It’s been two weeks since Amazon announced HQ2 will be split between the current Crystal city area in Northern Virginia and Long Island, New York. News outlets have been pouring out information and speculation on every possible impact Amazon could have on the areas. One of the biggest topics covered: Real Estate. What will happen to pricing? inventory? Will DMV natives be able to afford to buy in their home town in the future? This blog is here to tell you the impact Amazon will have on real estate in your neighborhood.
No Market Shock, Slow Buildup
First, while real estate will change in the DMV area, the shift will not happen overnight. Phase 1 of Amazon’s HQ2 is a 12-year plan to bring in 25,000 employees, completing in 2030. (Phase 2 completes in 2043 with a goal to have 37,850 Amazon jobs in the area). According to the 25-page agreement between the company and the state, Amazon’s goal is to hire 400 employees in 2019 and 1188 in 2020. 400 people moving into the area will not cause a real estate shift. The DMV is an area that is accustom to families moving in and out every year. For prices to rise significantly, there will need to be much higher demand. This will not happen in a big way until the people come. With the slow arrival of Amazon jobs, expect to wait at least 2 years for prices to begin to rise significantly. (For a complete list of Amazon jobs moving into the area each year through 2030, visit page 23 of the 25-page agreement.
Investors Rush In, Higher Prices
Still, the announcement has led to a current mini-rush on real estate close to the Crystal city area. These buyers come in two forms. First is the investor hoping to flip the property in 5-6 years. The second group are those people, mainly younger, rushing to buy homes pre-Amazon because of the threat of rising prices. Over the past two weeks, this has caused an increase in showings and homes going under contract, but because of a slower fall and a slight build up in inventory, not yet significantly higher prices.
Following this mini-rush will begin a wave of new employees entering the DC workforce. And as with most major tech companies, expect an influx of millennials to come with it. As is the trend with this tech savvy generation, they will initially rent while they figure out the area and where they would like to live before they think about buying. Apartment buildings along the metro line and around Crystal City will fill up. New restaurants, grocery stores, and shops will pop up. Luckily for the Crystal City or “National Landing” area, this will also provide a much needed facelift.
Where will Prices Rise?
But an unasked question remains: With Amazon coming to the Crystal City, now National Landing, area where exactly will the new employees live? Right around Crystal City is an obvious area, but if you are looking for an investment opportunity, you may be overlooking some other quality sites. Don’t forget the impact it will have on the rest of the DMV. Neighborhoods along the Metro lines as well as outside of the beltway will feel an impact as well.
Internal surveys at Amazon show that 55% of Amazon employees in Seattle walk, bike, or use public transportation to get to work. Indeed it is part of the culture at Amazon. For those walking, it will put pressure on the Crystal City area. Already, there are plans to redevelop some of the older rental units there, and more plans are sure to follow.
For those using public transportation, Metro’s Yellow and Blue lines are likely to feel the biggest impact as they are the two lines that run through the heart of Crystal City. The Yellow line extends up into some of DC’s trendier and more hip neighborhoods like U Street, Columbia Heights, and Petworth. Millennials and younger couples are already moving to these areas in droves. Having a straight shot down the Yellow line to Crystal City is sure to make them an attractive spot for Amazon workers. With just one connection to the Orange or Silver lines, the Blue line will take employees right through the Clarendon to Ballston corridor. Already a happening area for the younger crowd, there is sure to be further housing pressure here as new Amazon workers with their $150,000 average salaries fill the area.
Areas Most are not Thinking About
The same survey referenced above also showed that only 15% of Amazon employees live within the same ZIP code as their office. This leaves 85% of employees living outside of the office area. So what areas likely to attract Amazon employees are not being talked about right now? What about those with families and children? If they choose to metro, logical spots will be out the Orange and Silver lines to places like Reston and Vienna. Further down the Yellow line will make areas like Springfield and Huntington increasingly attractive. Those choosing non-metro commuting options may go for areas like South Alexandria, or North Arlington, fairly easy commutes with nice neighborhoods and schools.
Other Tech corridors
Those Tech corridors already in the DC area are sure to see sizable shifts also. With the initial 400 hires, some are sure to be people already living in the DC area and working for other Tech firms, perhaps half or 200 will fit this profile and already be living in the DC region. If you are uncertain about the traffic and higher real estate prices Amazon might bring you may be thinking Great! Doesn’t that mean 200 fewer people coming to DC? Not at all. When these workers leave their current jobs in the DC area, 200 people will have to be hired to replace them. This should lower the pressure on housing right around Crystal City but increase it a bit on the current Tech corridors in the DC area, like out by Dulles.
Further pressure on these current tech corridors and throughout the region will come as other large companies move to the area to provide support services to Amazon, lifting housing prices even higher throughout the entire DC metro area.
What’s a Normal buyer to Do?
So if you are looking to buy before the already high home prices in the DC area feel the same huge increases Seattle has seen, what are you to do? My advice is to take it somewhat slow, but don’t wait too long. Let the current mini-rush of investors run its course. Then step in and look for the bargains. Some things remain true. December, January, and August are great times to buy in DC. March April and May see many buyers and multiple offers pushing prices up.
Now let’s be clear. In the next five years, prices WILL rise as Amazon moves in. This does not mean you need to rush to buy tomorrow. If you are looking to buy your first home in the DC area, or currently live here and want to move up to your next home, feel free to contact us to talk your situation through. A steady approach is sure to be the right course and one that will lead you to the smartest decision. Give us a call or text (Kris, 703-981-7802 or John, 703-981-3678) or send us an email and we would love to talk with you more about your options.
Interested in Learning More?
Sign up for our Home Buyers seminar on January 12, 2019. Whether its you’re a first time buyer, moving up, investor, or you are just interested in learning more about the process, Everyone is welcome. Email firstname.lastname@example.org for more information or use our Contact Form.