The Amazon effect? House prices in Northern Virginia soared after mega retailer set up its second HQ there in 2018 – bringing with it thousands of high-paid workers – but new report says the trend was short-lived!
When Amazon announced in 2018 that it would build a second headquarters in Arlington, Virginia, to house 25,000 white-collar technology workers, fears erupted that local housing prices would skyrocket, displacing lower-income residents.
Now, five years later, a report by real estate data company Bright MLS examined how that site, branded “HQ2” by Amazon, may have affected the surrounding housing market.
It turns out that in 2018, after it was announced that Headquarters 2 would be located in Arlington, home prices in that county rose faster than in neighboring areas, such as Washington, DC, Maryland and the rest of Northern Virginia.
But that initial uptick was not a direct result of workers buying and renting homes, the report found. Instead, it was driven by speculation and actions by real estate agents who used the upcoming Amazon development to drive demand.
Amazon’s second headquarters is in Arlington, on the Potomac River and across from DC. Research has shown that the location was first announced in November 2018, causing house prices to temporarily rise
A rendering of Amazon’s proposed design for its second headquarters campus in Arlington. Pictured is ‘The Helix’, which is part of the company’s Phase 2 and is currently on hold
The report also noted that while the original uptick was linked to Amazon, the company’s effects may have been short-lived. The 2020 Covid-19 pandemic then muddied the waters, making it harder to identify clear trends.
According to the report, home prices in the DC area have risen about 4.5 percent annually over the past decade. And since 2019, the pace of home price growth has escalated, rising about 7.0 percent per year between 2019 and 2023.
A special one analysis by Realtor.com Shortly after the announcement in 2018, it emerged that the median home price in Arlington rose 17 percent to $750,000 in April 2019, up from $640,000 in November 2018.
That was considerably higher than the national average.
“It’s a bit like a chicken and an egg,” said Lisa Sturtevant, the author of the article.
“Amazon came to Arlington because Arlington was attractive, Arlington was attractive, so people wanted to be there and home prices and rents were going up. And then Amazon came along and house prices and rents continue to rise.”
She noted in the report that the immediate impact was not caused directly by Amazon employees buying homes — as they wouldn’t move in for several years — but by speculation about how HQ2 could ultimately have an impact.
“I think it was sparked by the announcement and not by new Amazon employees moving to the area,” she said.
“There was an expectation that this new economic development would bring 25,000 very highly paid workers to the region and create greater demand for housing,” she added.
The new Virginia campus is intended to eventually house about 25,000 staff members, who will have an average salary of $150,000, according to Amazon.
So far, Amazon has hired 8,000 workers at Headquarters 2. They arrived mostly over the course of several weeks in June.
The immediate increase in home prices after Amazon announced it would establish HQ 2 in Arlington was most pronounced among higher-priced and older detached homes
Another phenomenon Sturtevant noted was that after the announcement in 2018, local real estate agents began using Amazon to increase hype and interest in the area.
“Real estate agents started using Amazon HQ2 as a marketing tool. Two of the five detached single-family homes listed in 2019 in zip code 22202 – the area where Amazon HQ2 is headquartered – explicitly mentioned HQ2 in the property description,” the report said.
“It was definitely a marketing tool for real estate agents and brokers because they would leverage the proximity to the metro, or the proximity to a business district,” she said.
Headquarters 2 was divided into what Amazon has called phases one and two – with 14,000 and 11,000 new jobs respectively.
Since the pandemic, Amazon has temporarily scaled back development of the second headquarters, putting phase two on hold indefinitely.
The first influx of employees came earlier in June. And for now, Sturtevant predicted that the new hires were still unlikely to have an immediate impact on the market.
She pointed to a 2018 study from George Mason University that estimated only 10 percent of new workers would actually buy a home in Arlington.
The latest crop of employees have moved into a location Amazon is calling Met Park — a 60,000-square-foot development on the Potomac River and across from DC.
Traditional log home in Arlington near DC in 2018
Since the pandemic, Amazon has temporarily scaled back development of the second headquarters, putting phase two on hold indefinitely
“In June, we began welcoming the 8,000 employees hired at HQ2 to Met Park, the first phase of our second headquarters,” Amazon spokesperson Zach Goldsztejn told DailyMail.com.
“Our long-term intent and commitment remain unchanged, including our plans to bring 25,000 business and technology jobs to Headquarters 2.”
And the temporary delay of Phase 2 also causes concerns among brokers.
“On the other hand, we’ve heard from some real estate agents that they’re concerned, ‘Oh my gosh, Amazon canceling phase two, is that going to dampen the housing market?’” he said.
And Amazon has largely attributed the home price increases to a lack of supply and not to its new national headquarters.
“It is clear that the relatively high home prices in Arlington and the greater Washington DC region are driven by strong demand and low supply, and not by the relocation of high-wage employment to the area,” Goldsztejn said.