The Amazon Effect: How Has HQ2 Impacted the Housing Market?
May 25, 2022
On November 13, 2018, Amazon announced that it was locating its second headquarters (HQ2) in the Crystal City area of Arlington County. The national process for siting the expansion of Amazon’s headquarters was competitive and widely publicized, and the selection was seen as a major win for Arlington, as well as Virginia. However, there were also concerns about how the arrival of thousands of new, highly paid tech workers would drive up housing costs in an already expensive part of the state. More than three years and a name change later—welcome to the new National Landing—how has Amazon changed the housing landscape in Northern Virginia?
- Amazon has brought new workers to the region. The company announced that it would ultimately bring 25,000 to the Amazon HQ2 headquarters. As of November 2021, Amazon had hired more than 3,000 HQ2 employees and was actively hiring for another 2,500 workers. These new Amazon jobs tend to be higher-paying jobs—the average annual salary is $150,000.
- Housing costs are high and generally rising. In Arlington County, the median sales price in April 2022 was $645,000, with the typical single-family detached home selling for more than $1.2 million. In zip code 22202, which includes National Landing, the median sales price was $662,500 in April. Prices have been rising at double-digit rates across much of the surrounding region. Over the last year, the median prices in Arlington and Alexandria declined, largely due to the mix of homes, with more condominiums selling this year than there were last year.
Home prices have actually risen much faster in neighboring Fairfax and Loudoun counties, where the median prices were up 10.1% and 18.0% year-over-year, respectively, in April.
- Amazon employees are not the only ones driving up prices. There was a big bump in home prices in Arlington in 2019, when the median price rose 18.9% year-over-year, much faster than surrounding jurisdictions. However, the “Amazon” effect has not been a long-standing part of the housing market. Real estate in Arlington and in other parts of Northern Virginia have been in high demand for years, with the hot housing market being fueled by overall strong job growth and high household incomes in the Washington, D.C. region. Amazon added some fuel to that fire a few years ago but has not been the sole factor lately.
- Other companies are moving to the area. The area continues to attract jobs and high-wage workers, as Boeing recently announced it is moving its headquarters from Chicago to National Landing. Only a few employees are moving to Arlington for now; however, more workers will be coming over the next couple of years. It is likely that more expansions and economic development will be coming to Arlington and Northern Virginia, as well. These new companies will bring more demand to the housing market. New companies could also bring new opportunities for private-sector involvement in supporting the development of both market-rate and affordable housing.
- Amazon has committed funds to building and preserving affordable housing. Amazon established its Housing Equity Fund to provide below-market loans to developers who build or preserve homes for moderate and low-income individuals and families. To date, Amazon has spent about $800 million to fund more than 4,100 affordable units in Northern Virginia. However, there are still concerns that these investments have done very little to ease housing affordability challenges, particularly for households with very low incomes.
When businesses move in and bring workers, it can fuel demand for housing and drive up home prices. Communities looking to attract employers should also be aware that the new workers will need housing. After all, housing is where workers go to sleep at night. Virginia REALTORS® can be an important voice in making the case that, in this tight inventory environment, expanding housing options while attracting economic development need to go hand in hand.
For more information on housing, demographic, and economic trends in Virginia, be sure to check out Virginia REALTORS® other Economic Insights Blogs and our Data Page.
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