Lainie Singerman grew up in Fairfax County, Va. Now that she’s a fully employed lawyer in her 20s, she’d like to buy her first place. Naturally, she’s anxious about finding something she can both afford and love.

But then, something happened that sent her anxiety level higher: Amazon HQ2.

“I’ve been saving for my down payment for years, but everything I look at is expensive,” Singerman says. “Since Amazon decided to locate in Crystal City, everything seemed to get even more expensive right away. I’m afraid I’ll be priced out.”

If the past few months of data are any indication of what’s ahead for Northern Virginia, Singerman could be right. While the average sales price in Northern Virginia stayed steady at $565,000 in January, according to the Northern Virginia Association of Realtors, the number of homes under contract rose by 70 percent compared with January 2018, and the number of homes for sale fell by 20 percent year-over-year. Limited availability of homes drives prices higher.

Since Amazon’s Nov. 13 announcement that it will establish its second headquarters in “National Landing” — the new name for the area that encompasses parts of Crystal City, Pentagon City and Potomac Yards — the percentage of homes under contract in Northern Virginia rose for three consecutive months. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

Amazon’s plans call for 25,000 new employees to be based in National Landing over the next decade, starting with 400 this year, followed by 1,200 more in 2020. The final count of Amazon jobs here is expected to reach about 37,850, and additional ancillary jobs are expected to boost employment in the region, too. The average wage of the Amazon workers is anticipated to be $150,000.

While there’s lots of excitement about Amazon’s choice of location, the impact may not be quite as dramatic as real estate agents anticipate.

“I think the top-line narrative is moving from the idea that ‘everything is the result of the Obama/Trump/etc., administration’ to ‘everything is the result of Amazon,’ ” says Jeanette Chapman, deputy director and senior research associate at the Stephen Fuller Institute for Research on the Washington Region’s Economic Future at George Mason University.

“There’s always a grain of truth in those top lines, especially in very narrowly defined markets, but there are so many other factors playing a role that the magnitude gets lost,” Chapman adds.

One immediate impact of Amazon’s coming is the redevelopment of Crystal City with more transit options, more amenities and more apartments, says Chapman, which makes that market more attractive. She thinks that some renters and buyers will switch from the Rosslyn-Ballston-Clarendon corridor to National Landing.

“The fact that we’re talking about adding jobs over a decade tempers price appreciation expectations a little,” says David Howell, executive vice president and chief information officer for McEnearney Associates Realtors.

“We’ve seen an average of 70,000 residential transactions per year over the past decade,” Howell adds. “We think even with the spinoff of extra jobs, there could be 50,000 Amazon-related jobs over the decade, averaging 5,000 per year. About half of those employees are anticipated to buy a home within the first year or so of living here, which means about 2,500 extra transactions per year.”

While that represents healthy growth, Howell says he thinks those additional purchases will not be transformational.

“We certainly don’t expect to see 50 percent price appreciation in a year or so,” Howell says. “We expect 2 to 3 percent price appreciation on average in the region over the next few years and maybe 5 to 8 percent price appreciation in the National Landing area.”

Separating the Amazon-specific impact on rising home prices and rising rents in the region will be difficult, Chapman says.

“Rents have been rising in this area since 2000, and the number of affordable market-rate rentals has been decreasing since then,” she says. “It’s a national phenomenon that already makes it extremely difficult for people to make ends meet. But there’s no certain correlation between increasing jobs and rising prices.”

Even so, homeowners, investors and buyers are caught up in Amazonian levels of anticipation.

Singerman plans to spend $300,000 to $350,000 on her home.

“I’m not even looking at Arlington or Crystal City, but I hoped to stay near where I work in Fairfax,” Singerman says. “Now I’m looking at Lorton, Reston, Burke and Manassas. Many of my friends are leaving Fairfax County for Prince William or Loudoun County to find something they can afford.”

Amazon delivers speculation

Home buyers and investors went into an immediate frenzy after the Amazon announcement in November, says Greg Doherty, a real estate agent with Coldwell Banker Residential Brokerage in Alexandria.

“Given the numbers of people coming, with 25,000 spread over 10 years compared to the 52,000 jobs we normally add each year in the region, this is purely psychological,” Doherty says. “But buyers don’t want to get locked out, and we’ve seen multiple offers for properties that are priced right.”

On the other hand, Doherty says, sellers who immediately tried to up their prices by 10 percent because of Amazon didn’t necessarily get any takers.

“Investors are trying to buy inexpensive condos and townhouses to rent to Amazon employees, but the supply is limited,” Doherty says.

In the Old Town Alexandria area near National Landing, there was a 47 percent fall in the number of available listings in the third week of February 2019 compared with the corresponding week in 2018, says Will Wiard, managing broker of Weichert Realtors in Alexandria.

“The lack of listings in Alexandria can be attributed to the Amazon effect, in some cases because people took their homes off the market,” Wiard says. “For comparison, in Fairfax County, the number of listings was down just 3.7 percent compared to 47 percent in Alexandria.”

The drop in listings in Alexandria began after Amazon’s November announcement, says Ben Sage, director of the Mid-Atlantic Region for Metrostudy, a housing-market research firm.

“In October, there were 423 listings in Alexandria, and in November there were 243 listings,” Sage says. “In January 2019, there were 149 listings in Alexandria, compared to 289 listings in January 2018. But the sales pace stayed steady in those months, so that tells us that some people simply took their homes off the market.”

Similarly, Arlington’s listings dropped from 505 in October to 349 in November, says Sage, and from 330 in January 2018 to 220 in January 2019, without a big uptick in the number of sales.

