The latest evidence that the impending arrival of Amazon’s second North American headquarters has ignited a real estate frenzy came last week when the real estate brokerage Redfin calculated that the two housing markets bracketing Crystal City, the new home for Amazon’s multiple offices, are the most competitive housing markets in the nation.
“Most competitive” in this context means that nearly half the homes in the 22202 Zip code sold faster than both the Washington metro region or the national rate. “Over half of all homes for sale (57%) in both Arlington and Alexandria went off the market in two weeks or less,” according to the Redfin study of July data, numbers with which non-Redfin real estate agents agreed.
The homes also sold for more than their listing price, with multiple buyers who routinely waive the contingency clauses that protect them from unseen structural defects. All this in a market where fewer than half the number of homes are for sale now than a year ago.
“I had a condo listing right across from ‘ground zero’ of HQ2 last fall and it had been on the market for 90 days with no interest at all. [The owner] was about to take the listing off the market,” said Mara Gemond, a Redfin agent with 15 years of experience in Northern Virginia. After the news leaked on Nov. 11 that Amazon chose the area, “all of a sudden, it sold for $70,000 more than we asked — and in one day.”
The buyer, like many who have popped up since then, was an investor who plans to rent the property. Other buyers, many of whom are local residents who have been renting and planning to buy soon, are also rushing to purchase before the Amazon employees, who will have average salaries of $150,000, arrive in force over the next few years. (Amazon said it plans to hire 400 this year and 1,000 to 1,500 in subsequent years. Amazon chief executive Jeff Bezos owns The Washington Post.)
“I don’t have anybody who is a client working for Amazon or anybody relocating to work for Amazon,” Gemond said. “All of them are locals, often first-time home buyers . . . who are accelerating their plans to buy.”
Shortly after Amazon announced its move to Virginia, the area saw its monthly supply of homes on the market — the time it would take for existing inventory to sell at the current pace — approach its lowest levels since at least 2006. Alexandria and Arlington have had fewer than a month’s worth of homes on the market this year, according to data from the two jurisdictions analyzed by The Washington Post.
While the inventory has decreased, the number of homes sold in Arlington and Alexandria has remained relatively stable, according to The Post’s analysis. The number of days homes are staying on the market also has declined. In July, the median time a home in Alexandria and Arlington sold after being listed was nine and 12 days, respectively, which is about 30 days faster than the same period a year ago.
New home buyers, armed with a 3.5 percent Federal Housing Authority loan and seeking help from the seller with their closing costs, simply cannot compete, especially when investors are making all-cash offers, with no contingencies and a willingness to close the sale within the week, said Christine Richardson, a real estate agent and president of the Northern Virginia Association of Realtors.
“These [buyers] are speculators or folks who just want to live in Arlington and Alexandria,” she said, negating the notion that they are early tech workers. “The Amazon announcement put them in a tailspin. They are probably renting and intended to buy in 2021 or so, but they said, ‘I’ve got to accelerate this.’ Then you have the opposite [instinct] with the sellers.”
Homeowners ready to downsize or move out of the area are putting their plans on hold for a couple years, when they hope even stronger demand will fetch them higher prices, Richardson said.
“We have Zip codes in Northern Virginia with zero houses on the market. Zero,” Richardson said. “That’s something we never see.”
The market could “stand for a little modulation,” Arlington County Board Chair Christian Dorsey said Monday at the Northern Virginia Elected Leaders Summit at George Mason University.
“I don’t want anybody to misunderstand me, but we could use a little bit of cold water,” he said, referring to the housing market. “I don’t want pain to come, but neither do I want to be fueled by irrational exuberance.”
What’s happening here is a result of the housing affordability and availability crisis, said Terry Clower, director of George Mason’s Center for Regional Analysis.
“We just haven’t been building enough units,” Clower said. The oft-observed maxim that new construction in the Washington metro area is luxury rentals or high-end homes is true, he said. “It simply doesn’t pencil out for builders to construct a 1,400-square-foot house for $300,000.”
So buyers downsize, go farther from the job centers inside the Beltway and make compromises.
“The problem with rising housing prices is if you’re staying in the area, any gain you experience with selling will be plowed right back into your new home. A generation ago, it would be unthinkable to build multifamily housing in Loudoun County,” Clower said.
Richardson recently had a client who bought an old house on a cul-de-sac in North Arlington sight unseen, spending $900,000 to tear it down, betting that the market will keep the land value high.
“Sometimes that initial exuberance the market feels doesn’t play out to reality,” Richardson acknowledged. “That could happen here.”
But it has not, yet.
Gemond said she posted an online “coming soon” notice for a condo in Rosslyn, four Metro stops from Crystal City, and “within five minutes, someone called and begged me to let them see it immediately.”
John Harden contributed to this report.
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