Amazon’s anticipated expansion into Virginia is having a major effect on local housing markets.
Alexandria and Arlington, both in Virginia, boast the two most competitive markets in the country, just above Grand Rapids, Michigan, Tacoma, Washington, and Oakland, California, according to a Redfin report released Monday. While the average home sells in 38 days across the country, houses flew off the market in just 11 days in Arlington and 14 days in Alexandria in July.
The rising heat in Virginia is directly connected to Amazon’s November announcement that it would be building a second headquarters in Crystal City, an Arlington neighborhood nestled in between the two cities. Last July, homes in both Arlington and Alexandria took about a week longer to sell. Now, 57 percent of all homes for sale in the two cities went off the market in less than two weeks.
Meanwhile, only 40 percent of homes in the D.C. metro and 29 percent of homes nationwide did the same.
“The Amazon HQ2 effect has become a permanent factor in the Arlington and Alexandria housing markets,” local Redfin listing agent Marcia Burgos-Stone said. “Some sellers are still opting to hold on to their homes and wait until it becomes a more concrete reality in the hopes that they’ll get more money.”
Both cities saw large numbers of potential homeowners seeking to buy, prompting inventory declines of approximately 50 percent, according to Redfin.
As a result, 45.9 percent of Arlington homes sold above list price in July while 35.7 percent sold above listing price in Alexandria. Nonetheless, the announcement in November that Amazon would be building a second headquarters in Crystal City has not yet led to an anticipated explosion in prices. The median sale price in Arlington rose by only 0.2 percent to $616,000 while the median price in Alexandria fell by 4.4 percent to $490,000 over the past year.
“This has led to a shortage of homes for sale, which puts pressure on buyers who are concerned that they’ll be left behind if they can’t find a home before things get too heated up,” Burgos-Stone said.
According to Redfin, Amazon’s news has certainly caused a market commotion in the cities’ housing markets. People know what the ‘Amazon Effect’ did to housing prices in the Seattle area and are hoping to get in on the action by buying homes now.
“If you believe home values will go up hundreds of thousands of dollars in the next five years, you will race to bid five or ten thousand dollars above asking price today,” Redfin Chief Economist Daryl Fairweather said in a statement. “So, even though it may take a decade for Amazon’s HQ2 to grow the size of the Seattle headquarters, attracting high-earners and driving economic growth in the surrounding area, homebuyers and home sellers are already operating under the assumption that there will be strong demand for homes going forward.”