pushing out of the poor makes way for gentrification and rising home prices.  However, I hope that Boston will not stoop to those measures to beautify areas visible to Olympic visitors.

Who Else Will the Olympics Hurt?

The Olympics could also wind up costing taxpayers in two ways.  The Boston Olympic committee is already talking about the need to upgrade the T.  And who can argue it needs to be upgraded after the past couple of weeks of breakdowns?  But we all know who is going to pay for these improvements.

Homeowners, particularly those whose homes are near the venues could wind up paying higher taxes.  That is what Atlanta did, basing it on the theory that those people most benefited from improvements.

Renters – During the time leading up to the Atlanta Olympics, renters were given notices telling them that they would need to move out for three months or pay an additional $3,000 in rent.  Now you would think you can’t do this to someone who has a lease and, in Massachusetts, you cannot.  But trust me, the management companies and landlords have enough advance notice to not grant any leases that run through the Olympics.

Not to mention rents will go up in the years leading up to the Olympics as construction workers flood into the area to work on what will likely be several billion dollars in construction projects.  That alone is a compelling case for buying a house before then if you are a renter.

Who WILL the Olympics Help?

Construction Companies – the Atlanta Olympics generated over $1B of construction projects, from housing for athletes to Olympic Venues.

Student Housing – A summer Olympics typically hosts over 10,000 athletes.  The city will most definitely have to build that housing as there is no venue with that much free space today.  Atlanta wound up turning over the athletes’ housing to Georgia Tech for dorms.  If Boston did the same, that would definitely help alleviate the shortage of student housing in Boston.

The Hospitality Industry – Hotels, Restaurants, etc.  At least for those weeks of the Olympics.

Starbucks – Remember the pent-up demand at the Sochi Olympics?  They were not an official sponsor so people had to, and did gladly, leave the housing and venues in search of Starbucks and NBC got a secret outlet installed in their media center.

Entrepreneurs – those who are clever enough to figure out ways to make money off the influx of visitors.  See above re Starbucks.  Figuring out how to get people what they need and want is the key.

Final Note on Renting out Your House

Since this is somewhat real estate related, I’ll tackle this one.  During the Atlanta Olympics people were renting out apartments at the rate of $165 per bedroom and single-family homes for as much as $2,000 a night.  Mind you, that was 20 years ago so rates would be higher now – probably at about the same rate of a comparable hotel room.  But that would only be if the over 50,000 hotel rooms and 37,000 dorm rooms are not enough for all the visitors.  And if your home is in a location convenient to the venues.

If you want to go this route, plan on leaving your house for the summer as these renters will want the entire house and won’t want to be your roommate.  Also be prepared to:

  1. Remove Your Valuables from the home.
  2. Buy Extra Insurance
  3. Pay Lodging Tax

I’ll cover this more in a future blog post if Boston wins the bid.

You have time to figure all this out and make your strategic real estate moves.  Final bids are due in January of 2016 so it will be a while before we know if Boston will host the 2024 Summer Olympics.

If you have questions in the meantime, you know who to call!

Michelle J. Lane
Century 21 Commonwealth
CELL: 617 584-3904