Many properties that stayed on the market sold fast. Two units in the Bella Vista condo in Alexandria, which had been sitting on the market for weeks, were purchased by investors within 48 hours of the Amazon announcement, Wiard says.

“Arlington and Alexandria felt the most-immediate response from the Amazon announcement,” says Christine Richardson, a real estate agent with Weichert Realtors in Great Falls and 2019 president of the Northern Virginia Association of Realtors. “Those close-in markets are always the last to fall in a housing market decline and the first to recover. They were always strong and robust, but now they’re on steroids.”

One indication of the short-term impact of Amazon is the absorption rate of housing, which refers to how many homes on the market go under contract in a month.

“A balanced market has an absorption rate of about 30 percent,” Howell says. “We looked at the Zip code 22202 in Crystal City and Pentagon City, which is mostly condos. During the last six weeks of 2018, the absorption rate was 70 to 80 percent.”

Richardson says people who wanted to move are accelerating their plans to get into homes ahead of the Amazon employees.

“We’re seeing lots of investors, especially flippers looking at older properties that are perfect for a teardown or redevelopment,” she says. “We’re also seeing investors who want to buy something to rent to Amazon employees, especially in the area near National Landing.”

New development

Supply constraints have been a concern in the Washington region for years, says Chapman, and new permits to build homes flatlined a few years ago.

“Job growth in the area was already projected regardless of Amazon, and housing development is universally not keeping pace,” Chapman says. “New development would give demand a new place to go besides just putting pricing pressure on existing homes.”

New Amazon employees are likely to rent for at least their first year or two in the area, but eventually many of them will want to buy. Real estate agents say they hope that developers will take note and find a way to accelerate building in the region.

Right now, the burst of development in the National Landing region consists primarily of luxury apartments. Approximately 7,400 residential units are planned or are under construction near National Landing, some of which were in the pipeline before Amazon’s decision, Sage says.

“It’s likely that some of the apartment projects will convert to condos near National Landing, especially because we’re already seeing price appreciation in existing homes in that area,” Sage says.

Neighborhoods zoned for single-family houses are limited in Arlington, Alexandria and the District, Chapman says.

“In Arlington, most of the permits are for teardowns, which doesn’t change the amount of available housing,” she says. “To add new single-family homes, developers will have to go to farther-out suburbs, but there’s an increasingly limited amount of development there.”

The lack of land, especially in built-up Arlington, means developers will need to look at existing neighborhoods, particularly if they want to build single-family houses.

“Developers are likely to look at neighborhoods such as Aurora Highlands and Arlington Ridge, where there are older single-family homes,” Howell says. “But they’ll face community opposition to changing the neighborhoods’ character. This kind of redevelopment can’t be done overnight because you need the infrastructure such as sewers and electricity, particularly if you want to increase density.”

Fairfax County is likely to see the biggest impact in a few years when Amazon employees want to buy houses, Sage says, because that county has more availability for new home development than Arlington and Alexandria.

“Loudoun County is likely to be impacted as well because of the reputation for good schools, and Prince William County will likely be the third area to be impacted,” Sage says. “Some employees will move to Montgomery County and Prince George’s County, too. Employees who want to live in a condo or apartment may also look at D.C.”

Amazon employees are likely to make a circle around the headquarters to look at housing prices, availability of homes, schools, parks and the commute to decide where they want to live, which is likely to include the District and parts of Maryland, Richardson says.

Challenges for the region

Rising home prices and increased demand could exacerbate the lack of affordable housing in the region. Arlington County and the city of Alexandria expect to rely on tax revenue from Amazon’s location in the area to fund at least $15 million annually to investment in preserving and creating affordable housing.

After the Amazon announcement, the Virginia Housing Development Authority pledged an additional $15 million annually for five years for REACH Virginia (Resources Enabling Affordable Community Housing in Virginia) in Northern Virginia. That is on top of the $300 million annually that the agency provides for rental housing and $600 million per year for homeownership financing in Northern Virginia.

JBG Smith, Amazon’s development partner, is working with the Federal City Council on the Washington Housing Initiative to preserve or build 2,000 to 3,000 units of affordable workforce housing in the metro area over the next decade.

“Transportation and affordable housing issues were both public-policy challenges before the Amazon announcement, and they will be after, too,” Howell says. “But one great way to address affordable-housing problems is to have more people make more money.”

Sage says the region can absorb the job growth from Amazon, but he thinks some people, particularly in Northern Virginia, will face longer commutes and higher housing costs. He thinks that development is likely to accelerate and that local jurisdictions will be more open to development, and will be more aggressive in their planning for transportation and infrastructure needs as a result of Amazon.

Richardson says the area needs “to deal with affordability issues and infrastructure challenges, but overall, Amazon locating here is great for the whole area and great for the Northern Virginia marketplace.”

Condos and apartments under construction in the Crystal City, Pentagon City and Potomac Yard areas of Arlington; the location; number of units; and the expected time of opening:

Condos:

Crystal House V & VI

1900 S. Eads St.

144 units

TBD

2551 Main Line Blvd.

2551 Main Line Blvd.

142 units

TBD

Rentals:

Altaire Phase II

400 11th St. S.

306 units

2022

Riverhouse

1400 S. Joyce St.

933 units

TBD

Pentagon Centre – Phase II

1501 S. Hayes St.

264 units

TBD

223 23rd St.

223 23rd St.

353 units

TBD

Concord Crystal City – Phase II

2600 Crystal Dr.

208 units

2022

Century City Addition

2351 Jefferson Davis Hwy.

302 units

TBD

The Witmer

1201 S. Hayes St.

440 units

2019