Amazon hasn’t broken ground on its first HQ2 building in Northern Virginia yet but its plans to build a 25,000-person campus there over the next decade have already sparked a red-hot housing market.
Amazon’s future stomping grounds, Alexandria and Arlington, are the most competitive cities in the country for home buyers, according to Redfin data. Meanwhile, the housing market in Seattle, Amazon’s original headquarters city, is cooling after years defending the distinction of “nation’s hottest housing market.”
Both regions are a lesson in what happens when a tech company with an insatiable appetite for growth and deep enough pockets to pay top salaries comes to town. But while Amazon’s success and rapid growth caught Seattle by surprise, Northern Virginia has the opportunity to see into the future and plan accordingly. Whether that will make a difference in the housing market remains to be seen.
Alexandria and Arlington’s housing market ranked first and second based on Redfin’s Compete Score, a metric that measures the relative competitiveness of home sales in cities across the country. The ranking combines data from Redfin and the Multiple Listing Service and takes into account factors like the number of competing offers, waived contingencies (like a home inspection), whether homes sell above or below the asking price, and the number of days on the market.
“A market can become highly competitive when buyers agree that home values will increase steeply in the future,” said Redfin chief economist Daryl Fairweather in a statement. “If you believe home values will go up hundreds of thousands of dollars in the next five years, you will race to bid five or ten thousand dollars above asking price today. So, even though it may take a decade for Amazon’s HQ2 to grow the size of the Seattle headquarters, attracting high-earners and driving economic growth in the surrounding area, homebuyers and home sellers are already operating under the assumption that there will be strong demand for homes going forward.”
When Redfin debuted the Compete Score last year, Seattle had the third most competitive housing market, following Silicon Valley cities Fremont and San Jose. This year, Seattle didn’t even break the top 10. Nearby Tacoma, Wash., did however. Redfin’s Tim Ellis speculates that Tacoma’s housing market growth is driven by priced-out Seattleites.
Seattle’s cooling housing market has tracked with the perception that Amazon is cooling on its hometown. In April, Amazon announced plans to relocate its entire Seattle-based worldwide operations team to Bellevue, the city across Lake Washington that other big tech companies call home. It was a weighty symbolic gesture that followed a year of escalating tensions between Amazon and Seattle’s municipal government.
It wasn’t the first time Amazon pulled jobs following criticism from local officials. A few months before the Bellevue announcement, Amazon canceled plans to build one half of its HQ2 project in New York City amid backlash from activists and elected officials. That left Northern Virginia as Amazon’s only HQ2.
Amazon began hiring for its Northern Virginia office in April. The company plans to grow the team to 400 by the end of the year. Amazon rented a temporary office space and says it will open its first building this fall.
The region’s housing market has been steadily heating up since Amazon revealed Northern Virginia as a winner of its ballyhooed HQ2 contest last November. That heating has escalated over the past few months.
Between July 2018 and last month, Arlington and Alexandria saw the number of homes for sale drop by about 50 percent. The median home sale price in Arlington is $616,000 and in Alexandria its $490,000. That’s still less than Seattle’s median home sale price of $685,000 but home prices in Amazon’s hometown are down substantially from a year ago.