By Jacob Passy
It’s official: Northern Virginia has felt the Amazon effect.
A year ago, Amazon /zigman2/quotes/210331248/composite AMZN +2.70% announced its plans to build a pair of new headquarters as part of its so-called “HQ2” project: One in New York City, and another in Virginia. But months after this announcement, Amazon decided not to move forward with its headquarters in the Big Apple, leaving the region surrounding Arlington, Va., as the sole home to HQ2.
In Virginia, home prices remain seriously elevated, while in New York prices have fallen since Amazon backed out of its plans for a large campus there. Initially home prices in Northern Virginia rose 21% following Amazon’s announcement. A year later, the median listing price in Arlington County is $863,000 as of October 2019, up 33% year-over-year, according to Realtor.com. The median sales price in Manhattan, meanwhile, has dropped 15% in that same time to $1.04 million.
Amazon’s plans to build its second headquarters ignited harsh criticism and protests among affordable-housing advocates who worried that the project would exacerbate the ability of existing residents to find a place to live.
Researchers pointed to Amazon’s original home of Seattle as a cautionary tale: Home prices there had risen nearly 73% over the last five years when the tech company announced its HQ2 plans.
There may have been cause for concern in Northern Virginia, according to a new analysis from Realtor.com. In both New York and Northern Virginia, the HQ2 announcement led to a significant uptick in home sales, as investors and prospective HQ2 employees scooped up property in anticipation of Amazon’s arrival.
(Realtor.com is operated by News Corp /zigman2/quotes/201755982/composite NWSA -1.25% subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)
Prices haven’t just risen in the wake of the announcement — there’s also been major shortage of housing across Northern Virginia as people looking to cash in on Amazon’s arrival purchased homes, the report suggested. Across the 14 counties in Northern Virginia, the number of homes actively for sale has fallen 26% over the past year.
In Arlington County, listing numbers are half of what they were before Amazon entered the picture. The number of homes that were up for sale in Arlington has dropped by half. Homes now sell in around 28 days, which is 10 days shorter than the period last recorded a year ago.
“The impact of the company’s expansion in the suburbs of Washington, D.C. diverges along home-ownership lines, with homeowners experiencing noticeable equity gains and buyers feeling the sting of higher prices,” said George Ratiu, senior economist at Realtor.com.
“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 said.
An Amazon spokeswoman said claims about HQ2’s effect on home prices are hypothetical and that the impact in Arlington was probably driven by speculative sellers and buyers. The spokeswoman also contended that it’s innacurate to imply a direct correlation between Amazon’s hiring and home prices in Arlington and Seattle. Prices in Seattle are dropping significantly even as Amazon and other local employers grow, she said. The price of housing is a complex issue influenced by local zoning laws, she added.
Amazon, meanwhile, has responded to the affordable crisis brewing in Northern Virginia by donating $5 million to a nonprofit developer and $3 million to a community foundation to address homelessness.