When Amazon finally announced that its HQ2 project would have a headquarters in Crystal City, a wave of excitement many called “The Amazon Effect” hit the housing market and the media. But the hype has continued even after the newness of the announcement has passed. It’s true that the housing market in Arlington has grown, but how much of that can be attributed to Amazon?
After the Announcement
Even from the beginning, many experts urged caution when considering the effect of Amazon on the region. In a forum held December 12, 2018, Jeanette Chapman, the deputy director of the Stephen S. Fuller Institute, explained that while many look to Seattle for clues about how HQ2 will transform the region, Seattle and D.C. are two different cities. The D.C. region, due to its size, is significantly more able to absorb the incoming workforce. And a significant portion of the new workforce will likely come from existing residents.
Due to the already demanding government and contracting job market, Chapman said, “There’s already a lot of [housing] demand here, and the incremental increase that will result from Amazon will be relatively small.”
But despite early warnings, the psychological effects of Amazon expectation have had a concrete effect on the Arlington housing market. Arlington’s listings dropped from 505 in October to 349 in November and from 330 in January 2018 to 220 in January 2019, without a big uptick in the number of sales.
“At the time of Amazon’s HQ2 announcement in November 2018, Arlington’s median home price was $640,000,” says a release from Realtor.com. “The median home price in the area has sky-rocketed since then, increasing by a whopping $110,000 or 17.3 percent to $750,000 in April. Comparatively, over the same time frame, the national median list price has only increased $17,000 or 5.5 percent.”
These numbers seem extreme, but keep in mind that some studies with these claims suffer from flawed methodology. Some don’t have a large enough sample size, or pull from neighborhoods that sell quickly due to Arlington’s chronic lack of inventory. Talk to Geva and Jane about what the real increase your neighborhood and type of home might be year over year.
Too Much Hype?
But how much is speculation? And how long might this effect last? Many realtors attribute the increase in prices to low inventory and the interest rates continuing to stay low, making the cost of borrowing far more accessible.
And Dr. Lisa Sturtevant, Virginia Realtors Chief Economist, says that the abundance of media on Amazon might itself be misleading. “Arlington has been a strong housing market and a desirable housing market for a long time… Amazon didn’t create the challenge of affordability in Arlington. And Arlington will continue to be a strong, desirable and expensive housing market even after Amazon starts to bring its new employees in.”
She also urges buyers and sellers to talk to their realtors when considering buying or selling around National Landing. Also, they should make sure they carefully consider comparable homes before committing to a price.
And sellers who might be holding off on listing to take advantage of a further Amazon bump in the next year or so need to consider the uncertainty of the market. And that much of the “Amazon bump” came after the announcement and further appreciation will likely be within the normal average for Arlington.
Which, granted, is significant, and usually above the national average, but may not be what reluctant sellers are hoping for.