Amazon’s decision to build its much-touted HQ2 office in Virginia sent home prices in the surrounding neighborhood skyrocketing by more than 17 percent in just six months, a new analysis shows.
When the online retailer announced in November that it would put HQ2 offices in New York City and Crystal City, Virginia, the median home price in those areas was $640,000 and $1.65 million, respectively, according to new analysis from realtor.com. However, agents in the surrounding neighborhoods quickly reported an ensuing real estate frenzy, and that rush to get property has now apparently driven up prices near the Virginia location.
“The median home price in the area has sky-rocketed since then,” according to realtor.com’s report on its analysis, “increasing by a whopping $110,000 or 17.3 percent to $750,000 in April.”
Over the same period, inventory in the Arlington, Virginia, area (which includes the Crystal City HQ2 location) has fallen 40.1 percent. That dwindling inventory has sent would-be homebuyers spilling out into surrounding areas, according to realtor.com, driving prices up and inventory down in the larger northern Virginia region as well.
Rendering Amazon’s HQ2 location in Virginia Credit: HQ Nova
Realtor.com also found that Arlington’s luxury sector “is faring even better” than the local market generally.
“Luxury asking prices in Arlington — the top 5 percent of home prices — reached $2.4 million in April, up 22.1 percent year-over-year,” the report states. “At the same time, sales of million-dollar homes increased by 34.8 percent.”
Significantly, however, the situation in New York City has played out very differently. Along with Crystal City, Amazon had planned to build an HQ2 office in the Long Island City area of New York’s Queens borough. But that plan was controversial from the get-go; though many real estate professionals welcomed the news — with some even going so far as to create a website for prospective Amazon workers — other locals and political leaders fiercely opposed the retailer’s plans.
Community members celebrate Amazon’s decision to pull out of Long Island City | Credit: Drew Angerer and Getty Images
In the end, Amazon abandoned its plans to build an HQ2 facility in New York City. Though the move was hailed by some, agents who spoke to Inman at the time expressed frustration and regret over the decision.
Realtor.com found that Amazon’s announcement did initially spur home sales in New York. The retailer’s expected arrival also specifically prompted growth in Manhattan, well beyond Long Island City itself, “likely due to anticipated high salaries,” realtor.com reported.
However, six months later and with Amazon’s cancelation of its New York plans in the rearview mirror, “Manhattan has had a comparatively meager price increase of less than 3 percent growth of $40,000, and a 3 percent decrease in inventory,” realtor.com reported.
Realtor.com chief economist Danielle Hale said in a statement Thursday that the Manhattan market did boom after the initial HQ2 announcement, but has since “cooled off after Amazon decided to pull out of the city.”
Meanwhile in Virginia, the growth has been sustained and striking.
“With a household name as big as Amazon moving into Arlington’s backyard,” Hale added, “we expected that home prices were going to increase, but because the number of homes for sale is not keeping up with demand, the price growth we’ve witnessed so far in both the mid-market and luxury sector has been dramatic.”
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