Wherever Amazon’s HQ2 ended up, there was going to be a significant impact on the selected city. And now that Amazon has announced that half of its prize will go to Arlington County’s Crystal City, VA (the other half going to New York), the news further proves the DC Metro area’s reputation as a business magnet and the east coast’s tech epicenter.
The announcement will almost certainly influence residential real estate in and around Crystal City. Once the new Amazon location is up and running, there will be a large influx of new Amazon employees into the surrounding area — many of whom will have families with them — and they’re going to need places to live. So, let’s take a moment to look into exactly how this development will affect housing and real estate in Arlington County and the DC Metro area as a whole, and what real estate investors should be looking at as they get ready for what could be a financial windfall.
Amazon HQ2 means lots of jobs — and lots of new residents
Winning half of Amazon’s HQ2 is no consolation prize — the news means 25,000 new jobs for the region, and many of them will command salaries on average of $150,000 per year. That salary estimate means a lot of people will be looking for homes that are commensurate with a higher wage.
Of course, the DC Metro area doesn’t have the means to staff all of those jobs, so Amazon will have to move people to the region. So on top of needing homes to match high salaries, the region will also need to find housing for a lot of new residents. And to meet the needs of job growth, we can expect residential real estate growth as well.
The suburbs of Washington, DC are already popular housing markets, but this doesn’t mean that Amazon HQ2 will cause home prices to increase in a manner similar to what they did in Amazon’s hometown of Seattle. As Aaron Terrazas, chief economist at Zillow says, these areas “have historically been quicker to build upward and outward to meet the housing needs of newcomers.” He goes on to note that there is a well-developed public transit infrastructure, deeper labor markets and better air accessibilities. That said, there will definitely be an increase in real estate value in Arlington County, as noted in the chart below.
It’s also worth noting that a lot of the new hires at Amazon will be millennials, who are far more likely to rent before they buy. Knowing this, expect to see a sizable impact on luxury apartment buildings first. After 12 to 24 months, these new residents will be looking to buy, and that is the point at which the mid-range housing market will feel the most pressure.
For real estate investors, this news means that it might not be a bad idea to invest in multi-family units, as well as holding onto any fix and flip homes as rentals for a couple of years to see what happens to the prices in their investment neighborhood.
Crystal City can’t support all the newcomers. So where will they live?
Crystal City is an ideal place for a tech giant like Amazon, with close proximity to Ronald Reagan Washington National Airport and being just across the river from our nation’s capital. But all the new employees simply cannot fit in Crystal City alone, so where will they live?
Luckily for Amazon’s Virginia employees — who are more likely to walk, bike or take public transit to work — Crystal City can be accessed via both the blue and yellow Metro lines, greatly expanding the housing possibilities. To the south, the nearest location of appeal will be Potomac Yard, which has experienced a lot of apartment, condominium and townhouse development in the last five years.
Going further south, new Amazon employees will find Alexandria and Franconia attractive, both for an abundance of housing and the public transit options. To the west, there are many neighborhoods in Arlington that these new hires will find attractive. Even Springfield, to the southwest, is just a 20-minute ride on the Metro. And should any Amazonians want to live in DC proper, just about anywhere in the west and southwest of DC will make their ride easy by car or train.
If you’re a real estate investor, all of these places are worth looking into. If you can get ahold of some nicely priced investment property now, you could see a solid return on your investment a little down the road.
What does the Amazon HQ2 news mean for DC-area real estate investors?
As any investor knows, a significant growth in residential real estate means there is significant potential to invest now for a high return on your investment. The areas in and around Crystal City are already seeing far more interest than they have in a long time. A two-bedroom condo in a 1980s-era building that had been on the market for three months with very little interest is already seeing eight showings per day.
So the opportunity is real, but it will require a lot of fast action on the part of investors. Anything new that comes up will disappear quickly. Investors aren’t just competing against other investors, either. Long-time residents who have been looking into buying are now going to be looking aggressively, trying to get themselves into a home before the prices go up beyond their means. Plus, you can expect a lot of people who were interested in selling their property holding onto it for longer in anticipation of a bigger payout.
But even if that fix and flip opportunity costs more upfront than it would have a year ago, there’s still great potential to sell it for a significant profit. It will just require patience and forethought. However, once you find that prime deal and you need to close quickly, don’t hesitate to reach out to us for a quick pre-approval once you've identified a deal so that you can quickly get that property under contract.
Tough, but worth the effort
Amazon HQ2’s announcement to move into Crystal City is going to be a boon for real estate investors in and around the Metro DC area. And while acquiring properties is going to be more difficult as time moves forward, the opportunity to get an enviable return on your investment will also increase.
So do your research, and do your due diligence, but do them quickly. Your missed opportunity is another investor’s gain.