Thanks to Amazon and its incursion of well-paid employees, real estate prices in the online retailing behemoth’s hometown of Seattle have soared to unprecedented heights. So is history repeating itself? A year after the tech company announced it will be opening a new headquarters in the Washington, DC, area, home prices in nearby neighborhoods are exploding—but in some more than others.
On the first anniversary of Amazon’s highly anticipated HQ2 announcement, prices in communities near the company’s new location just outside the nation’s capital in the Crystal City neighborhood of Arlington, VA, have shot up, according to a recent report from real estate data firm CoreLogic. But the effect hasn’t extended across all of the DC area.
“Amazon has created a new hotbed of demand in Northern Virginia,” says CoreLogic Deputy Chief Economist Ralph McLaughlin. “Given that we’re seeing double-digit upward swings in house prices and Amazon has only just started hiring in the region, I think we can expect prices to increase further in already hot ZIPs and spread to ZIPs farther out.”
In Virginia’s Arlington County, where Amazon will be located, prices surged 33% annually, according to a recent realtor.com® report. They hit a median $863,000 in October in the county after the news of Amazon’s arrival. As folks rushed to get in on the action, the number of listings in the county dropped 49% compared with the previous year.
In the 14 counties making up Northern Virginia, the number of listings fell 26% year over year.
“The nationwide competition [for Amazon] drew so much attention, it caused a massive shortage of homes as investors descended on the area, buying homes as quickly as they could,” realtor.com Senior Economist George Ratiu said in a statement. “Second, homeowners and investors have been holding out on selling, anticipating that prices will only continue to increase further.”
Where are home prices rising the most?
Prices soared the most in Chevy Chase, MD, an affluent suburb of the nation’s capital just over 8 miles away from Amazon’s new headquarters, according to CoreLogic. Already-high home prices surged 11.8% year over year in the 20815 ZIP code from September 2018 through September 2019. The previous year, home prices in that community had fallen 1.1% from the year before.
The median listing price in that ZIP, the neighborhood of Kenwood, was $1,187,050 as of Oct. 1, according to realtor.com data.
“The Chevy Chase ZIP code is likely leading home price change because it’s close to the District of Columbia, and all of its employment and amenities. It has great-quality public and private schools,” says McLaughlin. Plus, it offers relatively easy access to Amazon’s new headquarters.
Prices also rose sharply in areas that have good access to the DC metro system, making it easier for folks to commute to Amazon—or to other jobs in the capital, he adds.
The suburb of Vienna, VA, 22180, and the Grovetown neighborhood, 22306, in Arlington, VA, also got some much-needed boosts. Home prices had fallen 4.8% and 5.3% respectively in the prior year, according to CoreLogic data. But in the wake of Amazon’s announcement, they’ve gone up 6.6% and 6.1%. Median list prices there were $1,398,925 and a more manageable $639,050, according to realtor.com data.
Prices in 22302 in the Del Ray community of Alexandria, VA, and in Arlington’s Fairlington, 22206, also shot up 9.3% and 11.8% in the past year, according to CoreLogic. Median home list prices were $896,050 and $497,500, according to realtor.com data.
“Amazon employees are known for being very well-paid, so it’s no surprise that high-paid employees and/or investors are bidding up prices where these existing and future employees might want to live,” McLaughlin says.
What happened to Amazon’s HQ2 neighborhood in New York City?
The tech giant originally planned to open an additional headquarters in Long Island City, a Queens neighborhood just across the river from Manhattan. That sparked a feeding frenzy as investors and buyers jumped on the neighborhood’s myriad of condo units in the brand-new towers going up along the waterfront.
However, Amazon wound up walking away from the deal in February in the face of mounting political opposition. And the city’s real estate market has paid the price.
Unlike the Washington, DC, area, home prices in Long Island City’s main ZIP Code, 11101, rose just 3.8% in October compared with a year earlier, according to realtor.com data. The median home list price there was $1,160,050.
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