Over the past year, the suburbs of Washington, D.C. have seen an obvious shift in the housing space, and all it took was Amazon announcing National Landing as the future home of HQ2.
The massive undertaking—encompassing two 22-story, 2.1 million-square-foot buildings at Metropolitan Park and situated on a 16-acre lot—is still in the initial development stage, but the real estate industry is already feeling the impact.
Inventory Was Low to Begin With
According to two industry experts who service the Greater D.C. Metro area, John Eric and Kara Chaffin Donofrio, inventory supply was dangerously low even before the announcement—the most challenging factor thus far.
“Northern Virginia was already low in inventory, and the HQ2 announcement caused a further shrinkage of available properties for sale,” says Chaffin Donofrio, managing broker of the Long & Foster, Christie’s International Real Estate office in Arlington, Va.
Eric, senior vice president and senior advisor at Compass, agrees, stating the biggest market shift has been in the decrease of inventory across the board, but especially in the cities of Alexandria and Arlington.
In fact, according to data from Bright MLS, the zip code 22202, belonging to Arlington, Va., has experienced the most dramatic changes, with the number of new listings decreasing 85.3 percent around the time Amazon made its announcement in November 2018. Inventory in June 2019 was down 70.2 percent year-over-year.
“This severe lack of inventory in 22202 could be the result of homeowners waiting for their property values to peak as the official opening of HQ2 grows closer,” said Chris Finnegan, vice president of Marketing and Communications for Bright MLS, in a statement.
Residents Holding Out for Major Profits
Eric has it witnessed firsthand: Consumers are holding onto their property in hopes that it becomes more valuable.
“A huge chunk of my listing appointments were initially calls to sell and have turned into rental listings,” says Eric. “Many are holding real estate instead of selling based upon the HQ2 announcement…it’s been prolific.”
Chaffin Donofrio says that conversations with sellers are focusing on whether they should hold their property for the time being or sell now.
“Some sellers want to keep their properties for a few more years in hopes of increased appreciation. It’s very situational as to what is truly in the best interest of the client,” says Chaffin Donofrio. “For some, now may be the right time to sell their larger home at a great profit and downsize by purchasing another home while interest rates are still at all-time lows.”
Buyers Being Priced Out
Those that have chosen to sell, however, have largely listed their homes at inflated prices, according to Bright MLS. The median asking price of single-family homes spiked 99.9 percent year-over-year in June 2019, and shot up 56.6 percent between November 2018 and December 2018—an increase of 75.5 percent ($780,000 to $1,369,900).
Chaffin Donofrio has found that the combination of tightening supply and an increase in prices has put a strain on would-be buyers.
“It’s made an already hot market even more competitive,” she says. “Our team has experienced an even greater challenge in finding properties closer to the HQ2 proximity, specifically in Del Ray and communities around the 22202 zip code.”
Navigating a Challenged Market
Real estate professionals are taking these challenges in stride, coming up with innovative ways to help renters, buyers and sellers. Chaffin Donofrio, for example, is looking to develop more creative and proactive approaches to helping clients find homes by identifying “off-market opportunities.”
“At our office, we have developed several unique approaches to help buyers find homes before they go on the market,” she says.
Eric says the biggest thing is just setting expectations.
“Sellers are under the assumption that their houses are worth double after the Amazon announcement, and that’s just not true. And buyers don’t want to pay double,” he says. “We have to do a lot of research and delve deep into Amazon’s impact to know what to expect.”
Despite inventory limitations and pricing-related obstacles, the industry is hopeful that Amazon HQ2 will be a lucrative addition to the area and a positive influence on the homeownership rate.
“We’re certainly excited that Amazon is coming,” says Eric. “We’ve already sold three homes to Amazon folks that are heading this way to set up the environment.”
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at email@example.com.