Question: What would the impact of Amazon HQ2 be on housing in the DC Metro, Northern VA, and Arlington VA?
Answer: Welp, here we go…On the heels of Jeff Bezos’ trip to DC, where he confirmed an Amazon HQ2 announcement would be made by the end of the year, I figured there’s no better time to get maximum internet clicks on an Amazon article! In all seriousness, this is a topic I think and talk about almost daily (jealous?) so I wanted to share my thoughts with you, with a focus on ideas you may not have read in other forums or articles (e.g. Bezos buying a house in DC is not mentioned beyond this point).
I’m Confident Amazon HQ2 is Coming to Northern VA/DC Region
Criteria: I won’t bore you with a breakdown of Amazon’s RFP criteria, but the Amazon RFP is a quick read and it’s clear this region meets and exceeds their priorities and everything on their list of “Key Preferences and Decision Drivers.”
Tech’s Shifting Role: It seems that the long-term success of tech giants will depend on their ability to lobby and direct favorable public policy just as much as it will depend on their ability to develop innovative products. I believe that Amazon HQ2 is only the beginning of a massive tech migration to the DC region (see recent Facebook and Apple news).
Bezos v Trump: Don’t you think that with every Trump tweet or comment about Bezos/Amazon/WaPo, the decision becomes more and more personal for Bezos? Can you think of a more tempting power-play by Bezos than moving in next door? I have no doubt that Bezos knows where he can put an Amazon building with a direct line-of-sight from the White House.
My Network: Did I mention I talk about Amazon HQ2 almost every day? That has led me to some interesting conversations with folks in my network including recruiters for Amazon, employees and former employees of Amazon and other tech companies, local corporate relocation insiders, home inspectors, and general contractors. Each offering their own industry-specific signs of a decision in favor of our region.
Vegas: There is nobody better at predicting the future than Las Vegas bookmakers so when Bovada.lv, the largest online gambling site in the US, came out with odds heavily favoring Northern VA (#1) and Washington DC (#2), I knew the hype wasn’t just local.
Amazon Shouldn’t Pick One Location
The popular choice for Amazon’s second headquarters in Northern VA seems to be Crystal City for a number of reasons including immediately available office space, proximity to National Airport (DCA) and Government, and Metro access. While I do agree that Crystal City is the best primary location for HQ2, I hope they take advantage of the entire Northern VA-Washington DC-Maryland region to prevent overloading the infrastructure (specifically schools and traffic) and housing market in a single jurisdiction.
According to the RFP, Amazon spreads 8.1M square feet of office space across 33 buildings in Seattle, so I would expect a similar make-up for HQ2 (projecting 8M square feet of office space). Amazon can distribute these offices from Arlington County to Loudon County in Virginia, K St to Congress Heights in Washington DC, and Montgomery/Prince George’s County to Baltimore in Maryland while benefiting from Metro/Commuter Train connectivity between every site, frequent domestic and international flights within 30 minutes, shipping ports, data centers, a diverse and educated workforce, affordable and diverse housing options, and everything else that they list in their Key Preferences and Decision Drivers.
All of this can be done to strategically improve local economies and infrastructure without the devastating effects of moving 50,000 jobs to one or two locations. Plus, Amazon already has enticing incentive packages from all of them!
The Impact to the Housing Market Will Be…
Everybody wants to know how much home values will rise and how quickly…and it would be irresponsible of me to answer that question. Until we know how the jobs will be distributed, the timeline, and the types of jobs there is no basis for quantitative analysis. However, I’ll share some theories I’ve discussed with clients.
If the announcement is made in favor of Northern VA or the DC Metro, I believe we will witness two opposing market forces at play:
On one side, prices will attempt to move upward as sellers demand a premium for being part of the new Amazon market area and buyers are eager to purchase before the wave of Amazon employees come. In direct opposition to price appreciation, will be a significant increase in homes for sale because many home owners are waiting for a decision before putting their home on the market. If you plan to buy or sell in the wake of Amazon’s decision, you’ll want a strategy and strong daily market analytics.
This is where I’ll happily plug myself and my team. If you’re a weekly reader of my columns, you’ll know this is what we do best. If you’re new to my columns because of the click-power of an Amazon HQ2 article, here are two recent examples (one and two) of custom, hyper-local data analysis that we provide our clients.
Ultimately, I think price appreciation will win out because the market is already hungry for more supply, but the appreciation will be limited until the demand curve shifts when Amazon’s employees, and the employees of companies that support Amazon, start buying and renting.
To get a sense of what could happen to the housing market over time, let’s take a look at the Seattle housing market since Amazon started taking off in 2012. Remember, with a company like Amazon, it’s not just their employees but the employees of companies with direct and indirect relationships to its business.
Median Home Prices Have Doubles Since Jan 2012
Courtesy of Zillow
Amazon Stock Growth Since Jan 2012
Courtesy of Yahoo
As a homeowner and real estate agent, I am excited and hopeful for Amazon to select our region as the location of their second headquarters. As an Arlington resident frustrated by congestion and concerned about the impact rapid housing price appreciation will have on our community, as well as a father of a future Arlington Public Schools student, I hope that Amazon makes a conscious decision to spread their wealth across the entire Northern VA-Washington DC-Maryland region. We will have our answer within the next 100 days.
P.S. – Jeff, I’d be happy to assist your employees with their relocation. My cell phone number is (703) 539-2529 if you’d like to discuss privately 🙂
2 thoughts on “Amazon HQ2, My Opinions, and its Impact on Housing”
Great article Eli. Very interesting points you brought up. Curious to see what will happen in the coming weeks.
My guess is that the important aspect of Amazon’s announcement is what will be seen as the launch of what you mention as "the beginning of a massive tech migration to the DC region." Many are saying that adding just 25,000 jobs to the area over many years is not that big a deal, and they are right.
But those 25,000 jobs (even with a greater than average salary of $150,000) isn’t the main impact of the announcement. The big news is the likelihood of Amazon’s highly visible efforts catalyzing more tech businesses (especially 5-7 years down the road when some of the Amazon people start creating their own startups). It isn’t that Amazon is moving into a barren tech landscape, there is already a strong base from which to launch a long term tech boost to the DC area economy.