This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: What impact has Amazon’s announcement had on Arlington’s real estate market?
Answer: Wouldn’t it be funny if I wrote about something other than Amazon this week? I’ll come back to this topic every 4-8 weeks to provide an analysis on how Amazon’s decision (and probably Apple too) is changing our local real estate market by combining my normal data analysis with experiences of my clients and my colleagues around the D.C. metro area.
Key Data Following the Announcement
On Saturday, November 3 the Washington Post broke news that Amazon HQ2 was in final discussions with Crystal City and by Monday, November 5, the impact on property values was all over the national news.
Late on Monday, November 12, the Walls Street Journal reported the decision was final, and the next day, it was confirmed by Amazon. Let’s take a look at market activity in Arlington over the last two weeks since the news broke:
- The November 3 WaPo announcement created the biggest surge with investors pouncing and owner-occupants accelerating their timelines. From November 4-12, 100 properties went under contract. Historically, about 200 properties have gone under contract the entire month of November.
- Since the news became official the night of November 12, 46 more properties went under contract, for a total of nearly 150 properties under contract in a two-week period, surpassing the activity during the same period in previous years by over 50%.
- I figured a lot of the increased activity would be in the condo market, but the percentage of contracts on condos is in-line with historical trends (about half of all contract activity)
- While we won’t know how much the market is appreciating until these properties close (when purchase price is released) investors and owner-occupants seem willing to spend more.
Historically, properties that have gone under contract in November averaged an asking price in the low $600’s and median asking price in low/mid $500’s. Properties under contract in the last two weeks averaged an asking price of $698,000 and median asking price of $625,000. - The surge in purchase activity has not been off-set with a surge in new inventory. We’ve had 89 properties listed for sale since the November 3 WaPo announcement, which is barely higher than the same period in prior years.
- After removing age-restricted housing and the River Place Cooperative, there are less than 350 properties currently for sale and the average asking price of those properties skews abnormally high. The current average asking price is over $995,000 and median asking price is $812,500, compared with an average asking price in the mid $800’s and median price in the mid/upper $600’s historically during this time of year.
My Experience So Far
I knew we were in for a wild ride when buyers I was working with started running into multiple offers and escalations on properties that had been sitting for weeks/months.
Generally, the odds of running into multiple offers after a property has been on the market for a full week are slim, yet every one of the buyers I worked with on an offer in Northern VA over the last two weeks found themselves competing against at least one other very strong offer.
Another investor I’ve been working with ran into 11 competing offers on an old condo in northern Alexandria that normally would have sat on the market for a couple of months.
On the listing side, we’ve had people reaching out about properties that were already under contract and off the market (rarely happened previously). Remember the new 12-unit condo building near Rosslyn I wrote about on October 30? All six of the two-bedroom units are under contract at full price and with the six three-bedroom units almost finished, we expect those to move just as quickly.
From what I’ve gleaned from offers I’ve been part of and activity my colleagues have seen, there’s been an almost overnight increase of 2-5% on most properties in Arlington and northern Alexandria. It doesn’t seem like D.C. or outside the beltway in Northern Virginia is experiencing as notable of a bump, at least not yet.
What I’m Watching For
I am really interested in how the Amazon news fits in with the winter market we usually experience, highlighted by fewer homes listed for sale and slower buying activity.
December historically produces the fewest new properties for sale, by a wide margin, and also tends to offer buyers the best opportunity to negotiate bigger discounts, but I highly doubt this December will offer buyers much in the way of negotiating.
The big question is whether the Amazon news will push a higher number of home owners to sell and buck the low-inventory trend. If new inventory remains low as sellers prepare their homes for the spring market, I wouldn’t be surprised if home owners who make it to market in December/January walk away with significant returns. The pace of new inventory will be key.
I also doubt the purchase momentum will continue at this pace, but will be watching closely with interest. A lot of the activity over the last two weeks was driven by investors, but I suspect many who didn’t get under contract in the first two weeks will hesitate for fear of not getting in early enough (I’ve heard this from a few of my investor clients already).
While many investors will take a step back, I think owner-occupants will continue to be active in the market and willing to pay the new premium, knowing that there is still a much higher ceiling for appreciation over the length of their ownership.
If you are interested in testing the market as a buyer, seller, or investor and want to talk in more detail about your options, feel free to give me a call at 703-539-2529 or email me at [email protected]
If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.