The flood of prosperity Amazon's HQ2 was supposed to bring to Arlington, Virginia, is already causing housing prices to spike and inventory to contract, according to new research from local real estate analysts.
When the controversial HQ2 decision was announced, critics warned of the havoc it could wreak on the local housing market. Since Amazon's arrival, Seattle has become one of the most expensive places to live in the United States, forcing lower-income residents to move to far-off suburbs. Now, the same price spikes are showing up in Arlington.
Median home prices in Arlington County are projected to increase 17.2 percent by the end of 2019, according to research from the Northern Virginia Association of Realtors and George Mason University's Center for Regional Analysis. Prior to the HQ2 announcement, the groups had only forecast an increase of 5.2 percent.
"This is a market response to the Amazon HQ2 announcement with investors competing with residents for a shrinking number of homes for sale," Terry Clower, CRA director, said at a local real estate conference last 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."
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 percent by the end of the year. The groups' original forecast only called for a 7 percent drop.
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 percent 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 press 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."
Those who might have been looking to sell homes may now be looking to hold onto their properties in hopes of renting instead, Clower said at the conference.
"I'm really concerned about the number of ownership to rental conversions we may have going forward, particularly as valuations get higher," Clower said.
The HQ2 project is now ahead of schedule, executives told The Washington 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.