Arlington housing market grapples with affordability post-Amazon HQ2
2023.11.13 01:30
In the wake of Amazon (NASDAQ:)’s decision to establish its second headquarters (HQ2) in Northern Virginia, the Arlington housing market has undergone significant changes. The initial announcement in November 2018 sparked a surge in home prices and sales, but the long-term effects on affordability have been a point of contention among local critics and economists.
The phenomenon dubbed the “Amazon effect” by economists at Bright MLS, led to a temporary hike in Arlington’s home prices and sales. However, this impact was short-lived. Between late 2018 and early 2020, home prices in the National Landing area, which encompasses ZIP Codes 22202 and 22305, rose by an average of 17%, outpacing the national average increase of 10%. Realtor.com reported a jump in demand for mid-priced homes in Arlington during this period.
By October 2019, one year after Amazon’s HQ2 announcement, the typical home sales price in Arlington climbed from $591,000 to $653,000. As of today, the median-priced single-family home stands at $761,000. The pending-to-new listing ratio for condo sales also soared to 1.34 post-announcement, signaling robust buyer interest.
Amazon’s promise to create 25,000 jobs fueled expectations of a housing price surge; however, as of now, only 8,000 positions have been filled. This slower-than-anticipated job growth comes as Amazon paused construction at HQ2 in March 2023 amidst broader efforts to slow its expansion and cut costs.
Today, housing affordability is at its lowest since 1984. The combination of low inventory and high borrowing costs has driven mortgage rates to a 23-year peak. While there is no substantial evidence of large-scale investors significantly impacting the market post-announcement, concerns persist over Amazon employees potentially displacing less-affluent local buyers. Yet the rise of remote work has tempered daily office attendance, mitigating some potential impacts on the local housing market.
Despite these developments and heightened concerns over affordability due to Amazon’s presence, Bright MLS points out that Arlington’s market was already one of the most expensive prior to Amazon’s arrival. The current state of the housing market continues to challenge both new entrants and existing residents looking for affordable options in an increasingly competitive environment.
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