Amazon's second headquarters is far from being built, but its prospects are causing housing prices to spike in northern Virginia, according to real estate experts and local records analyzed by The Washington Post.
In May, the average home price in Arlington County—Amazon HQ2′s future base—was $713,000, up about 7% from a year ago. In April, the average price reached $742,000, or more than 11% above the same month in 2018, according to The Post's analysis.
Real estate agents and local economists said inventories are so sparse that some popular ZIP codes in Arlington and Alexandria show no homes for sale at all. And since the company's headquarters was announced, investors have been pouring into the market, looking to turn homes into rental properties.
"This is a market response to the Amazon HQ2 announcement with investors competing with residents for a shrinking number of homes for sale," Dr. Terry Clower, the direct of George Mason University's Center for Regional Analysis, said at a local real estate conference this week. "The price gains we foresee do not reflect an overall bubble in housing prices but rather reflect the specific circumstances of our current market."
The spikes are not limited to Arlington, which saw average home prices reach above $700,000 for the first time this year. In nearby Fairfax County, the average sales price saw a year-over-year gain of 6% in May, while the increase was about 7% in Alexandria.
The Post's analysis shows all of the gains in real estate prices in Arlington and its neighboring jurisdictions occurred after the company revealed in November that it would open a second headquarters with as many as 25,000 workers in a campus in Crystal City. Indeed, average home prices actually fell in Arlington, Alexandria and Fairfax between May and November of last year.
The recent spike in housing prices echo what occurred in Seattle as Amazon grew into a behemoth and hired tens of thousands of workers. The city became one of the most expensive places to live in the United States, forcing lower-income residents to move to far-off suburbs. Seattle and surrounding King County eventually declared a state of emergency over homelessness in 2015. Despite that action, the number of number of homeless students in the city's public schools spiked to 4,300 during the 2016 to 2017 school year.
Clower has been dramatically increasing his real estate price projections in northern Virginia based on sales in the first quarter, low inventory and historical patterns. According to data compiled by Clower's center and the Northern Virginia Association of Realtors, housing prices could increase as much as 17% in Arlington by the end of the year and 7% in Fairfax. Clower cautioned, however, that the projections were comparing a forecast of December 2019 with a particularly slow December 2018, and that the actual price increases could be less.
Still, talk of such price increases could reignite worries of the havoc big tech campuses can create on the local housing markets.
Alexandria Mayor Justin Wilson said he was "clearly concerned" by the tightening market.
"I suspect there is a little bit of exuberance/speculation occurring that should hopefully settle a bit as reality sets in," Wilson said. "That being said, we know we have a serious supply issue in this region. We have for quite a while. We need to address that issue or prices will continue to soar, impacting residents across income levels."
Christian Dorsey, chair of the Arlington County Board, suggested that the rising prices were more rooted in sellers who were being optimistic in their pricing thanks to the anticipated Amazon boom. Dorsey, who supported the arrival of Amazon into Arlington, noted that Arlington saw double-digit price hikes in the first eight years of the 2000s, followed by a reversal when the Great Recession occurred.
"I'm not entirely shocked that there's speculation going on in the housing market," Dorsey said. "Some people are taking a huge speculative risk . . . but by no means has Amazon caused a true bubble. And I don't see one happening here."
In a recent meeting with Washington Post reporters and editors shortly after HQ2′s first job listings were posted, Amazon executives said the second headquarters will not aggravate housing problems as much as the company has in Seattle because it will be able to plan for growth here in a way that it couldn't in earlier years in its home base.
But already housing inventory in Arlington "has fallen off a cliff," Clower said, and is expected to be down nearly 19% in Arlington and down by 10% in Fairfax by the end of the year.
For the past two months, the number of homes sold in NVAR's coverage area—which includes Arlington County, Fairfax County, Fairfax, Falls Church, Alexandria and Vienna—have held at a 14-year high. The average home lasted just 27 days on the market, down 42% from a year ago.
"Speculation on higher pricing once Amazon settles in the region has caused many sellers not to sell their homes now," Ritu Desai, a broker with Samson Properties and one of NVAR's board members said in a news release. "While the number of potential buyers entering the housing market in the Northern Virginia region is rising, the ripple impact of low inventory and high demand has caused a tough market for them."
Higher real estate prices are a boon for home sellers. But they can raise rents and the taxes property owners pay.
Michelle Paterson, 43, of the District of Columbia who works at National Express, a U.K. company that operates MetroAccess in the Washington region, said she has heard from commuters who are "petrified" that landlords will raise rents
"I can't imagine how someone who's making less than 25 to 30 dollars an hour is going to be able to afford to live in this area and pay rent," she said. "Where does that leave the existing community?"
But the price hike isn't a concern for Alexandria homeowner Barbara "Biz" Van Gelder, 68. A resident for forty years, she said she's more worried about traffic conditions and the impact of the future Virginia Tech Innovation Campus.
"When you look at the surrounding neighborhood, I don't think that's going to skew the prices which are already exorbitant," Van Gelder said.
The HQ2 project is now ahead of schedule, executives told The Post, primarily because state and county officials had acted quickly to approve multimillion-dollar incentives packages. The company has leased temporary space in Crystal City and will start operations in June instead of October, as originally planned.