Olympic Effect on Housing Prices is Short Term, Say Experts - NBC Chicago

Olympic Effect on Housing Prices is Short Term, Say Experts

History shows Games have little impact on long-term real estate prices



    Olympic Effect on Housing Prices is Short Term, Say Experts

    Come Friday, if Chicago wins the Olympic host city contract, Douglas Park and Washington Park could become primo real estate.

    But if previous host city experience is any guide, those skyrocketing prices will fall after the games.

    Just ask Atlanta.

    "In the years leading up to the Olympics, I would say that we were wildly optimistic that it would be a great real estate fix for the Atlanta market," said Jim Ware, in 1995 the President of the Atlanta Board of Realtors.

    Atlanta won the 1996 Summer Games in '89, right on the cusp of the recession. The Games helped buffer Atlanta's housing market, but just slightly.

    "One of the things that people thought would happen is that housing prices would go wild, and we'd have a shortage of housing for the Olympics," Ware said.

    "That did not happen."

    Luckily for Atlanta, many of the downtown areas where the Olympic venues settled were already the subjects of revitalization efforts. Those projects were moved to the front burner.

    General construction before the '96 games increased. Development loans rose by an average of 24 percent in the years leading up to the Games, according to the Atlanta community bank peer group.

    Post-Olympics construction hasn't slowed considerably either, according to a FDIC report.

    "We're what, 13 years later? -- I think we're still seeing the benefits now," Ware said.

    Salt Lake City's Housing Collapse
    Salt Lake City's experience couldn't have been more different.

    While Atlanta was facing a recession heading into the Games, Salt Lake City was coming off a housing boom heading into the 2002 Winter Games.

    "(It was ) a very hot real estate market, (and) a lot of out-of-state and international buyers wanting to buy in Salt Lake," said Derek Whetten, a real estate broker focusing on Park City, where several of the 2002 venues were located.

    But immediately after the Olympics, the Salt Lake market collapsed.

    "One of the very worst in the nation if not the worst in the nation as far as market appreciation," Whetten said.

    But he doesn't attribute that downturn to the Olympics. Rather, he called it a "predictable cycle" from coming off the boom of the previous years.

    "The general mood has not been that the Olympics caused the down real estate market, I don't think there's been much of a sense that way," he said.

    Seven years later, Whetten said there isn't lingering opposition or discontent with having hosted the Olympics.

    And prices for real estate stayed constant with overall trends in the rest of the state,  according to a report by Phillips, Hager & North (.pdf), a real estate investment firm.

    "I think by and large we had such a very positive Games, portrayed Salt Lake City so well to the world, economic development since the Olympics have attracted a lot of companies, both nationally and internationally," Whetten said.

    As for Chicago
    While Chicago's plans will no doubt have an effect on neighboring home prices, the hope is that the venues, infrastructure and jobs that remain after the Games will lift those parts of the city up.

    "There are a lot of good people living [in Washington Park], a lot of working-class families and we want those folks to be able to stay," Arnold Randall Jr., the city's commissioner of planning and development, told the Chicago Tribune. "But we also feel there is an opportunity to get a lot of other people to move into the neighborhood and make it a better place."

    Chicago 2016 organizers have committed to converting up to 30 percent of the village into affordable housing after the Games, and the Chicago Housing Authority has expressed interest in 15 percent of the project for public housing, Crain's Chicago Business reported.

    Still, as Atlanta real estate agent Joanne Mason put it, "money can't be the only yardstick. There's so much goodwill that comes from the Games. It lasts for years."