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Amazon is the prime suspect behind Seattle's bonkers housing market

Seattle has one of the hottest housing markets in the country, thanks in part to Amazon.

U.S. home prices rose 5.8 percent in June compared to a year ago, according to data released Tuesday. But the price gains for Seattle surged by 13.4 percent, the fastest pace among the large cities tracked by a closely watched home-price index.

The Seattle real estate boom echoes that of other big coastal cities like New York, where the financial industry is the major catalyst, and the San Francisco Bay Area, which is dominated by a trio of big local tech companies: Apple, Facebook, and Google. The Seattle area is home to a number of corporate headquarters including Starbucks and Microsoft. But it would be hard to overstate the impact of Amazon.

After all, the company is an increasingly large force in the U.S. economy. Its recent purchase of Whole Foods, for example, threatens to upend the U.S. grocery industry as the online retail giant cuts prices for the traditionally upscale grocer. Its increasingly large Prime Day promotion accounted for roughly all U.S. retail spending in July. And the company’s stock price has risen to the point that, at times, founder Jeff Bezos has muscled Bill Gates out the throne as the world’s richest man.

As such, it makes sense that Amazon would also be an increasingly dominant force in its hometown as well. The Seattle Times recently reported that Amazon now occupies more office space in the city than the next 40 employers combined. The paper also reports that Amazon employs 40,000 people in the city, up from 5,000 in 2010. All things equal, the influx of Amazon workers seems to have put upward pressure on the price of an a relatively small inventory of houses. The predictable result is a price pop.

Of course, it can be risky when a local economy comes to rely on a single company. And this isn’t the first time one employer has so dominated the economy in Seattle. During the 1960s, aircraft manufacturer Boeing was a massive player in the Seattle economy. Its workforce in what was then known as Jet City surpassed 100,000. But the company cut employment by more than 70,000 in the early 1970s, sending Seattle into a recession so deep a billboard at the time famously asked “Will the last person leaving Seattle please turn out the lights?”

How things change.