Arlington and Alexandria’s real estate certainly got a boost in the immediate aftermath of Amazon’s announcement that they are bringing 25,000 new jobs to Northern Virginia over the next decade. A couple of weeks ago we talked about the Impact of Amazon’s HQ2 move to Northern Virginia and what to expect in the years to come, but today let’s focus on the immediate changes that we’ve noticed in the month of November.
To provide some context, absorption rates – the pace at which the market is putting the inventory of available homes under contract – is generally a bit lower in November than October. And as we have noted in this space before, rates above 60% represent an extreme seller’s market. (See chart below.)
Amazon made their big announcement on November 13 and the immediate impact on Arlington’s market was electric. Absorption rates for all property types – detached, attached and condos -throughout Arlington County were 14% higher than November of last year, and the same is true for the City of Alexandria. All property types – though not all price categories – are in the “seller’s market” range. And counter to what we typically see, the rates were considerably higher than they were in October.
The impact in Crystal City was even more dramatic. Almost all of the housing stock there is condos, and the November absorption rate was almost 85%! We typically see 6-10 condos go under contract in a given month – in November there were 22, and there probably would have been more if there were more on the market.
But we don’t expect these meteoric rates to continue. There is an understandable and immediate reaction to the news and that fuels speculation. But we think the initial reaction – perhaps overreaction – will settle into a more reasonable set of expectations. Northern Virginia and the whole metro DC area will benefit from Amazon’s move, but this is a long-term play. Those looking to score some quick gains by buying and flipping may be disappointed when things settle down.