Study Confirms the ‘Amazon Effect’ on Housing Is Real
November 15, 2019
One year after Amazon selected Arlington, Va., as its second headquarters site, home prices and sales in the surrounding area continue to surge, a new study from realtor.com® shows. “Massive inventory shortages, sky-high price spikes, and a blistering pace of sales are now the norm in the metro surrounding Amazon’s second headquarters, propelling it to one of the nation’s hottest housing markets,” realtor.com® notes in a new analysis.
New York City, on the other hand, hasn’t fared as well. New York City was initially chosen as one of the two markets for Amazon’s headquarters, but in February, Amazon backed out of that portion of its plans. New York City has seen a 15% decline in home sales and home prices year over year, realtor.com® notes. At the time of Amazon’s initial announcement, New York City had seen a surge of 50% in sales.
"The 'Amazon effect' has branched out of its home base of Seattle and it has clearly stamped its fingerprint on the Northern Virginia housing market,” says George Ratiu, senior economist at realtor.com®. “The impact of the company's expansion in the suburbs of Washington, D.C., diverges along homeownership lines, with homeowners experiencing noticeable equity gains and buyers feeling the sting of higher prices. Following Amazon's initial announcement that it was scouting cities for a second headquarters, we knew the winner would see a considerable jump in demand for housing, especially from investors and speculators looking to cash in on increased demand. Looking back a year after the announcement, we can see how dramatic the move has been in the market."
Home sales in Arlington shortly after Amazon’s initial announcement saw a 21% increase year over year. The median list price in Arlington County was $863,300 in October, a 33% increase from a year ago.
Housing shortages abound as demand remains high. Active listings in Arlington County were down 49% year over year. Homes are selling quickly, with half of all homes in Arlington selling in less than 28 days—38 days faster than the national median days on the market, realtor.com® reports.
The housing shortages will likely continue, keeping that pressure on home prices, says Ratiu. "First, the nationwide competition drew so much attention, it caused a massive shortage of homes as investors descended on the area, buying homes as quickly as they could,” Ratiu says. “Second, homeowners and investors have been holding out on selling, anticipating that prices will only continue to increase further, which has compounded the area's inventory shortage, and further increased home prices, testing the area's limits for what buyers are willing to pay.”
Updated: July 10, 2020