Amazon HQ2 impact on housing market short-lived, report says

The June opening of Amazon.com’s $2.5 billion East Coast headquarters in Arlington County only had a short-lived impact on home prices, and it’s hard to pinpoint HQ2’s direct impact due to other factors affecting residential costs, according to a report released this month by Bright MLS Research.

When Amazon announced it would bring 25,000 highly-paid workers to its second headquarters in Arlington County in November 2018, there were fears that the development would displace low-wage residents in the area, and only high-income earners could live there.

“It has been difficult to identify the true impact Amazon has had on housing costs — specifically on — home prices in Arlington and the surrounding area,” according to the Nov. 13 report. “Home prices tend to be high in places close to jobs and amenities. Arlington has an unparalleled location across the river from the District of Columbia. Furthermore, over the past two decades, the county has also pursued land use policies and economic development strategies to make Arlington attractive to young professionals and families.”

The pandemic was a complicating factor, upending where people work while the government’s response fueled housing demand, the report adds.

“While the announcement prompted both elation and anxiety, the effect on the housing market was short-lived as the COVID-19 pandemic and the resulting government and business responses to the pandemic have had a much bigger impact on the housing market,” Bright MLS Chief Economist Lisa Sturtevant said in a news release about the report.

Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors, agreed that it’s hard to pinpoint the impact of HQ2’s announcement and its first phase of construction on the housing market. The pandemic started about two months after the start of HQ2’s construction.

“I think the full impacts of HQ2 are yet to be seen,” he said, pointing out the shift in how people work and other economic factors, such as mortgage rates, low inventory and high interest rates.

Amazon opened Merlin, its first tower, and one of the twin 22-story buildings that make up Metropolitan Park, HQ2’s first phase, in June. About 8,000 employees currently work there. Amazon delayed construction of HQ2’s second phase, known as PenPlace, in March, as the Fortune Global 500 tech company laid off 18,000 workers.

A George Mason University report in 2018 estimated only about 10% of Amazon’s workers would live in Arlington County, while 60% would live in other parts of Northern Virginia, Washington, D.C., Maryland and elsewhere, according to the new report.

“I think the long-term impacts, certainly for Arlington, Northern Virginia and the Greater D.C. metro region will be very strong,” McLaughlin said. “There’s a reason why HQ2 selected Northern Virginia as the place where they wanted to invest.”