Just one year since Amazon decided on Arlington, Va. for its second headquarters, a recent realtor.com study shows the impact on the housing market has been hard to ignore for both Arlington and Amazon's initial choice in New York City.
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The study reveals Amazon’s presence has caused massive housing availability shortages, exorbitant price hikes on homes in the Arlington area, and a ridiculous sales pace ever since the multinational technology giant moved in last year.
Now, almost overnight, Arlington has become one of the country’s hottest housing markets, according to realtor.com’s report, a stark contrast to the location that Amazon initially picked for a second headquarters location in New York City.
New York City residents and officials protested the move to the point where the tech giant essentially gave up trying to move there, with Amazon having initially looked at commercial office space in the Long Island City neighborhood in Queens.
While the Arlington housing market is booming due to Amazon’s presence, New York City is currently at a 15 percent decline in home sales year-over-year, according to the report. However, prior to Amazon’s Arlington, Va. announcement, the borough of Manhattan saw a huge increase of 50 percent in home sales, with sales there maintaining double-digit growth until February of this year, when the company pulled out of pursuing the New York location entirely.
At the moment, the average sales price in Manhattan is $1.04 million, which is still down 15 percent year-over-year.
"The 'Amazon effect' has branched out of its home base of Seattle and it has clearly stamped its fingerprint on the Northern Virginia housing market. The impact of the company's expansion in the suburbs of Washington, D.C. diverges along homeownership lines, with homeowners experiencing noticeable equity gains and buyers feeling the sting of higher prices," according to George Ratiu, senior economist at realtor.com. "Following Amazon's initial announcement that it was scouting cities for a second headquarters, we knew the winner would see a considerable jump in demand for housing, especially from investors and speculators looking to cash in on increased demand. Looking back a year after the announcement, we can see how dramatic the move has been in the market."
Right after Amazon’s announcement regarding the move to Arlington, home sales in the area spiked a whopping 21 percent year-over-year, with investors moving en masse to the Virginia county.
The housing market in Arlington immediately saw a 17 percent rise in median listing prices for homes in the area, but has since increased, with the average listing price for a home in Arlington County reaching $863,000 last month, a massive 33 percent spike year-over-year.
The realtor.com report noted a lack of housing inventory and the recent increase in demand in the area as one of the main reasons behind the substantial price appreciation in Arlington County, with active listings dropping 49 percent year-over-year as of Oct. 2019. And it isn’t much better outside of Arlington, either. In all 14 counties that make up the Northern, Va. area, active listings are down 26 percent year-over-year.
Buyers have since been forced to look a bit farther away due to the lack of housing inventory and availability in the area, which sits within the Washington D.C. metropolitan area.
The report also reveals the short shelf-life homes have when they’re actively listed, with available homes being purchased almost instantly after hitting the market. Half of all houses on sale in Arlington are selling in less than 28 days, which happens to be nine days quicker than a year ago today. That figure also happens to be 38 days faster than the national average for a home on the market, with Amazon’s recent presence cited as the driving factor behind Northern, Va.’s housing market boon.
"First, the nationwide competition drew so much attention, it caused a massive shortage of homes as investors descended on the area, buying homes as quickly as they could. Second, homeowners and investors have been holding out on selling, anticipating that prices will only continue to increase further, which has compounded the area's inventory shortage, and further increased home prices, testing the area's limits for what buyers are willing to pay," Ratiu added.