The arrival of Amazon is likely to help boost parts of the local real estate market, which after a decade rebounding from the 2008-09 recession has hit a soft spot over the past year.
The announcement that Amazon anticipates bringing in 25,000 workers over a decade-long period “provides great affirmation about our region’s value and strong fundamentals,” said Ryan Conrad, CEO of the Northern Virginia Association of Realtors.
But pump the brakes on the enthusiasm just a bit – any growth regionwide in home sales due to Amazon will be a plus, but not so large that it overshadows overall market dynamics.
“My sense is that Amazon’s arrival will not have an immediate noticeable impact, but will over time be a contributor to increased values in close-in Northern Virginia,” said Carol Temple, a certified residential specialist with Coldwell Banker Residential Brokerage.
That’s in line with others in the industry.
“Amazon will have a significant effect on out local real estate market – but not immediately,” said Dean Yeonas of Yeonas & Shafran Real Estate. “I do not forecast an immediate and sudden change in our environment.”
How might the arrival of Amazon’s corps impact the local market? “There would be a 4-percent to 5-percent increase in the number of sales” above traditional norms over the coming decade if Amazon fulfills its stated goal of bringing 25,000 new jobs to the local area, according to a new analysis from McEnearney Associates.
McEnearney’s analysts suggest the increase (counting Amazon employees and those working for firms that spring up to service the company) could be about 3,000 per year in a regional market – the District of Columbia and the Virginia and Maryland suburbs – that sees an average of just under 70,000 homes sold each year.
The boost in sales, and a spike in prices, is likely to come to neighborhoods closest to the epicenter of the Amazon facilities: Arlington and Alexandria.
Housing along Metro corridors also are expected to benefit, even if it is not in the immediate vicinity.
“Buyers are willing to pay [a] higher price for pre-construction condos or townhomes in Metro-accessible areas,” said Tracy Comstock, principal broker of SilverLine Realty & Investments, who pointed to real estate along the Silver Line route running from East Falls Church through Tysons, Reston and, ultimately, eastern Loudoun County.
But Coldwell Banker’s Temple said a little historical perspective might temper expectations just a bit when it comes to the short-term impact on existing homes.
“When the Orange Line Metro stations opened in the mid-to-late 1970s, the prediction was that values for properties in close proximity would soar,” she said. “Not so. It took many years to see an appreciable increase in values. Despite the current headiness of Amazon’s arrival, appreciation is affected by supply and demand, the economy, the political climate and always unforeseen circumstances.”
Yeonas, whose work spans Northern Virginia, said changes will impact the region over time.
“Once the specific timing, number and rate of incoming people is known, I suspect we will see strength in the rental market first, and then in the for-sale market,” he said. “If the trend of the past several years of low inventory continues, I would expect to see prices increasing at an incrementally higher rate than previously.”
Casey Samson, a Realtor based in Vienna, said portions of Fairfax County stand to be impacted positively by having Amazon close, but not right at their doorstep.
“I think it is better for our area that the business is located in Crystal City, not in our back yard,” he said. “The major employment centers of D.C./Arlington/Alexandria feed the bedroom communities – Falls Church, Vienna, Oakton and McLean. Any employment boom in those major employment centers is great for the bedroom communities.”
After a solid sales year in 2017 – the highest in total sales and volume since 2005 – the Northern Virginia market has taken a bit of a breather, although in many cases prices continue to rise.
The local market also appears to have reached a kind of equilibrium in recent weeks.
“Both buyers and sellers compromised in October,” Comstock said. “Trying to get in front of the expected [interest-]rate increases, sellers were more willing to negotiate prices, recognizing that their own buying power would be less. The same held true for buyers: They were anxious to complete the transactions to ensure they would get the best possible rate and could maximize their buying power now.”
The Amazon arrivals certainly could have some cash to spend; JBG Smith, one of the partners in the deal bringing the online giant to the local area, estimates that the average wage of the 25,000 could be north of $150,000, although like many aspects of the plan, that’s little more than a guesstimate at this point.
While the Northern Virginia real estate market has been soft in recent months, it is coming off a strong 2017. A total of 22,555 properties went to closing last year, up 6.9 percent from the 21,097 transactions in 2016, according to preliminary data from the Northern Virginia Association of Realtors.
That was the highest since the all-time local record of 29,235 sales reported in 2005 at the height of the pre-recession bubble.
Total Northern Virginia sales volume for 2017 – $13.1 billion – was up from $11.7 billion in 2016 and also was the highest since the all-time record ($15.7 billion) was set in 2005.
October proved another sluggish month, with the 1,585 sales reported across Northern Virginia, down 4 percent from a year before. Sales were down in Arlington and Fairfax counties and the city of Fairfax, up in the cities of Alexandria and Falls Church.
While average sales prices were up modestly in the single-family and townhouse segments of the market (down in the condo segment), total year-over-year sales volume for October was down 3.1 percent to $903 million – and the number of pending sales reported during the month also was in negative territory.
The need for additional housing is likely to put pressure on local governments to allow for more dense development in certain corridors. “There will be community opposition to this kind of development, because, understandably, there always is,” McEnearney’s analysis noted.
Sales figures come from RealEstate Business Intelligence, based on data from Bright MLS.