In a market where everything is click bait, and you are competing against other listings, you need to make sure your agent has a strong marketing game. That’s why we use the best 3D tour
Amazon is coming, what does this mean for your home values?
Dated: February 22 2019
*JBG Smith rendering of the north section of Amazon’s National Landing
Real estate professionals and investors alike in the DC Metro monitor the market for potential zones of opportunity. Areas that will see exponential growth over the next decade. In DC, areas like Trinidad have seen growth over 600% since the early 2000s. Some investors just follow the “The Whole Foods Effect”, where businesses like Trader Joe’s and Whole Foods seem to jump start neighborhoods.
But what happens when a behemoth like Amazon establishes a new headquarters in your neighborhood. Will the trends reflect the same phenomenon as depicted above in Zillow’s home value chart or will Amazon’s “second coming” be a drop in the proverbial bucket?
Amazon’s HQ2 will help to diversify Washington’s Gross Regional Product (GRP). Nearly one third of all jobs in the Washington region are federal, but the trend shows a decline in relative federal jobs to private sector jobs. As seen below in Fuller Institute’s study, federal jobs have decreased from 39.8% to 31.2% just in the last 7 years due to relative growth in the private sector.
With Amazon adding as much as 50,000 jobs over the next 20 years this trend should continue. According to the Fuller Institute, Northern VA should see over an 8% increase in direct private sector job growth. This doesn’t take into account the additional economic impacts that Amazon HQ2 will have on the region. Additional economic impact will be seen in the immediate construction of HQ2 as well as annually to support Amazon operations. There will be growth seen in retail, transportation, food and beverage as more workers and families move into the region to support high end tech jobs. Amazon’s operations and workforce spending are estimated to exceed $2.6 billion annually up to $3.4 billion, adding an additional 2300 jobs in Arlington directly supporting Amazon and an estimated 2200 supporting jobs located in Northern VA (*Fuller Institute, Read the full report here, “The Economic and Fiscal Impacts of Locating Amazon’s HQ2 in Arlington County”, November 8, 2018).
At total build out, Amazon HQ2 will provide Arlington County with a net fiscal tax benefit of about $52 Million per year based on an average HQ2 wage of $150-200K. Net annual benefits are projected between $328-472 Million per year at full build out.
Housing Market Impact
Adding 25-50,000 jobs will certainly impact the housing market with increased demand for housing. Arlington County could see an increase in housing demand by 8-9K housing units with 63-70% being rentals (*Fuller Institute). This will put a strain on rental supply in Arlington and will increase demand in surrounding counties.
The total impact on Arlington County’s and the Commonwealth’s economies over the twenty-year development period planned for HQ2 is captured by comparing the projected economic growth rates projected including HQ2 and in its absence. For the County, its economy is currently projected to grow by 141.2 percent (not adjusted for inflation over the 2019-2039 period; with the addition of HQ2, both its construction impacts and its annual post-construction expenditures, for operations and by HQ2 employees, in combination with already projected growth would increase the economy’s growth rate to 246.8 percent, a gain of 75 percent. - “The Economic and Fiscal Impacts of Locating Amazon’s HQ2 in Arlington County”, November 8, 2018
Since supply and capacity of new development in Arlington County is limited, the majority of Amazon employees living in Arlington will be renters. The Fuller Institute estimates the majority of the 8200-9000 households will rent multifamily in Arlington whereas the commonwealth will gain as many as 73,000-78,000 households which will live in single family detached housing and will own their own home.
What does this mean for homeowners, investors and developers in Northern Virginia?
The influx of jobs created from Amazon HQ2 plus the supporting job creation will contribute to increased home values in the next two decades. However, these projections are based on estimates and many unknowns and projections could increase or decrease based on unknown economic factors. But the net economic impact will be positive and home owners and investors alike will most likely see home values and rental incomes increase as a direct result of Amazon adding 25,000-50,000 high paying jobs.
*JBG Smith rendering of the Pen Place development
Dan specializes in luxury home sales, investment and development. With the best technology platform in the real estate industry powered by EXP, the cloud based brokerage, Dan continues to innovate fo....