Ever since Amazon announced that half of its HQ2 is coming to Northern Virginia with 25,000 jobs in tow, speculation about how intense its effect on the local real estate market would be has tamped down.
Area real estate agents are glad to welcome new potential homeowners, but none of the agents who sell homes in Falls Church and Northern Virginia and were interviewed by the Falls Church News-Press are working with anyone from Amazon nor do they see much happening to the housing market anytime soon.
No one disputes the benefits the influx of jobs and consumers Amazon’s new branch will bring, but as far as sellers champing at the bit for higher prices in an already low inventory region, they may have to sit and wait a while, said Bethany Ellis, a 10-year veteran who works for Long and Foster.
“People are expecting property values to quadruple, but if that happens, it will price everybody out of the market. At some point there are diminishing returns,” Ellis said.
Over three to five years, Ellis does not believe prices will rise “as rapidly as people think.”
That’s an opinion shared by a leading economist, Stephen S. Fuller at the George Mason University institute that bears his name.
“While HQ2 will generate additional demand for housing, its effects will be geographically dispersed and gradual,” Fuller writes.
Maria Fernandez, a location specialist with the Fulcrum Properties Group, knows a Crystal City seller who hiked his price $50,000 after Amazon’s announcement, and the property still waits for a buyer.
“There are always going to be motivated sellers, but buyers are not stupid. They are savvy and recognize fair market value.” Fernandez said, mentioning her buyers have exhibited no significant sense of urgency.
“I don’t think [Amazon] will be as crazy as some think it will be,” Ellis said, an opinion echoed by Jeff Wu, a Keller-Williams Capital Properties salesman who’s been in the business 15 years, who added. “[Amazon] will have a positive impact but it won’t be as dramatic as most people think.”
Fernandez thinks “Amazon is not going to hurt the home market in any way. Effects will be gradual and not as significant” as what happened in Seattle. “There won’t be a knee jerk reaction here.”
Seattle experienced a “tsunami of growth,” says the Washington Business Journal, after Amazon took off there. Instead of rain in Seattle, it was a doubling of home pricing over six years and an 80 percent explosion in traffic over seven years.
Real estate agents and Fuller predict changes here will be slow with a gradual absorption of new residents.
That the region is a seller’s market and has been for years is undeniable. Inventory is low, but the Fuller Institute says about 40 percent of area homes are occupied by baby boomers who over the next 20 years will be downsizing and moving away, opening up their properties to the Amazon influx.
The timing is right.
Fernandez said some new Amazon employees may choose a smaller house, closer in to D.C., while others with a tolerance for commuting will opt out for distance.
Millennials may live in group homes, too, said Ellis.
“It’s like springtime in January” is the way Bev Tatum, a saleswoman at Weichert Realtors, puts it.
She recently represented a buyer competing with three others for a house priced under $500,000 in Springfield. Her buyer didn’t get it.
These days some buyers are waiving home inspections.
It’s too early to really see much of an Amazon impact, Tatum noted.
“Some sellers may think, ‘I’d better hold off so I can take advantage of the people coming,’ but at the end of the day, it’s all about supply and demand,” and right now, the demand, with or without Amazon, exceeds the supply.
Tatum thinks the market has already spiked due to Amazon’s announcement, the uncertainty of political and economic worlds and interest rates.
Clearly, the Amazon announcement caused a tremendous buzz, per Tatum. Amazon will bring more diversity and definitely help the economy.
“If the economy is good, residential sales are good. This is a highly transient area any way with the military and State Department” staffs moving in and out, Tatum continued.
To her, Amazon is “the most significant development in my ten great years of selling houses,” she exclaimed.
Whether it’s Nestle or Exxon moving out or Hilton coming in, this influx of people and the effects of its spillover are like nothing no one has seen.
Economists believe about half of Amazon’s residents will settle in Fairfax County because the county is more affordable than Falls Church or Arlington, Fernandez said.
The Northern Virginia Association of Realtors reports the average price for a home sold last year in Falls Church City was $835,176. In Arlington County, it was $663,894 and in Fairfax County, $578,723.
Wu and Fernandez credit the region’s well-educated workforce as a major draw for Amazon and rather that all new workers, there will be a shuffling of what’s here.
Ellis claimed that the large majority of Amazon employees are already here.
Rental rates are increasing nationally, reports Apartment List, predicting an annual hike in rents of up to two percent for the Washington region.
Single-family housing prices will drive some employees to rentals which will attract new residents anyway who want to stake out the area before they commit to a mortgage and buy.
Wu described the rental scene as “crazy now, what they are paying for two and three bedroom apartments in Tysons: $3,000 to $5,000!” with more new buildings going up, because “[tenants] want something new.”
With New York City, Northern Virginia was selected for Amazon’s new headquarters and a total of 50,000 jobs which the two areas will split. Meanwhile, Nashville welcomes 5,000 jobs at a new Amazon operations center.